Govt blames soaring fuel prices on UPA-era oil bonds; dealers say brace for further hike

While the Centre continued to blame the fuel price rise on the UPA regime’s issuance of oil bonds, dealers warned that consumers are in store for more hikes in coming days.

Finance Minister Nirmala Sitharaman, while replying to a debate on the 2022-23 Budget in Rajya Sabha on Wednesday, attributed the fuel price hikes to disruptions in global oil markets over the past couple of weeks to the war in Ukraine, and oil bonds issued by the previous government.

Explaining the functioning of oil bonds, Sitharaman said the erstwhile UPA (United Progressive Alliance) regime’s continuous policy of issuing oil bonds has led to issuance of oil bonds worth Rs 2 lakh crore that are still being repaid.

"The taxpayers of today are paying for subsidies dished out to consumers more than a decade ago in the name of oil bonds. And they will continue to pay for another five years,” she said.

The previous UPA government issued bonds to oil companies to make up for losses they incurred on selling auto and cooking fuel below cost, the finance minister pointed out.

It is interesting to note that under former PM Atal Bihari Vajpayee, the NDA government had also issued oil bonds worth Rs 9,000 crore.

The country is witnessing soaring oil prices because of global uncertainties and the government is responding to the global crisis, said Sitharaman. Various steps have been taken and inflation is being controlled in items like pulses.

"As far as the inflation is concerned, the Wholesale Price Index in the deflator has been very high this year compared to the Consumer Price Inflation (CPI). We are hopeful that the WPI indices will shrink going forward,” she said.