Even as petrol and diesel costs in India have not been revised by OMCs for the last one month, more than half the nation has petrol at more than Rs one hundred-a-litre mark. Finance Minister Nirmala Sitharaman clearly stated that there will be no reduce in excise duty on fuel as of now, saying the government has to spend for the oil bonds issued by the UPA government in the previous. “I can’t go by the trickery that was played by the previous UPA government. Due to oil bonds, the burden has come to our government, that’s why we are unable to reduce prices of petrol and diesel,” FM Sitharaman stated, blaming the earlier Manmohan Singh-led UPA government.
The earlier government had issued oil bonds worth Rs 1.34 lakh crore to the OMCs, of which only Rs 3,500 crore of principal had been paid. While for the next six years, the government has a total debt obligation worth Rs 1.30 lakh crore. FM Sitharaman stated that the government has paid more than Rs 70,195.72 crore in interest on these bonds in the last seven years.
The government has to repay Rs 10,000 crore in the present fiscal year, a different Rs 31,150 crore in 2023-24, Rs 52,860.17 crore in the following year and Rs 36,913 crore in 2025-26. “A significant amount is going for interest payment and principal repayment. What an unfair burden on me,” FM stated.
What are oil bonds?
Oil bonds had been issued in lieu of money subsidy to oil marketing and advertising corporations (OMCs) in former Prime Minister Manmohan Singh’s UPA era, and also Atal Bihari Vajpayee’s NDA rule. These sovereign oil bonds, issued in favour of oil corporations Indian Oil Corporation, HPCL and BPCL, had been transferable, enabling these corporations to raise quick money at the time. The government, being the issuer, would bear the interest payments and redemption at maturity. The government has a liability to spend Rs 20,000 crore in the present fiscal year 2021-22 in the type of bond repayment and interest on the outstanding oil bonds.
Also study: Why govt is not cutting petrol, diesel costs Rs 1.3 lakh cr oil bond repayments due for low-priced fuel in previous
Meanwhile, the government’s tax collections on petrol and diesel surged 88 per cent to Rs 3.35 lakh crore in the year to March 31, 2021, from Rs 1.78 lakh crore a year back. Excise collection in pre-pandemic 2018-19 was Rs 2.13 lakh crore.