Since the start of the West Asia conflict, the price of Brent crude has gone from about $73/bbl to $109/bbl, a 49% hike. The Centre has reduced the special additional excise duty on petrol and diesel by ₹10/litre, to compensate the oil marketing companies (OMCs) from under recoveries due to price increase. Any reduction in excise duty is a fiscal-hit. However, any price absorption by OMCs should effectively also be viewed as a fiscal cost, as it erodes the dividends these companies would otherwise transfer to the government as revenue. Given this trade-off, the best fit in a protracted supply shock situation is near-equal distributional burden sharing by economic agents, with OMCs bearing the first leg of pain, followed by the government and eventually the end consumer

Published on March 27, 2026