As fuel prices continue to dig into the pockets of all consumers, Dharmendra Pradhan, Union Minister of Oil and Natural Gas, reiterated that gasoline’s upward trajectory is driven by global prices rough.
“There has been a rise in the prices of crude oil in the international market. One of the main reasons for the rise in fuel prices in India is that we have to import 80% of the oil we consume,†Pradhan said Wednesday. .
The minister also launched an attack on the UPA regime led by former Prime Minister Manmohan Singh, saying the previous government had left oil bonds worth crore for repayment.
Bonds, he says, are what the current government has to pay back with interest, resulting in higher oil prices.
“Economists raised a point that Congress left multi-million dollar oil bonds for repayment, due to which we now have to pay both its interest and its principal price, that is also a big reason for the rising fuel prices, â€Pradhan said.
The Minister of Petroleum has repeatedly blamed the price of crude oil in international markets for rising fuel prices in India.
He had previously said that it was up to the GST Council to decide whether fuel should be subject to the goods and services tax, which many believed would bring prices down significantly.
Currently, central and state taxes account for 60% of the retail price of gasoline and over 54% of diesel. Sampling center ₹32.90 per liter of excise duty on gasoline and ₹31.80 per liter in diesel.
In view of this, the government headed by Prime Minister Narendra Modi is under increasing pressure to reduce high taxes on fuel.
The Center has since invoked the instrument of the oil bond to justify its inability to reduce taxes on petroleum products.
“The rise in gasoline and diesel prices is a legacy of the UPA’s mismanagement,” BJP computer chief Amit Malviya said earlier this week.
“We are paying for the oil bonds that will be reimbursed … issued by the UPA to the oil companies so as not to increase retail prices at that time!” He added.
Responding to Malviya’s argument, Congressman Amitabh Dubey said oil bonds cannot be the only reason for the price spike.
“Indians consumed 30 million tonnes of gasoline and 73 million tonnes of diesel, or 14,228 million liters in 2019-2020. ₹20,000 crore bond payment adds to * drum roll * ₹1.40 / liter. Meanwhile, the Modi government increased fuel prices by ₹7 / liter over the past six weeks, â€he wrote on Twitter.
What are oil bonds?
These are special long-term securities issued by the government in lieu of a cash grant. Oil companies collect interest through it, usually over a period of 15 to 20 years.
They are issued if the government risks exceeding the budget deficit target and aims to shift the budgetary burden of such a payment over the coming years.
Gasoline and diesel were sold below the international market price before tariffs were completely deregulated.
To compensate for this, the UPA government issued oil bonds to companies in the amount of ₹1.4 lakh crore between 2005 and 2010.
About ₹10,000 crore of bonds will mature this year. The interest payments on oil bonds each year over the past decade have been around ₹10,000 rupee crores. But the redemption of bonds so far has only been ₹3,500 crore in the last seven years.
Central government revenue from gasoline and diesel taxes and surcharges has exceeded, experts say. ₹3 lakh crore in FY21.
Gasoline Prices Today
According to a price notification by state-owned fuel retailers, a liter of gasoline sells for ₹97.50 in Delhi today, while diesel is priced at ₹88.23.
In Mumbai, the price of gasoline hit a record high of ₹103.63 per liter. Diesel now costs ₹95.72 per liter in the country’s financial capital.
The price of gasoline was ₹98.65 per liter and that of diesel was ₹92.83 per liter in Chennai.
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