ECONOMY
Surging oil and gas prices set to disrupt Centre’s FY27 fiscal maths: ICRA
- IBJ Bureau
- Mar 27, 2026
A sharp surge in crude oil and natural gas prices due to the ongoing West Asia conflict is emerging as a key risk to the Centre’s fiscal calculations for FY27. This will potentially strain both revenue and expenditure, notes rating agency ICRA.
With crude oil prices more than doubling from pre-crisis levels amid supply disruptions and shipping constraints, the government faces the prospect of a higher subsidy burden.
“Escalation of the West Asia conflict and the consequent upward pressure on fertiliser input costs is (sic) likely to push up the fertiliser subsidy requirement by around Rs 40,000 crore in FY27 compared to the BE of Rs 1.7 lakh crore,” according to ICRA’s estimates.
LPG under-recoveries are estimated to rise to around Rs 20,000 crore in FY27 (assuming average crude oil price at $85/barrel), amid severe supply shortages, owing to the West Asia conflict and the consequent increase in international LPG prices. This would exert pressure on the fuel subsidy bill (FY27 BE: Rs 12,100 crore), it has added.
If crude oil prices remain high, the Centre may consider cutting the Excise Duty rates on petrol and diesel to keep retail prices of auto fuels at the existing levels, partly compensating OMCs for refining losses.
Report By
View Reporter News