Rajasthan Chief Minister Ashok Gehlot on Tuesday urged Prime Minister Narendra Modi to further reduce excise duty on fuel to provide relief to the 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. The Central government on November 3 announced slashing excise duty on petrol by Rs five per litre and on diesel by Rs 10 a litre to give reprieve to consumers battered by record-high retail fuel prices 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, the chief minister said in a statement. He said after 2016, the Centre has reduced the state share in excise duty on fuel price and states do not get any share from additional or special excise duty charged by the Centre.
”Continuously reducing the share of states in taxes is against the spirit of fiscal cooperative federalism,” Gehlot said. The chief minister said that it is right of the state under the Constitution to impose tax for revenue collection for various 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.
He said that during the lockdown, the Centre had increased the excise duty on petrol by Rs 10 and on diesel by Rs 13 per litre. From November 4, 2021, there has been talks of giving relief to the public by reducing Rs 5 on petrol and Rs 10 on diesel. Gehlot said the reality is that in 2021 itself, the price of petrol increased by about Rs 27 and the price of diesel by about Rs 25. Out of the excessively hiked additional excise duty, only some relief was given. As such, the reduction in excise duty by the Centre appears to be insufficient, he added. The chief minister said that more than 22 percent of the total revenue of Rajasthan comes from VAT of petrol and diesel. As a reduction in VAT, the Rajasthan government has reduced by about Rs three per litre on petrol and Rs 3.8 per litre on diesel from January 29, 2021 till now.
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Due to this, there is a loss of Rs 2800 crore in the revenue of the state every year. Due to the circumstances of 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 that 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 that even in such a situation, state government did not allow the pace of development in the state to slow down by doing efficient financial management. The state government is ready to fulfil public announcements and promises made in the budget in a time-bound manner, he added.