Oppn rebuts FinMin on cost of UPA oil bonds

Interest on bonds just 3.2% of taxes collected on petroleum products, says Congress

The Congress and the Left on Tuesday reacted sharply to Union Finance Minister Nirmala Sitharaman’s assertion that it is difficult to reduce fuel taxes as the government has to foot the bill for oil bonds issued by the UPA, with former finance minister P. Chidambaram calling the argument ‘incredible ignorance at best and motivated malignity at the worst’.

“The FM’s statement that servicing oil bonds stands in the way of giving relief on petrol and diesel prices is astonishing,” Mr. Chidambaram said, adding the NDA has no right to comment on the fuel subsidy after ‘profiting several times over through exorbitant taxes and cesses on fuel’.

“The people know that UPA gave them relief and the NDA is crushing them through oppressive taxes and cesses,” he said, pointing out that the UPA government’s decision to subsidise fuel prices through borrowings, directly or through oil companies as a surrogate of the Central government, was known to every analyst and lender, and was ‘mentally added’ to the fiscal deficit at the time.

“In either case, servicing the loan (interest) would be the responsibility of the Central government,” Mr. Chidambaram said.

In Coimbatore, CPI (M) general secretary Sitaram Yechury criticised Ms Sitharaman’s comments and demanded a ‘complete’ withdrawal of the hikes in excise duty to contain inflation.

“In the last seven years, the Modi government made ₹15.6 lakh crore from these hikes in excise duty,” he said, terming them “the actual reason” behind the increase in fuel prices.

Earlier on Tuesday, Congress general secretary Ajay Maken said the Narendra Modi government is ‘fleecing’ the common people to make up for shortfalls in corporate tax collections due to the tax rate cuts announced in September 2019. He pointed out that the spending on the servicing of UPA-era oil bonds was merely 3.2% of the taxes collected on petroleum products.

Countering Ms. Sitharaman’s claim that high fuel prices are a legacy of UPA era oil bonds, the party claimed that spending on servicing of oil bonds is merely 3.2% of the tax collection from petroleum products. The government’s liability in 2021-22 on account of the oil bonds is ₹20,000 crore, but at the current rate, the Centre is expected to collect ₹5 lakh crore from taxes on petroleum products in this year, Mr. Maken said.

“We are not against providing any relief to the corporate sector since it has an important role in nation building but we are against fleecing the poor, the farmers and common people to compensate for fall in cross tax revenue from the corporate sector,” he said.

The Congress said the benefit of reduced international crude oil prices should be passed on to consumers by lowering the rates of petrol, diesel and cooking gas, bring petroleum products under brought under the GST and immediately roll back the excise duty hiked on petrol and diesel.

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