Rising Fuel Prices: Petrol and diesel prices have reached record highs. There is pressure on the government to reduce the tax on cheap oil, but a few days ago, Finance Minister Nirmala Sitharaman said that the burden of paying the installments and interest of oil bonds in the previous UPA government is on the Modi government, due to which it has to reduce oil prices. It is not possible to do. However, Financial Express found in its calculations that if the tax rates under the Modi government remain the same till FY 2024, then the additional net revenue earned in both the tenures will be saved after accounting for oil bonds, Rs 14.3 lakh crore.
Based on this calculation, according to the current rates, the tax levied on oil in both the tenures of the Modi government will give an additional revenue of Rs 115.73 crore, while the amount of interest and principal repayment of oil bonds in these 10 years works out to Rs 1.43 lakh crore, which is additional. Only 9 percent of the revenue. In many states, petrol is being sold beyond Rs 100 per liter, while in some places the price of diesel is also more than Rs 100.
Expensive oil provoked politics, Congress alleges – Government has raised ‘Modi tax’ many times from Oil Bonds
Reduced share of states in tax earnings
Since the Modi government was formed in May 2014, taxes on oil have been increased 12 times. The highest increase was made last year in March 2020 and May 2020. Due to this hike, a tax of Rs 32.9 per liter of petrol and Rs 31.8 was to be paid on diesel, whereas in FY15, a tax of Rs 9.48 per liter of petrol and Rs 3.56 on diesel was charged. However, the share of the states in this tax has come down. In the financial year 2015, the states used to get 41 percent of the central tax on diesel, which has now come down to 5.7 percent, ie the center has benefited from tax restructuring.
Oil bonds worth 1.44 lakh crore were issued between 2005-2012
Earlier this week, Union Finance Minister Nirmala Sitharaman had expressed her inability to reduce tax on oil due to the oil bonds issued by the UPA government. When the Modi government first came to power in May 2014, the oil bond liability was Rs 1,34,423 crore (principal amount). The government had made a payment of Rs 3500 crore in 2015 and then the outstanding amount has come down to Rs 1,30,923 crore, which has to be paid in full between the financial year 2022-2026. Out of this, Rs 41,150 crore is to be paid on the maturity of some bonds by the financial year 2024, when the second term of the Modi government will end. The central government has paid interest of Rs 70,196 crore on oil bonds between FY 2015 and FY 2021 and Rs 28,382 crore by FY 2024. The UPA government had issued oil bonds worth Rs 1.44 lakh crore between 2005-2012.
(Article: Anupam Chatterjee and Prasanta Sahu)