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Home / West-bengal / We will lose Rs 641 crore in revenue due to fuel price cut, says Mamata

We will lose Rs 641 crore in revenue due to fuel price cut, says Mamata

Centre on Saturday announced a series of measures, including reduction in excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre
Mamata Banerjee at Nabanna on Monday.
Mamata Banerjee at Nabanna on Monday.
The Telegraph

Pranesh Sarkar   |   Published 24.05.22, 01:41 AM

Mamata Banerjee on Monday hinted that the state was not in a position to reduce VAT on petrol and diesel before calling the Centre’s recent slash in the excise rates on fuel and announcement of a subsidy of Rs 200 on cooking gas under the Ujjwala scheme as something which the BJP did before “any election”.

Amid nation-wide concerns on high retail inflation, the Centre on Saturday announced a series of measures, including reduction in excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

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The Bengal chief minister, who had been demanding a slash in the prices of petroleum products, made it clear that she was not amused by the measures.

“They (BJP) do this before any election. Only a small portion of the BPL category is under the Ujjwala Yojana. How will poor people buy domestic gas at a cost of Rs 800?” she asked.

Mamata took care to explain the impact of the excise cut on the revenue generation of state governments, especially the ones ruled by Opposition parties.

“As the Centre reduced the tax component on petrol and diesel, the state is set to lose Rs 1.80 on a litre of petrol and Rs 1.03 on a litre of diesel. Overall, we are going to lose Rs 641.45 crore in revenue,” said Mamata.

Since the states levy VAT on an ad-valorem basis, the VAT inflow will be less after the excise cuts, said an official who explained Mamata’s arithmetic.

“The Centre has put the burden on the states as it did not reduce the cess (component of excise),” said the chief minister while adding that the collections on account of cess was not shared with the states.

The chief minister said as Bengal had already given a rebate of Rs 1 on each litre of petrol and diesel — resulting in a revenue loss of around Rs 500 crore per annum, the total revenue loss on diesel and petrol would be Rs 1,141.45 crore.

Using a similar line of argument, Palanivel Thiaga Rajan, finance minister of DMK-ruled Tamil Nadu, has also criticised the Centre by claiming that the excise cuts would result in an additional revenue loss of Rs 800 crore for the state.

Union finance minister Nirmala Sitharaman had already rebutted the criticism saying the Rs 8 cut in petrol and Rs 6 slash in diesel had been done in road and infrastructure cess levied on the two fuels, collection of which was never shared with the states.

No one from the Bengal government was available to comment on Sitharaman logic.

“The chief minister has said that there is going to be a revenue loss and a figure has also been given…. This has been done after doing the proper calculations,” said a source at Nabanna.

Although the last word on the debate on whether the excise tweak will affect the state coffers, there is no possibility of a VAT slash by the state government, said multiple sources.

Mamata didn’t say directly that the state would not reduce VAT, the manner in which she rolled out the detailed calculation on revenue loss indicated that she was in no mood to reduce the rates at least for the time being, said a source.

“As the Centre reduced the excise duty, the BJP leaders are likely to put pressure on the state to reduce VAT further so that fuel gets cheaper. The chief minister tactically made it clear that the deprivation from the centre does not allow the state to reduce VAT further,” said a bureaucrat.

A finance department source explained that as the state’s own revenue generation was yet to reach the pre-pandemic level, an additional revenue loss of more than Rs 600 crore would cost the state exchequer dear.

“We are spending around Rs 30,000 crore on welfare schemes over the past one year since new schemes like Lakshmir Bhandar were launched and several additional beneficiaries were added in schemes like old age pension and widow pension. As the state’s revenue generation has not increased and we are not getting GST compensation as planned, the financial condition is not in a shape to shoulder the additional burden of VAT cut on petrol and diesel,” said a bureaucrat.

The chief minister said Bengal was already shouldering more burden by giving rebate of Re 1 a litre on petro prices, compared to some Opposition-ruled states.

If the rebate of Re 1 on each litre of petrol and diesel is added, the state is losing a revenue of Rs 2.80 on each litre of petrol and Rs 2.03 on each litre of diesel, sources said.

“Kerala will face a loss of revenue of Rs 2.41 on a litre of petrol and Maharastra will shoulder a burden of Rs 2.08 on a litre of petrol while Rajasthan will incur a loss of Rs 2.48 on a litre of petrol,” said Mamata, explaining that the loss would be the highest for Bengal among non-BJP ruled states.

The chief minister said that as the Centre had earned a total of Rs 18,23,224 crore through excise duty on petroleum products over the past few years, it could have withdrawn cess on petrol and diesel to give relief to common people without leaving the burden on the states.

“We are yet to get Rs 93,000 crore from the Centre under various heads. The centre should have cut down the cess,” said the chief minister.



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