Nirmala Sitharaman says the approach to oil prices is “honest” compared to UPA’s reliance on oil bonds
Nirmala Sitharaman says the approach to oil prices is “honest” compared to UPA’s reliance on oil bonds
Finance Minister Nirmala Sitharaman attributed Tuesday’s fuel price hikes to disruptions in global oil markets over the past “few weeks” due to the war in Ukraine, saying the government has an “honest” approach to oil prices, unlike the UPA, which has backed then relied on oil bonds.
The minister also said she expects wholesale price inflation to moderate in the coming year while addressing the debate on the Finance Law and Appropriation Law of 2022 in the Rajya Sabha. The upper house of parliament returned the two bills, closing the 2022-23 budget.
“I’m tempted to talk about oil prices. Just one line will probably explain it. We are dealing with a situation resulting from the global warlike situation. It has been said that the war has been raging for some time and you didn’t raise it then, now raise it,” Ms Sitharaman said in an approximately 80-minute response to the points raised by MPs.
“[This is] Absolutely untrue sir. The disruption and consequent surge in global oil prices and disruption of supply has been happening for several weeks and we are responding to it. The government has taken various steps,” she said, noting that inflation is being controlled for items such as legumes.
The admission that the NDA government led by Atal Behari Vajpayee had also issued Rs worth of oil bonds. 9,000 crore, the minister said was a one-off action in contrast to UPA’s “continuous policy” which resulted in the issuance of Rs worth of oil bonds. 2 lakh crore to be repaid.
“Today’s taxpayers are paying for subsidies given to consumers in the name of oil bonds more than a decade ago. And they will continue to pay for another five years,” she assured. “So there’s an honest way to fund oil at a higher cost and a way to just book it on someone else and another government keeps paying for it. We didn’t do that,” Ms. Sitharaman said.
The minister described the government’s GDP growth estimates in the budget as “conservative”, said the budget did not take into account the Omicron wave and highlighted the Russia-Ukraine war and the unprecedented rise in fuel prices as new challenges.
“However, I would like to say to members that we take a full year’s picture of the economy, rather than reviewing or reassessing it on a weekly or even monthly basis. As for inflation, the wholesale price index in the deflator has been very high this year compared to consumer price inflation (CPI). We hope that WPI indices will shrink going forward,” she noted.
Ms Sitharaman took on former Finance Minister P. Chidambaram’s criticism of the finance law and a question he asked about whether the government had lost confidence in private investors, saying it was a very strange issue to be aware of.
“The pandemic has created enormous uncertainties that have seriously impacted private sector investment. The government stepped in to close the gap and create an environment needed to revitalize and sustain private sector investment. We believe that government and the private sector are partners in driving economic development. There is no ‘us versus them’ when it comes to the state versus the private sector,” she noted, adding that higher public investment spending would help push private investment.
