ATF Price Stabilisation Fund – Key Cabinet Decisions to Balance Economic Stability, Connectivity and Environmental Goals

ATF Price Stabilisation Fund Latest News

• Amid the ongoing West Asia crisis and unprecedented volatility in global aviation fuel markets, the Union Cabinet has approved a ₹10,000 crore one-time budgetary support mechanism for public sector Oil Marketing Companies (OMCs).
• This aims to stabilise Aviation Turbine Fuel (ATF) prices for Indian airlines. 
• Simultaneously, the Cabinet approved major initiatives for pollution reduction in Delhi-NCR and highway infrastructure development in Odisha and Bihar.

ATF Price Stabilisation Support for Indian Airlines

• Need:
  • The West Asia conflict and disruption of maritime routes, including the Strait of Hormuz, have sharply increased international ATF prices. 
  • For example, jet fuel prices rose from about ₹60.5 per litre (in March, 2026) to ₹142 per litre (in May, 2026)—an increase of nearly 135%.
  • ATF constitutes around 40% of airline operating costs under normal conditions, but its share recently increased to 55–60%, severely affecting airline profitability and operations.
• Key features:
  • Budgetary support: ₹10,000 crore.
  • Beneficiaries: Public sector OMCs to support scheduled Indian airlines.
  • Duration: 36 months (three years).
  • Nature of support: Interest-free advances provided through the Ministry of Petroleum and Natural Gas.
  • Coverage: Applicable only to Indian carriers for both domestic and international operations.
  • Implementation mechanism: Airlines availing the facility must procure ATF exclusively from participating OMCs during the support period.
• Working:
  • A benchmark ATF price will be fixed.
  • Whenever international import-parity prices exceed the benchmark, OMCs will be compensated from the corpus.
  • When fuel prices decline, the excess amount will be recovered from OMCs and returned to the Consolidated Fund of India.
  • The arrangement is designed as a self-sustaining revolving fund, ensuring eventual recovery of government support.
• Monitoring framework: Representatives from the Ministry of Civil Aviation (MoCA), Ministry of Petroleum and Natural Gas (MoPNG), and Department of Expenditure, will oversee claim verification, reconciliation, audits and settlement.

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Significance of the Measure

• For airlines: Provides predictability in fuel costs. Improves operational and financial planning. Helps sustain domestic and international connectivity. Reduces pressure to increase passenger fares.
• For OMCs: Protects them from losses caused by volatile international fuel prices. Supports their financial health at a time when they are already facing under-recoveries in several petroleum products.
• For the economy: Expected to protect approximately 77 lakh jobs linked to the aviation ecosystem. Ensures continuity of air transport, tourism, trade and business travel. Limits inflationary pressure arising from higher airfares.

Challenges in the Aviation Sector

• Indian airlines have been facing multiple disruptions:
  • Sharp rise in global jet fuel prices.
  • Closure of Pakistan’s airspace for Indian carriers.
  • Airspace disruptions in the Gulf region due to the West Asia conflict.
  • Longer flight routes to Europe and North America, resulting in greater fuel consumption and operating costs.
• These factors have particularly affected Air India, which has curtailed both international and domestic flight schedules.

NCR Clean Mobility Scheme

• Objective: The Cabinet approved a scheme (with a financial outlay of ₹9,585 crore, and duration of two years) to support the National Capital Region Planning Board (NCRPB) in replacing older, polluting commercial vehicles in Delhi-NCR.
• Key features:
  • Coverage: Delhi, Haryana, Rajasthan and Uttar Pradesh within the NCR region.
  • Target vehicles: Trucks and buses complying with BS-IV or earlier emission norms.
  • Replacement options: BS-VI compliant vehicles or electric vehicles (EVs).
• Expected outcomes: Replacement of nearly 2 lakh trucks and 16,000 buses. Reduction in particulate matter and vehicular emissions. Promotion of cleaner mobility and accelerated EV adoption. Improvement in regional air quality.

Other Cabinet Decisions

• Coastal highway project in Odisha:
  • Project details: The Cabinet Committee on Economic Affairs (CCEA) approved construction of a new coastal highway connecting Rameshwar and Paradip in Odisha.
• Benefits:
  • Enhanced connectivity to ports and coastal economic zones.
  • Boost to tourism, logistics and regional development.
  • Improved disaster-response and evacuation capability along the coast.
• NH-31 and NH-231 upgradation in Bihar:
  • Project highlights: The CCEA also approved four-laning of the Khagaria–Purnea section of NH-31 and NH-231 to improve connectivity across northern and eastern Bihar.
• Expected benefits:
  • Faster movement of goods and passengers, improved logistics efficiency.
  • Better integration of economic and social centres.
  • Strengthened regional development and market access.

Conclusion

• The Cabinet’s decisions reflect a multi-dimensional policy approach combining economic resilience, infrastructure expansion, energy security, environmental sustainability and employment protection.
• This will also address immediate disruptions caused by global geopolitical instability and advancing long-term developmental goals.

Source: AIR | IE