New Delhi: The Narendra Modi government should have released a white paper on government finances when it came to power in 2014 to show what it inherited from the Congress-led United Progressive Alliance (UPA) government, Finance Minister Nirmala Sitharaman said Monday.
The white paper would have “revealed” a lot, she said in a press briefing, referring to the issuance of oil bonds by the UPA.
The UPA had issued oil bonds between 2005 and 2010 to compensate oil market companies (OMCs) for the losses incurred by them for selling petrol and diesel domestically at prices below the international selling price.
These bonds were special securities issued by the government to OMCs and had a tenor of around 15 years.
The UPA government issued oil bonds to OMCs amounting to Rs 1.4 lakh crore at a time when international crude prices had crossed $100 a barrel.
This was a departure from the practice of providing cash subsidies to these firms for the losses incurred by them from the Union budget, and was used to artificially lower the fiscal deficit.
“This government of PM Modi is paying for the fuel price reduction done by the previous government,” Sitharaman said, pointing out that so far an interest of more than Rs 70,000 crore has been paid on these bonds with the remaining interest till 2025-26 amounting to Rs 37,340 crore.
“Nearly one lakh crore is just the interest payout,” she said.
The finance minister further said that the outstanding principal amount of these bonds as of 31 March 2021 was Rs 1.31 lakh crore.
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Modi govt to follow DMK’s footsteps? No, hints FM
Asked whether the Modi government will follow the footsteps of the Tamil Nadu government which recently announced a cut in taxes on fuel, Sitharaman said a cut by a state doesn’t necessarily have to be followed by a similar action by the Centre.
She also highlighted that the Dravida Munnetra Kazhagam (DMK), Tamil Nadu’s ruling party, was a constituent of the UPA when the decisions on the issuance of oil bonds were taken.
The Modi government has been under pressure to cut the excise duty on petrol and diesel as domestic retail prices crossed Rs 100 in many cities and retail inflation crossed 6 per cent in May and June.
Taxes imposed by the central and the state government account for more than 58 per cent of the selling price of petrol. However, the government has been reluctant to cut excise duties, a major source of its revenue.
Economy coming out of challenges of 2nd wave
FM Sitharaman was also optimistic about the Indian economy.
The economy is reviving, inflation is falling and sentiments are improving, she said, expressing confidence that inflation will be within 6 per cent as the government moves to remove supply constraints.
“The economy is coming out of the challenges of the second wave. Various economic indicators are looking up,” she said.
Sitharaman added that the revival of the economy has been aided by timely legislative support referring to the passage of some important bills in the recently concluded Parliament session including the legislation that does away with the controversial retrospective tax.
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