Reacting for the first time to the rising fuel prices in the country, Prime Minister Narendra Modi on Wednesday said some States did not reduce Value Added Tax (VAT) on petrol and diesel despite the excise duty cut by the Centre last November.
He said they have been doing “injustice” to the people by not transferring the benefits of the lower taxes.
Modi was addressing a virtual meeting with Chief Ministers about the emerging situation on Covid-19.
The PM flagged seven non-BJP States — Maharashtra, West Bengal, Telangana, Andhra Pradesh, Kerala, Jharkhand and Tamil Nadu — for not reducing VAT and thus not lessening the burden on the common man. Excise duty was reduced in November by `5 on petrol and `10 on diesel. The excise duty is levied by the Centre, the VAT is imposed by the States.
Petrol and diesel prices reached `100 for the first time in June last year and have been staying around or more since then. Since March 22, after the recent elections in Uttar Pradesh and four other States, the Government has increased oil prices many times accounting for about `10 per litre till April 5.
“I request, do now what should have been done in November. You should pass on the benefit to the citizens by reducing VAT,” the Prime Minister said.
The States that reduced VAT have lower fuel prices, he added and in this regard listed the BJP-ruled States. Modi gave the example of Karnataka and Gujarat, both ruled by the BJP, saying they have suffered a revenue loss of nearly `5,000 crore and `3,500-4,000 crore respectively by reducing VAT, but they did so to help people. Their neighbouring States did not, he said.
“I am not criticising anyone, just discussing,” he said and cited Maharashtra, West Bengal, Telangana, Andhra Pradesh, Kerala, Jharkhand and Tamil Nadu, for some reason or the other not listening to the Central Government and the citizens in those States continued to be burdened.
“Some States reduced taxes but some States did not give any benefit of this to the people. Due to this, the prices of petrol and diesel in these States continue to remain high. In a way, this is not only injustice to the people of these States but it also has an impact on the neighbouring States,” he said.
In Chennai, Jaipur, Hyderabad, Kolkata and Mumbai, petrol prices (per litre) are over `111, `118, ` 119, `115 and `120, Modi said, noting that they cost much lower at `102 in the Union Territory of Daman and Diu, `105 in Lucknow, `106 in Jammu, `105 in Guwahati and `103 in Dehradun.
The Prime Minister also said 42 per cent of the Centre’s revenues go to the States. “I request all States that in a time of global crisis, we should follow the spirit of cooperative federalism and work together as a team,” he said.
Many observers believe that the Centre and States are not ready to bring petroleum under Goods and Services Tax (GST) which could have brought oil prices under reasonable check.
For some apparent comfort, there has been a softening of international oil prices below 100 dollars a barrel this month and also India has been purchasing cheaper oil from Russia but domestic fuel prices have still been soaring.