Even as petrol and diesel prices in India have not been revised by OMCs for the last one month, more than half the country has petrol at over Rs 100-a-litre mark. Finance Minister Nirmala Sitharaman clearly stated that there will be no cut in excise duty on fuel as of now, saying the government has to pay for the oil bonds issued by the UPA government in the past. “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 said, blaming the previous Manmohan Singh-led UPA government.
The previous 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 said that the government has paid over 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 current fiscal year, another 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 said.
What are oil bonds?
Oil bonds were issued in lieu of cash subsidy to oil marketing companies (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 companies Indian Oil Corporation, HPCL and BPCL, were transferable, allowing these companies to raise immediate cash at the time. The government, being the issuer, would bear the interest payments and redemption at maturity. The government has a liability to pay Rs 20,000 crore in the current fiscal year 2021-22 in the form of bond repayment and interest on the outstanding oil bonds.
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.