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”, Union Finance Minister Nirmala Sitharaman Sunday hit back with a clarification.
The Congress on Sunday accused BJP of resorting to “trickery” to create an “optical delusion’’ and said the people deserve genuine relief from the “record inflation”. In a tweet, Congress leader Rahul Gandhi compared petrol prices between May 1, 2020 and now, and said the “government must stop fooling citizens”. “Petrol Prices – May 1, 2020: Rs 69.5, Mar 1, 2022: Rs 95.4, May 1, 2022: Rs 105.4, May 22, 2022: Rs 96.7m Now, expect Petrol to see ‘Vikas’ in daily doses of Rs 0.8 and Rs 0.3 again,” Gandhi said. “Govt must stop fooling citizens. People deserve genuine relief from record inflation,” he said on Twitter.
At a press conference at the AICC headquarter here, Congress spokesperson Gourav Vallabh accused the Modi government of being “high on political gimmick” and low on relief.
“The BJP government’s cluelessness about the economy and financial management has been out in the open for long now. Instead of accepting it and seeking guidance from experts, the BJP only resorts to trickery to create an optical delusion,” Vallabh alleged.
Vallabh also cited that the excise per liter on diesel in April 2014 was Rs.3.56 and in May 2022 is Rs 15.8. “The prices are back to the March 2022 numbers. Were the common people pleased with the fuel prices in March 2022? The answer is No. Is the government still charging a hefty excise on fuel? The answer is Yes. True relief will only come when excise will be reduced to 2014 levels,” he stressed.
Petrol prices have increased by Rs. 10 per litre in the last 60 days and then comes a reduction of Rs.9.5 per litre, Vallabh said and asked, “Isn’t this trickery”. Diesel prices have increased by Rs.10 per litre in the last 60 days and then comes a reduction of Rs.7 per litre, he said, asking how is this welfare. Vallabh pointed out that LPG prices have increased by 142 per cent between May-2014 and May-2022.
“LPG prices have increased by more than Rs.400 in the last 18 months. Providing Rs 200 reduction doesn’t mean the welfare of the people but just sucking the blood in lower volumes,” he alleged. He also questioned the Finance Minister claim that the inflation has remained lower in the BJP’s tenure
“Madam FM mentioned that her government is devoted to the welfare of the poor. The true face of your devotion to the welfare of the poor lies in the Oxfam report that claimed that, in 2021, the income of 84 per cent of households fell while the number of billionaires grew. Which welfare is she talking about?” he said.
Demanding answers from the government, Vallabh asked what is preventing the BJP government from announcing relief measures for the common people. “Why to resort to just optical delusion instead of concrete measures?” he said.
Will the BJP government guarantee that the excise duties on petrol and diesel will not increase for the next two years of their tenure, he asked.
Vallabh also questioned the government as to what measures are being taken to bring down the inflation to the lower end of the 2 to 6 per cent band set by the RBI. Petrol price on Sunday was slashed by Rs 8.69 a litre and diesel by Rs 7.05 per litre following the government cutting excise duty on auto fuels to give relief to consumers battered by high fuel prices that have also pushed inflation to a record high.
On a similar note, Maharashtra chief minister Uddhav Thackeray, reacted to this decision by tweeting in Marathi which reads in English, “It is not right to pretend to increase prices first and then reduce rates nominally.”
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,” Patnaik told news agency ANI.
Full burden of fuel excise duty cut is borne by Centre, says FM
Union Finance minister Nirmala Sitharaman, in a series of tweets, explained that the excise duty component that has been slashed 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.
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 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 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 on Saturday 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,” Sitharaman 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.