Whereas Prime Minister Narendra Modi’s authorities faces rising clamour to rein in rising petrol and diesel costs by slicing taxes, the explanation for it not yielding to the demand will be traced again to the early 2000’s. The current and the subsequent governments have a invoice value Rs 1.3 lakh crore to pay, because of the then governments’ largesse of retaining petrol and diesel costs in test.
Of late, retail gas costs hit over Rs 100 per litre in lots of states, together with nationwide capital Delhi. Notably, numerous central and state taxes make up for as much as 60 per cent of gas costs. The central authorities mopped up Rs 3.72 lakh crore in excise responsibility on crude oil and petroleum merchandise within the final monetary 12 months 2020-21; whereas the state governments collected Rs 2.03 lakh crore in gross sales tax and VAT on petrol and diesel. Alternatively, the federal government has to pay in the direction of the redemption of excellent oil bonds value over a lakh crore rupees.
What are oil bonds? Why did governments problem?
Oil bonds have been issued in lieu of money subsidy to grease advertising corporations (OMCs) in former Prime Minister Manmohan Singh’s UPA period, and in addition Atal Bihari Vajpayee’s NDA rule. These sovereign oil bonds, issued in favour of oil corporations Indian Oil Corp, HPCL and BPCL, have been transferable, permitting these corporations to boost quick money on the time. The federal government, being the issuer, would bear the curiosity funds and redemption at maturity. Throughout that point, OMCs have been promoting gas at decrease than worldwide market costs to maintain it inexpensive. The federal government compensated these corporations for it.
The federal government has a legal responsibility to pay Rs 20,000 crore within the present fiscal 12 months 2021-22 within the type of bond compensation and curiosity on the excellent oil bonds. Whereas 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 Cupboard reshuffle) blamed the UPA regime for issuing oil bonds, saying that that is the primary motive behind the hike in gas 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 satisfy the home wants, India has to import 80 per cent oil, which is the primary motive for the rise in petrol, diesel costs.
Final 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’re paying for the oil bonds that may come up for redemption beginning FY2021 until (2026), which have been issued by UPA to grease corporations for not growing retail costs then! Unhealthy economics, unhealthy politics,” part of the tweet learn.
Complete oil bonds payout stands at Rs 1.30 lakh crore
Within the 2021-22 receipt funds, as per annexure 6E titled ‘Particular Securities Issued to Oil Advertising Firms In Lieu Of Money Subsidy’, pending liabilities associated to grease bonds have been Rs 1,30,923.17 crore. This implies 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. Throughout 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. In accordance with 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’s possible that the federal government can pay an analogous quantity of curiosity for excellent bonds for the present fiscal as properly. So, the full bond compensation 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
Nevertheless, oil bonds have been issued not solely by the UPA authorities but in addition by Atal Bihari Vajpayee-led NDA authorities. In accordance with the funds speech of 2002-03, the then Finance Minister Yashwant Sinha mentioned that the federal government would problem oil bonds. “The Oil Pool Account will likely be dismantled on April 1, 2002, and the excellent balances will likely be liquidated by problem of oil bonds to the involved oil corporations.”
*First revealed on www.financialexpress.com on Saturday, July 10, 2021