Further reduce excise duty on fuel: Ashok Gehlot to PM Modi

Amid increasing pressure from opposition parties to reduce VAT on petrol and diesel, Rajasthan Chief Minister Ashok Gehlot on Tuesday urged Prime Minister Narendra Modi to further slash excise duty on fuel to provide relief to people.

In a letter to the prime minister, Gehlot also requested that a direction be issued to oil companies to stop continuous increase in fuel prices so that people get the benefit of reduced excise duty, according to a statement.

The opposition BJP in the state termed Gehlot's statement a drama, saying his government charges the highest VAT on fuel in the country.

The BJP asked why the Rajasthan government is not slashing tax on fuel when 25 states, including Congress-ruled Punjab, have done that.

The Centre on November 3 slashed excise duty on petrol by Rs 5 per litre and on diesel by Rs 10 a litre to give reprieve to consumers battered by record-high retail fuel prices.

The politics over fuel intensified after Congress-ruled Punjab cut down the price of petrol by Rs 10 a litre and diesel by Rs 5 per litre, claiming in an advertisement that fuel prices are lower than Delhi, Haryana and Rajasthan.

Gehlot demanded that the Centre should further reduce excise duty by Rs 10 on petrol and Rs 15 on diesel. If the Centre reduces excise duty then automatically VAT in the state will reduce by Rs 3.40 on petrol and Rs 3.90 on diesel.

As a result, Rajasthan is ready to bear a revenue loss of Rs 3,500 crore, he said in the statement.

He said after 2016, the Centre has reduced the state share in excise duty on fuel and states do not get any share from additional or special excise duty charged by it.

"Continuously reducing the share of states in taxes is against the spirit of fiscal cooperative federalism," Gehlot said.

The chief minister said it is right of the state under the Constitution to impose tax for revenue collection for development schemes.

"Increasing excise duty excessively first and then reducing it and simultaneously creating a competitive environment among states to reduce VAT is also against the spirit of cooperative federalism," Gehlot said.

Also read: Congress leaders hold protest, demand VAT be reduced on petrol, diesel in Delhi

He said during the coronavirus lockdown, the Centre had increased the excise duty on petrol by Rs 10 and on diesel by Rs 13 per litre.

Gehlot said in 2021, the price of petrol increased by about Rs 27 and that of diesel by about Rs 25. Out of the excessively hiked additional excise duty, only some relief was given, he said.

As such, the reduction in excise duty by the Centre appears to be insufficient, he added.

The chief minister said over 22 per cent of the total revenue of Rajasthan comes from VAT on petrol and diesel.

The Rajasthan government has reduced VAT by about Rs 3 per litre on petrol and Rs 3.8 per litre on diesel from January 29.

Due to this, there is a loss of Rs 2,800 crore in revenue, he said.

Due to the circumstances caused by Covid-19, there has been a decrease of Rs 20,000 crore in the revenue of the state in this financial year till October, he said.

Gehlot said the decrease in revenue can be attributed to not providing GST reimbursement of Rs 5,963 crore to the state by the Centre.

He said even in such a situation, the state government did not allow the pace of development to slow down by doing efficient financial management.

State BJP president Satish Poonia targeted the CM over the issue, terming his statement a "nautanki" (drama).

"The Gehlot government, which charges the highest VAT on petrol and diesel and provides expensive electricity, ridicules the Centre for inflation. Leave this gimmick, please give relief to people of the state from inflation," Poonia tweeted.

Deputy Leader of Opposition Rajendra Rathore in a tweet said, "The chief minister of Congress-ruled Punjab is also taunting through advertisement about expensive petrol and diesel in Rajasthan."

"When 25 states of the country have reduced VAT, then why Rajasthan is not reducing VAT? Muster courage to reduce VAT and give relief to people," he said.

Rathore said Gehlot has repeatedly held the Centre responsible for the increase in fuel prices but "shied away from his responsibility by giving baseless and absurd arguments".

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