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Modi government paying for UPA’s trickery: Sitharaman on fuel prices

UPA did trickery on oil prices by coming out with oil bonds, says the minister

18-Nirmala-Sitharaman Finance Minister Nirmala Sitharaman | Arvind Jain

Finance Minister Nirmala Sitharaman expressed hope that upcoming festive season will be a big boost for demand, while the inflation is expected to stay within the band range of 2-6 percent. But there are unlikely to be any relief from high fuel prices as Sitharaman said her government was paying for the trickery of the UPA regime on the issue.

“Until there is a dialogue between the Centre and the states there cannot be a one-point solution for cut in fuel prices,” she said. Responding to the Tamil Nadu government's move to cut petrol prices by Rs three, Sitharaman said that they had earlier raised price by Rs 7, of which Rs 3 has been cut.

The finance minister took pains to explain that Modi government was paying for the mess created by the UPA government which, she said, had brought in oil bonds in the name of cutting fuel prices.

The oil bonds were issued by the Manmohan Singh government in lieu of cash subsidy to the oil marketing companies. With these bonds, the oil companies could raise cash, but it meant that the government would have to pay the interest and principal amount at maturity. As the oil companies kept the fuel prices under check to pass on the benefit to the people, the government compensated them. But this meant that subsequent governments have to make the payments.

“The UPA had done trickery on oil prices by coming out with oil bonds. It issued oil bonds to the tune Rs 1.44 lakh crore. When PM Narendra Modi took over, the opening balance was Rs 1.34 lakh crore. From 2014 to 2021 financial years, the government has paid interest to the tune of Rs 70,000 crore. Between 2021 and 2025, the government has to pay another Rs 37,340.44 crore in interest only.

If I had this kind of money, I could have given relief. It’s the tax payers’ money which the UPA had used. We don’t do this kind of trickery,” Sitharaman said during an interaction with a select group of media persons.

The outstanding balance at the start of 2020-2021 fiscal stood Rs 130923.17 crore and this will be repaid by 2025-26. The mere interest on the principal amount is over Rs one lakh crore, the minister said.

She expressed satisfaction that the public sector banks’ financial health has improved. These banks, together, had reported Rs 31,816 crore as profits, while they have been able to raise Rs 58,000 crore from the market. As these banks are doing well, there is no proposal for their recapitalisation, Sithraman said.

With regards to the regulation of Cryptocurrency, the finance minister said a cabinet note was under preparation, and only once it is cleared by the cabinet that government will make a clear policy statement.

Sitharaman said though she did not expect a third wave of the pandemic, the government has prepared itself to face any eventuality by creating infrastructure at the block level for paediatric care facilities and oxygen.

Referring to Prime Minister Modi's announcement on PM Gatishakti masterplan, Sitharaman said the masterplan goes way beyond the existing National Infrastructure Pipeline scheme which has a target of spending Rs one lakh crore. She said the masterplan looks at a holistic picture to create multi-modal infrastructure. “The masterplan will deploy funds in such a way to develop multimodal system to connect various economic hubs.”

As people were still facing problems with new Income Tax portal, the finance minister said Nandan Nilekani was keeping her updated on a weekly basis and had assured that glitches will be sorted out in a next week or so.

Reacting to the outburst of Commerce Minister Piyush Goyal against the corporate sector, Sitharaman said that the minister was expressing his anguish to safeguard the interests of the small traders. He appealed to the industry to help the small traders and businesses. 

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