No excise cut on fuel; Sitharaman blames UPA-era oil bonds
Finance Minister Nirmala Sitharaman on Monday blamed the former Congress-led United Progressive Alliance government for the soaring fuel prices. Sitharaman said the Narendra Modi-government is paying the cost of oil bonds that the UPA government had issued to oil marketing companies (OMCs) in lieu of cash subsidy. Incidentally, petrol prices in India have remained unchanged since touching a record high in July.
Sitharaman made it clear that the government cannot cut the excise duty on petrol and diesel as the Centre needs to clear the past burden of oil bonds. "If I had not incurred the UPA's oil bonds worth over Rs. 1.4 lakh crore, I would have given relief from petroleum prices," she said, "I am paying through my nose for the oil bonds."
The Congress-led UPA government had issued oil bonds to state-owned OMCs to compensate for the difference in artificially-suppressed retail selling prices of the fuel and the cost. The Finance Minister said the current government has been paying these oil bonds and interests thereon.
Sitharaman said the government has paid Rs. 70,195.72 crore in interest to these oil bonds in the last seven years. It still has to pay Rs. 37,000 crore in interest by 2026. "Despite interest payments, principal outstanding of over Rs. 1.30 lakh crore is still pending," she added. She said the Centre and the states will have to work together to find a solution.
Meanwhile, Congress denied allegations that fuel prices are increasing due to bonds. Amitabh Dubey, President of Professionals' Congress, Delhi, pointed out that the BJP government had, in the six weeks between May and June alone, increased fuel prices by Rs. 7/liter. Congress spokesperson Randeep Surjewala also said the Modi government has "extorted Rs. 22,33,868 crore by levying excise on petrol-diesel in last seven years."
On India's economy, the Finance Minister said that there are signs of recovery with higher revenue generation. She said public sector banks (PSBs) have generated profits totaling Rs. 31,000 crore and raised capital amounting to Rs. 58,000 crore. She also said the upcoming festive season is expected to boost demands further, which is necessary for economic recovery.
Further, Sitharaman said she expects retail inflation to be contained between 2-6%, as targeted by the Reserve Bank of India. Notably, retail inflation stood at 5.59% in July after crossing 6% for May and June. On the retrospective tax issue, Sitharaman said rules will be framed soon. She also said the government is working on a cabinet note on cryptocurrency rules and regulations.