Union Cabinet Approves Rs 20,000 Crore Plan for Jet Fuel Price Support and Cleaner Vehicles

On 3 June 2026, the Union Cabinet, headed by the Prime Minister, approved two big spending plans worth close to Rs 20,000 crore. The first is a Rs 10,000 crore fund to keep jet fuel prices steady for Indian airlines, and the second is a Rs 9,585 crore scheme to put cleaner vehicles on the roads of the Delhi-NCR region. The decisions were taken to protect the economy from the effects of the conflict in West Asia, which has pushed global fuel prices sharply higher.

The fuel support fund for aviation is called a Price Stabilisation Fund (PSF). Under it, the government will give interest-free advances to oil marketing companies so that they can sell aviation turbine fuel (ATF) to airlines at stable prices. International ATF prices jumped from about Rs 60.5 a litre in March 2026 to about Rs 142 a litre in May 2026. The government has fixed a benchmark of Rs 75.6 a litre for domestic flights; whenever world prices cross this level, the oil companies will be paid for their losses. When prices fall again, this money will be recovered from the oil companies and returned to the Consolidated Fund of India. The scheme is funded from the Economic Stabilisation Fund, which was set up in March 2026 with an opening corpus of Rs 57,381 crore. It is open to all willing Indian airlines for both domestic and international flights, and participating airlines will buy ATF only from oil companies for up to 36 months, with a yearly review.

Jet fuel is the single largest cost for airlines, making up nearly 40 per cent of operating expenses and rising to as much as 60 per cent during sharp price swings. The fund is meant to stop these fuel shocks from being passed on to passengers as sudden fare hikes, while also shielding airlines and oil companies. Major carriers welcomed the move, saying it gives much-needed support to the aviation sector and helps keep flight connectivity and airfares more predictable. The relief is expected to help linked activities too, including airports, aircraft maintenance, travel agencies, hospitality and the regional connectivity served by the UDAN scheme.

The second decision, the clean transport scheme for Delhi-NCR, aims to cut vehicle pollution by replacing old commercial vehicles with BS-VI compliant or electric vehicles. It will benefit about 2.07 lakh vehicle owners, including roughly 1.91 lakh trucks and over 16,000 buses, across Delhi, Haryana, Rajasthan and Uttar Pradesh. Of the Rs 9,585 crore total, Rs 5,041 crore will come from the central government, with the rest from state tax concessions and discounts offered by vehicle makers. Owners will get a 5 per cent interest subsidy on vehicle loans for five years, monthly fuel vouchers of up to Rs 4,800, and waivers on registration fees and motor vehicle tax. The same Cabinet meeting, through the Cabinet Committee on Economic Affairs, also cleared highway projects worth over Rs 24,000 crore in Odisha, Bihar, Telangana and Madhya Pradesh.

For exam aspirants, this story links several key ideas: how the government uses a stabilisation fund to manage price volatility, the role of oil marketing companies and the Consolidated Fund of India, and the policy push for cleaner BS-VI and electric vehicles to fight air pollution. It also shows how external events like the West Asia conflict feed directly into India's inflation, oil imports and fiscal planning.