When global crude oil turns negative — as it did in March–May 2020, for the first time in recorded history — the logical expectation is simple: cheaper fuel at the pump. Instead, India's central government raised excise duty by ₹10 per litre. Revenue collections from petroleum that fiscal year hit ₹4,55,000 crore, a record high. The common citizen did not get cheaper petrol.
The middle class is not just paying for petrol it is paying for every political decision that was deferred disguised or denied
The state got richer. This is the transaction that keeps repeating, and the one that no prime-time debate will name directly. The Prime Minister's recent appeal for "tapasya" — austerity — was addressed to ordinary Indians. Drive less.
Use public transport. Cut foreign travel. Don't buy gold. These are the instructions handed down as economic wisdom.
But what goes unsaid is this: at the very moment citizens are told to conserve, India's three largest state oil marketing companies — IOC, BPCL, and HPCL — reported a combined profit of approximately ₹76,000 crore in 2026. If the system is under such strain, whose books are recording the surplus? "The middle class is not just paying for petrol. It is paying for every political decision that was deferred, disguised, or denied."
To understand how we arrived here, the money trail begins with UPA-era oil bonds — ₹1. 34 to ₹1. 44 lakh crore issued between 2005 and 2010, documented in Ministry of Finance records and CAG reports. Facing rising global crude prices, the Manmohan Singh government chose not to pass costs to consumers.
Instead, it handed oil companies not cash but paper — bonds promising repayment in 15 to 20 years, with interest until then. A deferred payment. A fiscal time bomb, as it has since been called. The NDA government that followed inherited those bonds and — legitimately — pointed to them as justification for keeping excise duty elevated.
Repaying UPA's obligations was real. The fiscal burden was real. But here is where the argument starts to crack: in the financial year 2021 alone, the central government collected ₹4,55,000 crore from petroleum excise duty. The total outstanding oil bonds peaked at ₹1,44,000 crore.
In a single year, the state collected more than three times the entire bond liability. So why did fuel prices not fall when the bonds were cleared? "Cheap crude globally should have meant relief domestically. It didn't — because the savings were captured by the state, not passed to the citizen."
The Russia discount makes this contradiction sharper. In 2025, India sourced approximately 40% of its total crude imports from Russia — at heavily discounted prices, a windfall by any measure. Consumer prices did not adjust downward. When crude was cheap, taxes went up.
When crude became expensive, prices went up too. The common citizen, the middle-class household, the transporter hauling goods across state highways — they absorbed the shock both ways. This is not market volatility. This is a system design.
The geometry of this system has three vertices: the government, the oil marketing companies, and the citizen. The government freezes prices before elections, adjusts them after. It compensates the OMCs through bonds and selective duty cuts. The OMCs report under-recoveries when convenient, then post record profits when the cycle turns.
And citizens? They are told the infrastructure being built with their fuel taxes justifies the arrangement. What they are not told is that Parliament's own standing committee could not complete a full audit of how the Road and Infrastructure Cess — levied on every litre — was actually spent. The money went "partially to roads, partially to the consolidated fund," according to CAG findings.
Partially. The austerity appeal also collapses under scrutiny of what it asks versus what it ignores. Foreign travel, the Prime Minister suggests, should be reduced. But what fraction of India's 1.
4 billion people travel abroad? The question that doesn't follow is: why does India's strategic petroleum reserve cover only 9 to 10 days of consumption, when the International Energy Agency standard is 90 days? RTI responses from the Ministry of Petroleum confirmed the reserve's inadequacy. The government knew this in 2015, when it publicly committed to reducing import dependence from 85% to 67%.
A decade later, import dependence remains above 85%. When the Strait of Hormuz — through which 21% of the world's oil transits — faces disruption, Delhi shakes. The answer offered is: drive less. "When the system fails, blame individual behaviour.
That is the oldest political manoeuvre, and it is happening again." There is a psychological principle at work here that deserves to be named: attribution error. Structural failures — under-investment in public transport, an inadequate strategic reserve, a decade of opaque fuel taxation — are reframed as failures of individual discipline. You drove too much.
You bought too much gold. You travelled. The citizen is handed responsibility for a crisis that was built, maintained, and profited from by the very institutions now preaching restraint. Moody's has revised India's growth forecast down to 6%, a number that carries weight for anyone whose employment depends on a growing economy.
At the same time, state resources are being committed to high-visibility diplomatic circuits — visits to the Netherlands and Norway, deal-making with Tata and ASML. These are not frivolous; strategic partnerships matter. But the contrast is worth sitting with: austerity for the household at the pump, ambition on the global stage. Who exactly is being asked to tighten their belt, and for whose future?
Every litre of petrol sold in India carries within it multiple stories compressed into a price: the UPA bonds that were a political convenience then, the NDA taxes that became a political convenience now, the OMC balance sheets that socialise losses and privatise profits, and the citizen's story — the one written in silence, at every fuel station, every morning. The numbers are public. The decisions are documented. What India is still waiting for is an accounting that does not stop halfway.
