NEW DELHI: The government has once again blamed the United Progressive Alliance (UPA) government’s oil bonds for higher prices of petrol and diesel. “Narendra Modi government is paying the price of UPA-era subsidies on petroleum goods,” said Finance Minister Nirmala Sithraman when asked if the government is planning to cut excise duty on petrol and diesel.
The finance minister said that the Narendra Modi government has so far paid Rs 60,205 crore in interest on oil bonds issued by UPA prior to 2014, and the total principal outstanding is Rs 1.31 lakh crore which has to be repaid by 2025-26. According to the finance ministry, an additional Rs 37,340 crore in interest will have to be paid between 2021-22 and 2025-26.
The government will have to repay the outstanding principal of Rs 1.31 lakh crore in four tranches beginning this financial year when it will have to repay Rs 10,000 crore. The UPA government had between 2005 and 2010 issued oil bonds worth Rs 1.44 lakh crore to oil marketing companies for the under-recoveries by the latter owing to subsidies given on petrol and diesel prices. These bonds were has maturity of 15-20 years. The finance minister, who was addressing the media in Delhi on Monday, remained non-committal on the question of likely cut in excise duty on petroleum products.
Referring to the Tamil Nadu government’s recent move to cut taxes on petrol and diesel by Rs 3 a litre, she said states which had earlier hiked taxes by Rs 7 are now cutting it by Rs 3. Taking a dig at the white paper released by the Tamil Nadu government on the fiscal situation of the state under previous AIADMK government, the finance minister said that Modi government in 2014 should also have released a similar white paper on the fiscal situation of the country under the UPA government.
Central and state taxes account for 50-55% of the price of petrol and diesel. In some states it could be higher. The Centre’s collection from excise duty on petroleum products has doubled from Rs 1.78 lakh crore in 2015-16 to Rs 3.71 lakh crore in 2020-21. During the same time states collection from VAT/sales tax on petroleum products have increased from Rs 1.43 lakh crore to Rs 2.03 lakh crore.
Petrol in most states is priced at over Rs 100 a litre, while in some states like MP and Rajasthan, prices have crossed Rs 110-mark. Diesel prices have breached Rs 90-mark in most states.
Meanwhile, the finance minister has rejected the oppositions’ allegation that the government has pushed through most of the impost bills without any debate. She said that she wanted to have debates on most of the bills related to finance ministry, but barring a few members none of the members from opposition participated in the debates.