Finance Minister Nirmala Sitharaman on Thursday clarified that the recent increases in fuel prices are not a result of government action but are driven by oil marketing companies (OMCs) responding to global crude oil prices. She made these remarks during a press conference, emphasizing that the government has not imposed any additional taxes on petrol and diesel in the current fiscal year.
Fuel Price Dynamics
The minister explained that OMCs revise fuel prices daily based on international crude oil costs and foreign exchange rates. Since the beginning of 2025, global crude prices have risen by approximately 15%, leading to a corresponding increase in domestic fuel rates. Sitharaman noted that the government continues to monitor the situation and has taken steps to cushion the impact on consumers, including a reduction in excise duty on petrol and diesel in November 2024.
Gold Monetization Scheme
On the gold monetization front, Sitharaman revealed that the Gold Monetization Scheme (GMS), launched in 2015, is under active review. The scheme aims to mobilize gold held by households and institutions, offering interest in return. However, its uptake has been limited. The finance ministry is exploring ways to make it more attractive, including higher interest rates and simpler procedures. A committee has been formed to suggest improvements, with a report expected within three months.
Other Economic Measures
The finance minister also touched upon other economic aspects. She highlighted that the government is focused on fiscal consolidation, with the fiscal deficit target for 2025-26 set at 4.5% of GDP. On inflation, she expressed confidence that retail inflation would remain within the RBI's tolerance band, aided by adequate food grain stocks and a good monsoon forecast.
- Global Factors: Fuel price hikes are linked to global crude oil prices and not government policies.
- Review Process: Gold Monetization Scheme is being reviewed to boost participation.
- Fiscal Discipline: Government committed to fiscal deficit target of 4.5% of GDP for 2025-26.
- Inflation Outlook: Retail inflation expected to stay within RBI's comfort zone.
Sitharaman's statements come amid concerns over rising fuel prices impacting household budgets and the broader economy. Opposition parties have criticized the government for not intervening to control prices. However, the finance minister reiterated that market forces are at play and that the government's role is limited to ensuring a stable policy environment.
