Why did the Modi government increased the fuel prices inspite crude oil prices going down all time low?

This is a golden opportunity on platter for the government to fill up its coffer. It can not let it go. The government is facing huge fiscal deficit because of poor economic condition. India's fiscal deficit in the first 10 months through January stood at Rs 9.85 lakh crore ($137.05 billion), or 128.5% of the revised budgeted target for the current fiscal year. India missed the fiscal deficit target for third year in a row. The shortfall was pushed to 3.8 per cent of the GDP against 3.3 per cent that was previously planned. The last quarter, GDP growth rate reached 4.5 per cent, the lowest in six and a half years. BJP government’s mismanagement has taken a heavy toll on the economy, and we are required to pay higher fuel price in-spite of hefty reduction of crude oil prices. This is price we are paying for the incompetency of the government in financial matters. The nation already facing massive economic slowdown and our unemployment is highest in 45 years.

Govt raises excise duty on petrol, diesel by Rs 3 per litre. Special excise duty on petrol was hiked by Rs 2 to Rs 8 per litre incase of petrol and to Rs 4 incase of diesel, an official notification said. Excise duty on petrol and diesel was on Saturday hiked by Rs 3 per litre as the government looked to mop up gains arising from fall in international oil prices. Additionally, road cess on petrol was raised by Rs 1 per litre each on petrol and diesel to Rs 10.

The government had in July last year raised excise duty and cess on both petrol and diesel by Rs 1 per litre each. Petrol attracts excise duty of Rs 17.98 per litre and diesel Rs 13.83 per litre.

Crude Oil Prices are its lows with Prices almost reduced by over 50% from 65.93$ per Barrel in January 2020 to just 31.49$ per barrel in March 2020 and settling at 36.5$ per barrel on 11th March 2020

As can be seen that even after Depreciating Currency, the Crude Oil Cost is 40% lower in March 2020 than as what was in January 2020. But the Benefits are not what passed on to consumers.

On 14th March 2020 - Excise Duty and Road Cess on Petrol and Diesel was hiked by Rs 3 per Litre, which will indicate that Prices will increase by Rs 3.3 per Litre from 15th March 2020, considering overall impact of Excise and State Government VAT Rates too.

Simplified Calculation Chart for Petrol & Diesel Prices in New Delhi - (as on 12th March 2020)

OMC stands for state owned oil marketing companies. Apart from Crude Oil Rates - There are 2 Important Factors which determine the Fuel Cost - VAT and Excise Duty - which is as below

Moreover The Petrol been Sold in India from End 2017 has 10% of Ethanol been Mixed with Petrol. Been Ethanol. However - the catch is that Ethanol is priced at just Rs 47.89 per Litre, but is mixed in Petrol and sold at combined rate of petrol. Under the Ethanol Blending Programme, the Centre has asked oil marketing companies (OMCs) to target 10 per cent blending of ethanol with petrol by 2022.