Global crude prices may have crashed to historic levels but Indians may not benefit directly from this.

Brent crude prices, the international benchmark, fell to a historic low of $16 per barrel on April 22. It has fallen 39% so far in the month. Petrol prices in India, meanwhile, have remained flat, at Rs 76.31 or $1 a litre in Mumbai in April. Diesel prices in the city, too, were unchanged at Rs 66.21 or $0.87s.

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While Brent crude prices have been on a downward trend since January, the Narendra Modi government has only sought to maximise the windfall.

On March 14, it increased the excise duty on petrol and diesel by a maximum permissible Rs 3 per litre each to shore up an additional Rs 39,000 crore. In the following week, the government passed an amendment to India’s finance bill, giving it powers to increase the excise duty by an additional Rs 8 per litre in future.

Here’s why the government isn’t passing on the benefits of inexpensive crude oil.

Fiscal trouble

The government of India’s fiscal condition is unenviable.

The finance ministry was looking to bring down the fiscal deficit – the difference between the government’s income and expenditure – to 3.5% of GDP this financial year. With the economy coming to a virtual standstill under the coronavirus lockdown, this target may be missed by a wide margin, especially with revenues dropping and the government spending more on stimulus packages.

In a report dated April 13, Mumbai-based brokerage Motilal Oswal estimated that fiscal deficit will widen to 7% of GDP this financial year.

“The centre’s fiscal [situation] remains stretched due to the economic slowdown triggered by Covid-19. Hence, they will try to make up for the revenue shortfall by increasing tariffs on oil. The [retail] price of petrol and diesel won’t reduce by a large margin,” Somnath Mukherjee, head of investment strategy at ASK Wealth Advisors, told Quartz.

Tepid demand

The demand for fuel itself is tepid now, limiting the tax mopped up from its sales.

A dramatic fall in prices won’t push people to consume more oil, says Mukherjee. “The demand for fuel products is low as global growth will remain subdued for an extended period. The level of oil demand is a measure of economic activity,” he said.

The transport sector has frozen and is unlikely to return to normal anytime soon. Airlines, which are the major oil consumers, are grounded. Together, all these will ensure that demand remains low, if not nil, over the next few months, said Mumbai-based ratings agency CARE Ratings in a note on April 21.

Fall in rupee

The recent depreciation of the rupee will result in a higher oil import bill, offsetting some of the gains from falling crude. Since the start of January, the rupee has fallen by 7% and currently trades at Rs 76.67 per dollar. It had hit a record low of Rs 76.92 per dollar yesterday.

Analysts believe the rupee could depreciate to as much as Rs 80 per dollar. “If coronavirus induced disruptions exacerbate, amid fiscal concerns, we may see another 3%-4% fall in rupee,” said IFA Global in a recent note.

Disinvestment dent

The volatility in the Brent crude market is a bane for India’s oil marketting companies. “The decline in crude prices will impact earnings of [oil marketting companies] as they would be sitting on huge inventory losses,” says a Motilal Oswal report dated April 20.

Oil marketting companies suffer losses in a falling oil market when they buy Brent crude at a certain price and by the time it is shipped for refining, it loses value.

This is something the Modi government can ill-afford when it is looking to divest its 53.29% stake in Bharat Petroleum Corporation. The government expects to mop up around Rs 60,000 crore from the sale. This is a significant share of its Rs 2.1 lakh crore divestment target for financial year 2021.

The disinvestment plans of oil marketting majors will remain hampered until the prospects of the industry improve, according to CARE Ratings.

This article first appeared on Quartz.