Context:

Government has clearly stated that there will be no cut in excise duty on fuel as of now as government has to pay for the oil bonds issued by the UPA government in the past.

About Oil Bonds:

• Oil bonds were issued in lieu of cash subsidy to oil marketing companies (OMCs) in former Prime Minister Manmohan Singh’s UPA era, and also Atal Bihari Vajpayee’s NDA rule.
• These sovereign oil bonds, issued in favour of oil companies Indian Oil Corporation, HPCL and BPCL, were transferable, allowing these companies to raise immediate cash at the time.
• The government, being the issuer, would bear the interest payments and redemption at maturity.
• The government has a liability to pay Rs 20,000 crore in the current fiscal year 2021-22 in the form of bond repayment and interest on the outstanding oil bonds.

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