New Delhi, [India] June 9 (ANI): The government extended financial support of approximately Rs 1.23 lakh crore to Oil Marketing Companies to cushion under-recoveries caused by the West Asia conflict and shield consumers from rising crude oil prices.

Government sources told ANI that the support was extended for the initial 78 days of the conflict and includes excise duty cuts.

The sources said the under-recoveries of Oil Marketing Companies continue to remain 'at a high level of 652 crores per day following the increase in import of crude oil and gas.

The daily burn has kept pressure on OMC margins as global crude prices stayed elevated through the conflict period.

The financial package for OMCs was aimed at preventing immediate fuel price hikes for retail consumers. By absorbing part of the cost through budgetary support and duty adjustments, the government sought to manage inflationary impact while oil imports remained high, the sources said.

On the fertilizer front, government sources said the market is going to be very stressed, with the fertilizer pool narrowing and prices going up. 'Don't see fertilizer prices coming down,' a source added.

To address the strain, the Fertilizer ministry has sought a 100% hike in subsidy allocation against the budgetary allocation of Rs 1.77 lakh crore for the current fiscal. Higher global gas and raw material costs have squeezed margins and have also limited availability of key nutrients.

Gold imports have seen a reduction with sources attributing it to the higher import duty imposed earlier.

The duty hike has cooled the demand and narrowed the trade deficit impact from the yellow metal.

On the disinvestment plans, government sources confirmed that the disinvestment of IDBI Bank will happen. 'Process is on, IDBI disinvestment will happen for sure,' sources said. The transaction remains a key item in the government's divestment pipeline for FY27.

Despite global headwinds, government sources said growth of the economy is not under stress. High-frequency indicators show domestic demand continues to support activity. Consumption, services and infrastructure spending are holding up, providing resilience against external volatility from oil and fertilizer markets. (ANI)