Finance Minister Nirmala Sitharaman on Tuesday attributed the fuel price hikes to disruptions in global oil markets over the past ‘couple of weeks’ due to the war in Ukraine, and said the government has an ‘honest’ approach towards oil prices unlike the UPA which relied on oil bonds.
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The minister also said she expects the Wholesale Price Inflation to moderate in the coming year, while responding to the debate on the Finance Bill and Appropriation Bill of 2022 in the Rajya Sabha. The Upper House of Parliament returned the two Bills, completing the Budget 2022-23 exercise.
“I am tempted to talk about the oil prices. Just one line will probably explain it. We are dealing with a situation arising out of the global war-like situation. It was said that the war has been raging for a time and you didn’t raise it at that time, now you are raising it,” Ms. Sitharaman said in an 80-odd minute reply to points raised by MPs.
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“[This is] Absolutely untrue, Sir. The disruption and the resultant increase in price of global oil and also disruption to supplies are all happening since a couple of weeks ago and we are responding to it. Various steps have been taken by the government,” she said, noting that inflation is being controlled in items like pulses.
Conceding that the NDA government led by Atal Behari Vajpayee had also issued oil bonds worth Rs. 9,000 crore, the minister said that was a one-time action unlike UPA’s ‘continuous policy’ leading to issuance of oil bonds worth Rs. 2 lakh crore that are still being repaid.
“The taxpayers of today are paying for subsidy 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 asserted. “So there is a honest way of funding oil at a higher cost and a way in which you just book it on somebody else and some other government keeps paying for it. We have not done that,” said Ms. Sitharaman.
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Terming the government’s GDP growth estimates in the Budget as ‘conservative’, the minister said the Budget had not factored in the Omicron wave and highlighted the Russia-Ukraine war and the unprecedented hike in fuel prices as a new challenge.
“However, I want to submit before the members that we take a whole year’s picture for the economy, rather than reviewing it or reassessing it on a weekly or even a monthly basis. So 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 noted.
Taking on former Finance Minister P Chidambaram’s critique of the Finance Bill and a query he raised about whether the government has lost its faith in private investors, Ms. Sitharaman said this was a very odd issue to flag.
“The pandemic created huge uncertainties that seriously impacted private sector investments. The government stepped in to fill the gap and create an environment necessary to revive and sustain investments from the private sector. We believe the government and private sector are partners in ushering development in the economy. There is no ‘Us vs Them’ when it comes to government versus private sector,” she noted, adding that higher public capital spending will help crowd in private investments.