In light of the recent increase in petrol prices, a social media post stating that the current Modi government is paying off the debts incurred by oil bonds issued by the previous Congress government is being widely circulated. Through this post, the user tries to make a point that the increase in petrol prices is because of the debts incurred by the previous UPA government led by Congress. This is evident from the comments section, as the comments to the viral post are in line with this argument. Through this article let’s fact-check the claim made in the post.
Claim: Increase in petrol prices is because of debts incurred by the previous UPA government led by Congress in the form of oil bonds.
Fact: By the time BJP led NDA first came into power in 2014, the pending dues for oil bonds accounted for Rs. 1,34,423 crores. And over the period of seven years i.e. from 2014-15 to 2020-21, the union government has paid a total of Rs. 73,695.72 crores for these oil bonds in the form of interest & principal. Whereas the during the same time period, the central government has collected a total of Rs. 25 lakh crores in revenue through collection of taxes on petroleum products. In other words, pending dues for the for ‘Oil Bonds’ issued during the UPA are only a fraction of the taxes collected on Petrol & Diesel, and hence, the current increase in oil prices cannot be justified by the pending dues for oil bonds. Hence the claim made in the post is MISLEADING.
Status of Oil bonds issued by the Congress-led UPA government :
Earlier during the Congress-led UPA rule, instead of passing on the burden of rising crude oil prices on to the consumers, the then government passed on this burden to the oil marketing companies. Oil marketing companies would sell petroleum products to consumers for subsidised rates. Whereas the losses (under-recoveries) incurred by the companies were borne by the government, upstream oil companies and oil marketing companies together.
The previous Congress government cleared a major chunk of the under-recoveries by means of budget allocations (here & here). In some instances, despite paying in cash, the government has issued oil bonds with a fixed interest rate and maturity period. In fact, the Congress government also cleared amounts for the oil bonds, and by the time the Modi led BJP (NDA) government first came to power in 2014, oil bonds pending dues were Rs. 1,34,423 crores only.
It must also be noted that it is not only the Congress-led UPA government that issued oil bonds but also the NDA government under the leadership of Atal Bihari Vajpayee.
Oil bonds cleared by Modi government
Responding to a query in the recent Parliament session, Union Government has stated that during the last seven fiscal years i.e. from 2014-15 to 2020-21, they had cleared oil bonds worth Rs. 73,695.72 crores (principal & interest).
And the government is due to clear bonds worth Rs. 92,200.17 in the next four years i.e. from 2023 to 2026.
However, over the period of seven years i.e. from 2014-15 to 2020-21, the central government collected more than Rs. 25 lakh crores revenue through the collection of taxes on petroleum products.
The huge gap between the revenue generated through taxes and the expenditure incurred in clearing the oil bond debts implies that pending dues for ‘Oil Bonds’ issued during the UPA are only a fraction of the Taxes collected on Petrol & Diesel in the last seven years. And, the current increase in petrol prices cannot be justified by the pending dues for oil bonds.
To sum it up, the current increase in petrol prices cannot be justified by the pending dues for oil bonds since pending dues for ‘Oil Bonds’ issued during the UPA are only a fraction of the Taxes collected on Petrol & Diesel in the last seven years.