Lok Sabha Question No. 1816 (UNSTARRED), answered on 2024-12-05
Subject: Savings from Fluctuating Price of Crude Oil
Ministry: PETROLEUM AND NATURAL GAS
Asked by: Shri Dharmendra Yadav

## LOK SABHA UNSTARRED QUESTION NO. 1816 TO BE ANSWERED ON 05 DECEMBER, 2024

## Savings from Fluctuating Price of Crude Oil

1816 Shri Dharmendra Yadav:

## पेट Ō ोिलयम और Ůाक ृ ितक गैस मंũी

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a)  whether the benefits of price cut of crude oil accrued to the Oil Companies have not been passed  on  to  the  consumers  by  the  Government  despite  significant  downward  fluctuations  in crude oil prices during the last decade, if so, the reaction of the Government;
- (b) the schemes to which the savings from the decreasing crude oil prices are being diverted;
- (c) the steps taken by the Government to provide financial relief to the consumers during the said period; and
- (d) the exact mathematical formula for calculating the cost of petrol and diesel?

## ANSWER

## पेट Ō ोिलयम और Ůाक ृ ितक गैस मंũालय मŐ राǛ मंũी ( ŵी सुरे श गोपी )

## MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI SURESH GOPI)

(a) to (d): Prices of petrol and diesel are market determined and Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of petrol and diesel.

India  imports  more  than  85%  of  its  crude  oil  requirements.  Crude  oil  prices  (Indian  basket) increased from $55/bbl (March 2015) to $113/bbl (March 2022) and further to $116/bbl (June 2022) and have continued to remain highly volatile.

Domestically,  Petrol  and  Diesel  prices  have  come  down  to  Rs.  94.77  and  Rs.  87.67  per  litre respectively  (Delhi  prices) as  a result  of  various  steps  taken  by  Government  and  PSU  OMCs, including reduction of Central Excise duty by the Central Government by a total of Rs. 13/litre and Rs. 16/litre on petrol and diesel respectively in two tranches in November 2021 and May 2022, which was fully passed on to consumers. Some State Governments also reduced state VAT rates to provide relief to citizens. In March, 2024, OMCs also reduced the retail prices of petrol and diesel by Rs. 2 per litre each, across the country.

Government  of  India  also  took  several  other  steps  to  insulate  common  citizens  from  high international prices, which  included diversifying the crude import basket, invoking the provisions of Universal Service Obligation to ensure availability of petrol & diesel in domestic market, increasing the blending of ethanol in petrol, etc.

Recently  PSU  OMCs  have  carried  out  intra-state  freight  rationalisation.  This  has  benefitted consumers located at remote areas, far from Petroleum Oil & Lubricants (POL) Depots in form of  reduced  Petrol  and  Diesel  prices  in  remote  parts  within  the  states.  This  initiative  has  also reduced  the  difference  between  the  maximum  and  minimum  retail  prices  of  Petrol  or  Diesel within a state.

India imports about 60% of the domestic LPG consumed. Price of LPG in the country is linked to its price in the international market. Government continues to modulate the effective price to consumer for domestic LPG. Average Saudi CP (international benchmark for LPG pricing) rose by 64% (from US$ 385/MT in July 2023 to US$ 632 /MT in November 2024) while on the other hand effective price for Pradhan Mantri Ujjawala Yojana (PMUY) consumers for domestic LPG reduced in India by 44% (from Rs. 903 in August 2023 to Rs. 503 in November 2024).

The retail selling price of a 14.2 Kg domestic LPG cylinder is currently Rs 803 in Delhi. After a targeted subsidy of Rs 300/cylinder to PMUY consumers, Government of India is providing 14.2 Kg LPG cylinders at an effective price of Rs.503 per cylinder (in Delhi). This is available to more than 10.33 crore Ujjwala beneficiaries, across the country. Apart from the direct subsidy to consumers,  the  OMCs  have  also  been  compensated  Rs  22,000  crore  in  FY  2022-23  by Government of India to cover the under-recoveries suffered by them in not passing on the high international LPG prices to the domestic LPG consumers.

The revenue generated by taxation is used in various developmental schemes of the Government like  Targeted  subsidy  to  PMUY  households,  Food  &  Fertilizer  subsidy  and  infrastructure building,  Pradhan  Mantri  Gram  Sadak  Yojana  (PMGSY),  Pradhan  Mantri  Ujjawala  Yojana (PMUY), Ayushman Bharat, Pradhan Mantri Garib Kalyan Yojana (PMGKY), Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), free vaccination for COVID - 19 etc. The cess is used for infrastructure development and also generates employment.