Back'Main reason behind petrol price hike...' oil minister Dharmendra Pradhan explains
The minister launched an attack on the former Prime Minister Manmohan Singh-led UPA regime, stating that the previous government had left oil bonds worth crores for repayment
PremiumAs fuel prices continue to dent the pockets of all consumers, Dharmendra Pradhan, the Union minister of petroleum and natural gas, has reiterated that the upward trajectory witnessed by petrol is due to global crude prices.
"There has been a jump in crude oil prices in the international market. One of the main reasons behind the rise in fuel prices in India is that we have to import 80% of the oil we consume," Pradhan said on Wednesday.
The minister also launched an attack on the former Prime Minister Manmohan Singh-led UPA regime, stating that the previous government had left oil bonds worth crores for repayment.
The bonds, he says, is what the current government has to repay along with its interest, leading to an increase in petrol rates.
"Economists have raised a point that Congress had left oil bonds worth crores for repayment, due to which we've to now pay both its interest and its principal price, this is also a big reason for the rise in fuel prices," said Pradhan.
The oil minister has time and again blamed the price of crude oil in international markets for the hike in fuel rates in India.
He had earlier said that it is up to the GST Council to decide whether the fuel should be brought under the Goods and Services Tax, which, many believe, would substantially bring down the prices.
Currently, the central and state taxes make up for 60% of the retail selling price of petrol and over 54% of diesel. Centre levies ₹32.90 per litre of excise duty on petrol and ₹31.80 a litre on diesel.
In view of this, Prime Minister Narendra Modi-led government is under increasing pressure to cut high taxes on fuel.
The Centre has since cited the instrument of oil bond to justify its inability to reduce taxes on petroleum products.
“The increased prices of petrol and diesel is a legacy of UPA’s mismanagement," BJP’s IT cell chief Amit Malviya had alleged earlier this week.
“We are paying for the oil bonds that will come up for redemption…issued by UPA to oil companies for not increasing retail prices then!" he added.
Replying to Malviya's argument, Congress leader Amitabh Dubey has said that oil bonds cannot be the sole reason for the skyrocketing prices.
"Indians consumed 30 million MT of petrol and 73 MMT of diesel, or 14,228 crore litres in 2019-20. A ₹20,000 crore bond payment adds up to *drumroll* ₹1.40/litre. Meanwhile, the Modi govt has increased fuel prices by ₹7/litre in just the last six weeks," he wrote on Twitter.
What are oil bonds?
These are long-term special securities issued by the government in place of a cash subsidy. Oil companies are paid interest through it, typically over a term of 15-20 years.
They are issued if the government is in danger of breaching the fiscal deficit target and aims to delay the fiscal burden of such a payout to future years.
Petrol and diesel were being sold at lower than the international market price before the complete deregulation of rates.
To compensate for this, the UPA government issued oil bonds to the companies amounting to ₹1.4 lakh crore between 2005 and 2010.
About ₹10,000 crore worth of bonds will mature this year. Interest payment on oil bonds annually over the last decade has been around ₹10,000 crore rupee. But bond redemption so far has been just ₹3,500 crore in the last seven years.
According to experts, the central government’s income from taxes and surcharges on petrol and diesel topped ₹3 lakh crore in FY21.
Petrol prices today
According to a price notification by state-owned fuel retailers, a litre of petrol is retailing at ₹97.50 in Delhi today, while diesel priced at ₹88.23.
In Mumbai, the petrol price hit an all-time high of ₹103.63 a litre. Diesel now costs at ₹95.72 per litre in the financial capital of the country.
The price of petrol was ₹98.65 per litre and that of diesel was ₹92.83 per litre in Chennai.
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