Union Finance Minister Nirmala Sitharaman has cautioned that the escalating West Asia crisis is set to significantly increase fuel costs for the common man and businesses, leading to broader economic challenges including delayed cargo and pressure on working capital.
Photograph: Ishant Chauhan/ANI Photo
Key Points
- Finance Minister Nirmala Sitharaman stated that the West Asia crisis will result in higher fuel costs for common people and businesses, impacting shipping and supply chains.
- Petrol and diesel prices have seen four hikes in 11 days, with cumulative increases of nearly Rs 7.50 per litre since May 15, driven by soaring global crude oil costs.
- The government is sacrificing Rs 1 lakh crore in revenue by cutting excise duties on petrol and diesel to mitigate the impact.
- The crisis poses challenges for small businesses in future planning and for countries like India in maintaining economic stability.
- The government is focused on protecting citizens, supporting MSMEs, safeguarding exporters, and ensuring supply chain continuity.
Hours after the fourth hike in pump prices for petrol and diesel in 11 days, Union Finance Minister Nirmala Sitharaman on Monday said that the crisis in West Asia is not just a geopolitical issue, but it will lead to higher fuel costs for the common people.
Speaking at the 27th foundation day event of Sidbi here, she said the government is sacrificing Rs 1 lakh crore of revenue by cutting the excise duties on diesel and petrol.
Economic Impact of West Asia Crisis
“The West Asia crisis is not only a diplomatic or geopolitical issue.
For businesses and common people, it can mean higher fuel cost, delayed cargo, costlier shipping, shortage of inputs, pressure on working capital and uncertainty in export orders,” the finance minister said.
Petrol prices were raised by Rs 2.61 a litre and diesel by Rs 2.71 on Monday, marking the fourth increase in less than two weeks that extended a delayed pass-through of soaring global crude oil costs triggered by the West Asia conflict.
The latest increase brought cumulative hikes since May 15 to nearly Rs 7.50 per litre.
Government’s Protective Measures
She acknowledged that it is a challenge for the small business units to plan for the future, and also added that the crisis, which has been running for over 80 days now is also a challenge for countries, including India.
The government’s approach is focused on protecting citizens, supporting micro, small and medium enterprises, safeguard exporters and keeping supply chains moving and maintaining economic stability, she said.
The minister said the government has taken a series of steps to protect exporters, including the simplification of customs formalities, which ensured that enterprises were able to bring back cargo, reroute them or store and trans-ship the stranded cargo.
