Union Budget 2024: The Economic Survey 2024 stated that India has been the only major economy in the world where the prices of petrol and diesel have come down in recent years.
The survey noted that the Centre took several other steps to insulate common citizens from high international prices, which included diversifying the crude import basket, windfall taxes on the export of petroleum products, invoking the provisions of Universal Service Obligation to ensure availability of petrol & diesel in the domestic market, increasing the blending of ethanol in petrol, etc.
It also noted a sharp decline in the global energy price index in FY24, which contributed to sustained low retail fuel inflation.
The Centre reduced Central Excise duty 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 and current RSP of petrol and diesel at Delhi is Rs. 94.72 and Rs. 87.62 per litre, respectively.
In August 2023, there was a significant reduction in the price of domestic LPG cylinders by Rs 200 across the nation. This price adjustment marked a shift towards deflation in LPG prices that has been sustained since September 2023. Subsequently, in March 2024, non-subsidizsed LPG cylinder prices were decreased by an additional Rs 100 per cylinder, as reported in a recent survey.
During the same period, Oil Marketing Companies undertook a reduction of Rs 2 per litre in the prices of petrol and diesel, leading to a deflationary trend in retail inflation for these essential fuels.
The survey highlighted that global commodity prices fell in 2023, easing price pressures in energy, metals, minerals, and agricultural commodities through the imported inflation channel. Low fuel and core inflation contributed to a downward trend in headline inflation, despite food price volatility in FY24.
"Thus, the moderation in inflation was largely due to prudent administrative measures and monetary policies implemented during the post-pandemic economic recovery phase," the survey noted.