On Fuel Price Cut, Nirmala Sitharaman’s Before-2014-And-After Comparison

New Delhi: As the Centre and opposition parties call each other out on the recent cut in central excise duty on fuel, with the latter accusing the government of “duping” people by “jugglery of figures”, Finance Minister Nirmala Sitharaman today hit back with a clarification. Congress, and some other opposition parties, had alleged that the Narendra Modi-led government had slashed excise duty which is shared by states, thus not really making a big effort in bringing down prices of petrol, diesel, and cooking gas. Ms Sitharaman, in a series of tweets, explained that the excise duty component that has been slased not shareable by the state and the Centre bears the full cost. She also pointed to comparative data on developmental expenditure and subsidies to claim that the PM Modi-led government has spent much more in the last 8 years than what the Congress-led UPA did in the 10-years it was in power.

“Basic Excise Duty (BED), Special Additional Excise duty (SAED),Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel…Basic ED is sharable with states…SAED,RIC & AIDC are non-sharable.

The excise duty reduction of Rs 8/litre on petrol and Rs 6/litre on diesel (effective from today) has entirely been made in Road & Infrastructure Cess (RIC),” she said in one of the tweets.

2/Basic Excise Duty (BED), Special Additional Excise duty (SAED),Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel.

Basic ED is sharable with states.

SAED,RIC & AIDC are non-sharable.

— Nirmala Sitharaman (@nsitharaman) May 22, 2022

She said that even the last excise duty cut in November 2021, of Rs 5/litre in petrol and Rs 10/litre in diesel, was entirely made in RIC.

“Basic ED which is sharable with states has not been touched.

Therefore, the entire burden of these two duty cuts (made in Nov, 21 and yesterday) is borne by the Centre,” she added.

Referring to Reserve Bank Of India (RBI) data, the Minister said the total developmental expenditure incurred by the PM Narendra Modi-led government during 2014-22 was Rs 90.9 lakh crore. 

“In contrast, only Rs 49.2 lakh crore was spent on developmental expenditure during 2004-2014,” she said.

Another “useful fact” as she called it, was that total expenditure incurred by the PM Modi-led government includes Rs 24.85 lakh crore spent so far on food, fuel and fertiliser subsidies and Rs 26.3 lakh crore on capital creation.

“Over the 10 years of UPA, only Rs 13.9 lakh crore was spent on subsidies,” she said.

She added that the duty reduction made yesterday has an implication of Rs 1,00,000 crore a year for Centre. The duty reduction made in November 2021 has an implication of Rs 1,20,000 crore a year. 

“Total revenue implication to Centre, on these two duty cuts is thus Rs 2,20,000 cr a year,” Ms Sitharaman said.

In a significant step aimed at providing relief to people from high fuel prices, the Centre on Saturday announced a reduction in excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

“We are reducing the Central excise duty on petrol by Rs 8 per litre and on Diesel by Rs 6 per litre. This will reduce the price of petrol by Rs 9.5 per litre and of diesel by Rs 7 per litre. It will have a revenue implication of around Rs 1 lakh crore/year for the government,” Ms Sitharaman had said.

“I wish to exhort all state governments, especially the states where the reduction wasn’t done during the last round (November 2021), to also implement a similar cut and give relief to the common man,” she added.

Congress swiftly hit back, saying the reduction is too little to matter and accused the Centre of ‘fooling’ people. “Nation doesn’t need jugglery of figures to dupe the people,” a senior leader said while pointing to figures from 60 days back and also the 2014 rates.

Minister for Petroleum and Natural Gas Hardeep Singh Puri, echoing Ms Sitharaman’s call to states, raised the pitch on “refusal by some states to reduce prices”.

“I want to highlight the fact despite this 2nd reduction in Central excise, price of Petrol & Diesel in States like Maharashtra, Rajasthan, West Bengal, Tamil Nadu, Andhra Pradesh, Jharkhand & Kerala remain around Rs 10-15 higher than in BJP ruled states,” he had tweeted.

He said the price disparity is due to the refusal of their respective state governments to reduce VAT. 

Congress General Secretary Randeep Singh Surjewala responded to the announcement, slamming what he called “jumlas” and demanded the restoration of central excise duty to May 2014 levels of Rs 9.48 per litre on petrol and Rs 3.56 per litre on Diesel.

Even the Biju Janta Dal (BJD), seen as friendly to the BJP, has dismissed the Centre’s call to states to reduce state taxes (VAT). Odisha BJD MP Amar Patnaik said there was “limited scope” for the collection of revenue for the states and that the states “already have a narrow revenue-raising space” in the form of Value Added Taxes.

“The Centre collects excise duty, additional excise duty and cess & surcharge on petrol and disease while the States collect only VAT. Therefore, the Centre has much more scope and space for reducing the tax, duty & cess component on these products and they have done that ostensibly to address the issue of rising inflation in the country affecting the common man and the poor who were reeling under its impact for several months now,” Mr Patnaik told news agency ANI.