States ask Center to share half of oil revenue losses

The battle between Centre and States for the spiraling inflation and price rise is not going to be end soon, as now states have asked the Central government to share at least half of the revenue losses which states have been suffering in account of cutting duty and reducing Value Added Tax in Petrol, Diesel and Cooking gas.

The Empowered Group of Finance Ministers of state on Monday have urged the Prime Minister to share the hefty revenue loss of total Rs.8, 000-crore in this fiscal by 50 percent, as States are not in an adequate position to bear the hefty loss alone.

The Finance Ministers of the states have attended a meeting chaired by West Bengal Finance Minister Asim Dasgupta on Monday in Kolkata, where the states have decided to ask the Union government to share the revenue loss equally.

“We want 50% loss incurred by states to be shared by the government of India. States cannot take this beating. They have limited revenue-raising power and huge developmental responsibilities,” said Asim Dasgupta to the reporters after the meeting.

“States government spends more than 80 per cent of revenue on education and health expenditure while out of the total tax revenue collected in the country, states get only one-third,” Added Dasgupta. “The expenditure budget of states is also increasing due to the hike in oil prices and its multiplier effect on inflation. States cannot take the beating further,” he said.

The Centre has asked the states to cut the duty and Vat in fuels as the Ministry has hiked the prices of petrol by Rs.5, diesel by Rs.3 and Liquefied Petroleum Gas (LPG) by Rs.50 on June 4, and this hike was enough to break the backbone of common people. Thus Centre had asked the State governments to provide the customers some relief by slashing the duty and VAT charges.

Some states like West Bengal, Kerala, Tamil Nadu, Maharashtra, Haryana, Bihar, Gujarat, Andhra Pradesh, Delhi, Orissa, Uttarakhand and Goa have immediately reduced the duty and VAT charges but some states are still firm not to change the duty charges as per their unwillingness to bear the heavy loss.

‘10 of the 33 states and Union territories have cut sales tax on petrol while 15 have reduced sales tax on diesel. Some states like Delhi have cut only VAT on LPG,’ as per Dasgupta informed.

The Centre, on the other hand, besides hiking the prices in petroleum fuels had also slashed the import duty on crude to zero, on petrol and diesel to 2.5%, and on jet fuel and other products to 5%. It also chopped excise duty by Re 1 a litre on petrol and diesel.

“The duty cuts were announced to avoid a sharper price hike. The price increase anyway would only help oil companies to reduce their losses by 8%, not the common public and the states,” argued States.

The spiralling prices of crude oil at international level are worsening; all the efforts of the UPA government have not yielded any fruitful result. The Manmohan Singh led administration is battling hard from both external as well as internal level. On external field, government is conflicting with the global inflation and recession while in internal level; government is losing the trust of the common people as its all immediate administrative measures have so far failed to control the rising prices.