While Prime Minister Narendra Modi’s authorities faces rising clamour to rein in rising petrol and diesel costs by reducing taxes, the explanation for it not yielding to the demand may be traced again to the early 2000’s. The current and the subsequent governments have a invoice value Rs 1.Three lakh crore to pay, due to the then governments’ largesse of preserving petrol and diesel costs in examine.
Of late, retail gasoline costs hit over Rs 100 per litre in lots of states, together with nationwide capital Delhi. Notably, varied central and state taxes make up for as much as 60 per cent of gasoline costs. However, the federal government is ostensibly utilizing this tax to mop up cash for fee of dues in direction of redemption of oil bonds value over a lakh crore rupees.
What are oil bonds? Why did governments difficulty?
Oil bonds had been issued in lieu of money subsidy to grease advertising and marketing firms (OMCs) in former Prime Minister Manmohan Singh’s UPA period, and likewise Atal Bihari Vajpayee’s NDA rule. These sovereign oil bonds, issued in favour of oil firms Indian Oil Corp, HPCL and BPCL, had been transferable, permitting these firms to lift quick money on the time. The authorities, being the issuer, would bear the curiosity funds and redemption at maturity. During that point, OMCs had been promoting gasoline at decrease than worldwide market costs to maintain it reasonably priced. The authorities compensated these firms for it.
The authorities has a legal responsibility to pay Rs 20,000 crore within the present fiscal yr 2021-22 within the type of bond reimbursement and curiosity on the excellent oil bonds. While for the subsequent six years, the federal government has a complete debt obligation value Rs 1.30 lakh crore.
Union Petroleum Minister Dharmendra Pradhan (earlier than the latest Cabinet reshuffle) blamed the UPA regime for issuing oil bonds, saying that that is the primary purpose behind the hike in gasoline costs. He mentioned that the Congress-led UPA, left lakhs of crores dues which the Modi authorities has to pay within the coming years. He additionally said that there was an increase within the costs of crude oil within the worldwide market. To fulfill the home wants, India has to import 80 per cent oil, which is the primary purpose for the rise in petrol, diesel costs.
Last month, Amit Malviya, nationwide president of the IT cell of the BJP, in a tweet mentioned that the rise in petrol and diesel costs has been a legacy of UPA’s mismanagement. “We are paying for the oil bonds that will come up for redemption starting FY2021 till (2026), which were issued by UPA to oil companies for not increasing retail prices then! Bad economics, bad politics,” part of the tweet learn.
Total oil bonds payout stands at Rs 1.30 lakh crore
In the 2021-22 receipt funds, as per annexure 6E titled ‘Special Securities Issued to Oil Marketing Companies In Lieu Of Cash Subsidy’, pending liabilities associated to grease bonds had been Rs 1,30,923.17 crore. This means an quantity of Rs 1,30,923.17 crore was the full worth of pending oil bonds by the tip of 2020-21.
Narendra Modi’s NDA authorities first got here into energy in 2014. During its regime, two tranches of bonds, value Rs 1,750, every (Rs 3,500 crore), matured in 2015.
Two oil bonds maturing this fiscal; Modi govt to pay Rs 20,000 cr
In 2019, Narendra Modi’s NDA authorities got here into energy for the second consecutive time. According to the funds paperwork, oil bonds value Rs 41,150 crore are due for maturity between 2019-2024. In 2018, Union Petroleum Minister Dharmendra Pradhan mentioned that the federal government has paid round Rs 10,000 crore yearly as curiosity over the past decade. It is probably going that the federal government can pay an analogous quantity of curiosity for excellent bonds for the present fiscal as effectively. So, the full bond reimbursement and curiosity on the excellent oil bonds stands round Rs 20,000 crore for the present fiscal.
Not simply UPA, however Atal Bihari Vajpayee-led govt additionally issued
However, oil bonds had been issued not solely by the UPA authorities but in addition by Atal Bihari Vajpayee-led NDA authorities. According to the funds speech of 2002-03, the then Finance Minister Yashwant Sinha mentioned that the federal government would difficulty oil bonds. “The Oil Pool Account will be dismantled on April 1, 2002, and the outstanding balances will be liquidated by issue of oil bonds to the concerned oil companies”