On Monday, Finance Minister Nirmala Sitharaman ruled out lowering excise duties on petrol and diesel to help down prices, which have reached all-time highs, claiming that payments in replacement of formerly subsidised fuel are limited.
During the previous Congress-led UPA administration, petrol and diesel, also the cooking gas and kerosene, were supplied at subsidised prices.
The prices of petrol and diesel across the country have almost touched the number of Rs 100, becoming heavy on the pockets of the common man.
The cost has risen due to international prices surpassing USD 100 per barrel, and instead of paying for the subsidy to raise the artificially suppressed retail selling price, the government oped to issue oil bonds to state-fuel merchants totalling Rs 1.34 lakh crore.
These oil bonds and the interest on them are now being paid.
“If I did not have the burden to service the oil bonds, I would have been in a position to reduce excise duty on fuel,” FM Sitharaman told reporters here. “Previous government have made our job difficult by issuing oil bonds. Even if I want to do something I am paying through my nose for the oil bonds.”
As reported by PTI, Sitharaman had said that, in the last 7 years, the interest on oil bonds paid totalled Rs 70,195.72 crore.
Only Rs 3,500 crore of the Rs 1.34 lakh crore in oil bonds has been paid in principle, she added, with the remaining Rs 1.3 lakh crore yet to be repaid between this fiscal and 2025-26.
This fiscal year, the government must repay Rs 10,000 crore (2021-22).
In 2023-24, another Rs 31,150 crore is expected to be returned, followed by Rs 52,860.17 crore in 2024-25 and Rs 36,913 crore in 2025-26.
“A significant amount is going for interest payment and principal repayment. What unfair burden on me,” she said.
“Opening balance in 2014-15 was about Rs 1.34 lakh crore and interest repayment was Rs 10,255 crore. Since 2015-16, the interest burden each year is Rs 9,989 crore”, FM Sitharaman said.
The revenue generated by the increase in excise duty significantly exceeds the amount owed to oil corporations.
According to Sitharaman, the Centre has not dismissed the possibility of including petroleum items under the Goods and Services Tax (GST) regime.
“Whenever states agree on this, it can be brought under the GST.”Inclusion under GST would mean subsuming excise duty and VAT (levied by states) into one tax. This would help contain the cascading impact of tax-on-tax (VAT being levied on excise duty).