4 Key states in India - Tamil Nadu, West Bengal, Assam and Kerala go for polling during April 2026. The two-phase elections will be over by end of April. Results shall be announced on 4 May 2026.
In a recent report, Kotak Corporate, Institutional & Investment Banking projects a steep increase of a Rs 25–28 per litre of petrol and diesel. The crude oil is staying close to USD 120 per barrel and given the situation, the cost of refining and selling fuel far exceeds current retail prices.
India’s Modi Government is funding INR 27,000 cr pm to bridge the gap between crude costs and retail prices, a figure that is simply not sustainable over an extended period.
In the days and weeks to come, expect a raise in transportation expenses, increased delivery charges, and influence demand in sectors like automobiles and rural markets.
To begin with, fruits and vegetables will get more expensive. And disproportionately This will impact what the Indian middle class households will buy; and how the Summer (vacation) of 2026 will unfold at homes.
Eating out will become more expensive, with Restaurants passing over the incremental (procurement and distribution) costs to diners.
Ordering food home will be a lot more expensive - expect additional delivery charges as the Gig workers will require higher incomes to cover higher petrol costs.
With FMCG companies unable to increase distributors and retail margins immediately, the supply chain ecosystem will face a huge short- to mid-term (say 6 months) challenge, until MRP of products is revised in a phased manner ahead of Q3 Festival season.
Vacations would get costlier. A 300-km drive to hometown during May and June will increase the cost of travel will setback the family by (300kms /15 kmpl = 20 litres * INR 25 incremental) INR 500 on an average. Toll rates across India have already been increased on 1 April 2026.
While State Government-led transportation could increase the ticket prices a little, private bus operators will jump in! That means train tickets (for summer travel) would get more scarce, especially Tatkal bookings, even as more families would prefer train travel instead of buses or by taxis or personal vehicles.
Expect a situation where the waiting time for EVs would get longer. Once the prices of fuel go up, more car owners would opt for a new or a second car for the family being an EV; upgrades from hatchbacks will now move towards EVs.
Luxury cars (priced over INR 75 lakhs) & Premium passenger vehicles (priced between INR 30 - 75 lakhs) would upgrade only for a similar sized EV, with their ICE vehicles’ mileage already low and a disproportionate increase in fuel costs.
With a huge round of job losses recently in IT, Banking, FinTech and BPO looming large in India, several lakhs of people will find it difficult to demand an increment in salaries from their employers as part of revision for FY 26-27.
Are we headed for a recession?
Perhaps not immediately.
It would take 3 months for Indians to adjust to the increase in fuel prices, with the already-high gold prices. But the shock will settle down in 4-6 months ahead of the festival season beginning August.
Mind you, however, the fashion industry and Organised Retail - comprising largely apparel, accessories and footwear will take the worst hit over Q2 mostly.
Brace up for a severe turbulence.