Finance Minister Nirmala Sitharaman on Monday ruled out a cut in excise duty on petrol and diesel, PTI reported. She blamed liabilities due to oil bonds issued by the previous Congress-led United Progressive Alliance government for her inability to do so.
“A significant amount is going for interest payment and principal repayment...What unfair burden on me,” Sitharaman told reporters. “...Even if I want to do something I am paying through my nose for the oil bonds.”
Oil bonds are a kind of special securities issued by the government of India to public entities like oil marketing companies, Food Corporation of India and fertiliser companies in lieu of cash subsidies, according to a Reserve Bank of India report.
Sitharaman’s comments on Monday came as petrol and diesel prices have remained unchanged since hitting a record on July 17. Petrol prices breached the Rs 100 per litre-mark in several cities as state-owned oil firms increased fuel prices on 41 occasions since May 4.
On Monday, Sitharaman told reporters that in the financial year 2014-’15, when the Modi government took over, the opening balance of bonds issued by the United Progressive Alliance government under former Prime Minister Manmohan Singh was about Rs 1.34 lakh crore.
The government had to pay Rs 10,255 crore as interest on the bonds that year and has been paying Rs 9,989 crore under that head annually since 2015-’16, the finance minister said. Of the principal amount of the Rs 1.34 lakh crore, only Rs 3,500 crore has been paid so far and the remaining is due for repayment between this financial year and 2025-’26, she added.
Congress spokesperson Randeep Singh Surjewala, however, claimed that oil bonds were not due for payment yet.
“Till April 2021, payment made on Oil Bonds is Rs 3,500 crore only, yet [you] falsely hold UPA responsible!” Surjewala said in a tweet.
The Congress leader also said that the Narendra Modi-led government has “extorted Rs 22,33,868 crore” by levying excise on petrol and diesel in the past seven years. He said that the Union government increased central taxes on petrol and diesel by Rs 23.87 and Rs 28.37 per litre, respectively, in seven years.
Analyses also show that the government is not cash-strapped when it comes to excise duty collection on fuel vis-a-vis repayment of oil bonds.
The government has earned Rs 3.45 lakh crore from excise duties on petrol and diesel in the last financial year, Bloomberg reported, citing a reply from the Centre in the Lok Sabha. Overall excise duty collections in the previous fiscal stood at Rs 3.9 lakh crore, according to data from the Comptroller General of Accounts.
Thus, the excise duty collection in financial year 2020-’21 alone was more than 2.5 times the total outstanding amount to be paid on oil bonds.
Moreover, the excise duty collection on petrol in 2020-’21 jumped over 74% on a year-on-year basis, according to The Indian Express.
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