NEW DELHI — Reserve Bank of India Governor Sanjay Malhotra said India may have to raise petrol and diesel prices if the conflict in the Middle East continues to drive up global crude oil costs.
Malhotra said rising energy prices linked to the Iran war are testing India’s flexible inflation-targeting framework and could require policy action by the central bank. The RBI’s next monetary policy meeting is scheduled for June 5, when it will decide on key interest rates.
The governor indicated that an increase in retail fuel prices would be “a matter of time” if the West Asia crisis persists, warning that higher petrol and diesel prices would push up transportation costs and add to inflationary pressure.
At its April 2026 meeting, the RBI’s Monetary Policy Committee unanimously voted to keep the repo rate unchanged at 5.25% and maintained a neutral stance. The decision reflected a wait-and-watch approach as the central bank seeks to balance strong domestic growth with inflation risks from global uncertainty.
“We are being more and more data dependent. The RBI is being flexible in its approach and is ready to look through the shock if it is transitory, but if it is entrenched, we need to take action,” Malhotra said Tuesday at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland.
Malhotra said excise duties had been reduced while public-sector oil companies were absorbing the increase in global crude prices during the continuing Middle East conflict.
Petroleum Minister Hardeep Singh Puri has said India has adequate stocks of petrol, diesel and LPG, but he also indicated that prices may need to rise because state-run oil marketing companies are facing heavy losses.
Puri said public-sector oil marketing companies are losing nearly Rs 1,000 crore per day because domestic fuel prices have not been raised despite a sharp increase in international crude prices, which have crossed $100 per barrel.
India imports about 88% of its crude oil requirement, making the country highly exposed to global price swings. Any increase in crude prices raises the cost of producing petrol, diesel and LPG.
According to Puri, under-recoveries have reached Rs 1.98 lakh crore, while losses for the current June quarter stand at nearly Rs 1 lakh crore.
Puri said oil companies have increased LPG production to 55,000 to 56,000 tonnes from about 35,000 tonnes earlier to ensure uninterrupted supply. He also said India currently has crude stocks equal to about 76 days of demand. (Source: IANS)
