The Rising Cost of Essentials – A Blow to Household Budgets

On April 8, 2025, Indian families woke up to yet another unwelcome financial jolt: a ₹50 hike in the cost of a 14.2 kg LPG cylinder and a ₹2 increase in excise duties on both petrol and diesel. While these measures have been framed by the central government as necessary to tackle fiscal deficits and offset mounting losses incurred by public sector oil companies, the timing and implications have stirred deep unease. With global crude oil prices on the decline, many expected relief—not additional burdens. Instead, what they received was a policy decision that seems increasingly out of touch with the realities faced by ordinary citizens.

The latest price hike brings the cost of an LPG cylinder to ₹853 for general consumers and ₹553 for beneficiaries of the Ujjwala scheme. At the same time, excise duties on petrol and diesel were raised by ₹2 per litre. Although oil marketing companies have reportedly absorbed the increase to prevent an immediate surge in retail prices, the underlying pressure on the supply chain is undeniable. Eventually, that pressure will be passed on to consumers, one way or another—through transportation, food prices, or service costs.

The government has pointed to substantial under-recoveries—amounting to over ₹41,000 crore in the last fiscal year—as a key reason for these hikes. With global LPG prices (benchmarked against Saudi CP) rising significantly, the Centre argues that it has little choice but to realign domestic prices. Yet, this explanation does not fully stand up to scrutiny. Global crude oil prices have eased considerably, and in a functioning, transparent pricing ecosystem, consumers should benefit from such declines. Instead, they are being asked to tighten their belts further. This raises a fundamental question: are Indian citizens expected to bear the brunt regardless of global trends?

The economic strain on households, particularly in lower- and middle-income brackets, is not hypothetical. For millions of families, cooking gas and fuel are indispensable necessities. A homemaker in Ranchi, Priya Kumari, shared her frustration at how even a ₹50 increase makes it harder to manage monthly budgets, especially when every rupee already counts. For salaried professionals like Samsuddin Firdous, who relies on his scooter to commute to work daily, the increase in excise duties means his monthly expenses are set to rise. Even if pump prices remain stable for now, the cascading effects—higher auto fares, inflated delivery costs, and more expensive groceries—will slowly tighten the noose around household finances.

It is in this context that opposition leaders have stepped in with scathing criticism. West Bengal Chief Minister Mamata Banerjee called the hikes an assault on household budgets, accusing the BJP-led central government of transforming basic necessities into unaffordable luxuries. Congress leaders Rahul Gandhi and Mallikarjun Kharge have raised similar concerns, condemning the move as insensitive and poorly timed. While political reactions are to be expected, they echo a broader sentiment shared by ordinary citizens across the country: that the government is more focused on revenue extraction than on public welfare.

This is not the first time indirect taxation—particularly on fuel—has become a go-to instrument for the Centre. Over the past decade, excise duties on petrol and diesel have risen sharply, turning them into significant revenue sources. However, such reliance on indirect taxes is regressive in nature. It disproportionately impacts the poor and middle class, while the wealthier sections of society remain relatively unscathed. This approach, especially during a period of economic uncertainty and stagnant wages, sends a clear signal: that fiscal consolidation is being prioritized over equitable recovery.

There is no denying that India’s public finances are under strain. Welfare commitments, infrastructure projects, and global uncertainties have made economic management more complex. But the solution cannot lie in placing the burden squarely on the shoulders of the consumer. There are other avenues worth exploring—curbing administrative inefficiencies, rationalizing non-essential expenditures, and even considering more progressive forms of taxation that do not punish necessity consumption. Moreover, the need for a more transparent and responsive pricing mechanism is urgent. If global price benchmarks are invoked as justification for hikes, they must also guide downward adjustments when costs fall. This one-sided policy architecture is both unfair and unsustainable.

The Centre could have adopted a more calibrated approach. Targeted subsidies for the poorest segments could have softened the blow. Enhanced support for Ujjwala scheme beneficiaries—many of whom are already struggling to refill cylinders—would have reaffirmed the government’s commitment to inclusive growth. Even a partial rollback or a phased implementation of excise hikes would have been more palatable. Instead, what we witnessed was a blunt policy move with little concern for its social impact.

At a time when economic recovery is still fragile, employment generation remains inadequate, and inflation continues to worry households, a move of this nature reflects a serious disconnect between fiscal policy and public sentiment. The government cannot afford to ignore this growing frustration. It must recognize that stability in household finances is not merely a social good—it is a necessary condition for sustainable economic growth. When families cut back on essential consumption, the ripple effect extends to businesses, services, and ultimately, GDP growth itself.

In the end, the issue is not merely about ₹50 more for a cylinder or ₹2 extra on fuel. It is about the message it sends: that the common citizen must always bear the brunt, no matter the macroeconomic context. If public confidence in governance is to be preserved, the government must show that it can balance its books without balancing them on the backs of its most vulnerable citizens.

India deserves an economic policy that is not only fiscally sound but also socially compassionate. It is time for the Centre to rethink its approach—to place the needs of its people at the heart of its economic calculus. Only then can we begin to rebuild the public trust that decisions like these continue to erode.