New Delhi: The special additional excise duty (SAED) cut on petrol and diesel on March 27, 2026 resulted in approximately Rs 30,000 crore cost for the central exchequer in the current fiscal year, and the pass-through of higher crude was not made to the consumer; it was absorbed by the exchequer.
Amid the Strait of Hormuz disruption, the SAED cut reduced petrol excise to three rupees a litre and took diesel excise to zero.
The Congress argues that petrol cost roughly Rs 71 a litre in May 2014 and costs roughly Rs 98 a litre today and presents the difference as evidence of overtaxation.
According to sources, the argument depends entirely on what one thinks the May 2014 number actually represented. It was not the cost of supplying a litre of petrol. It was the price that resulted after the UPA had issued approximately Rs 1.34 lakh crore in oil bonds to public sector oil marketing companies in lieu of price pass-through, between 2005 and 2010.
The 2014 price was a deferred tax invoice on the next generation of consumers. The Prime Minister Narendra Modi government has been redeeming those bonds: roughly Rs 10,000 crore in FY 2021–22, Rs 31,150 crore in FY 2023–24, Rs 52,860 crore in FY 2024–25, and Rs 36,913 crore in FY 2025–26, alongside cumulative interest running into the tens of thousands of crores.
The price which the Congress nostalgically quotes was being paid by the present government, on behalf of the previous one, until very recently.
The mechanism the present government has used to absorb a price shock is different in kind, according to sources.
When crude rose in 2022 and again in 2026, the central excise duty on petrol and diesel was cut.
The reduction was direct, transparent, on-budget, and visible at the pump within a day. The exchequer accepted the loss of revenue. No bond was issued; no obligation was deferred; no future taxpayer was committed to repaying anything, said sources.
(IANS)
