Modi urges reduction in VAT in Oppn-ruled states

New Delhi: Prime Minister Narendra Modi on Wednesday flagged the issue of high fuel prices in some Opposition-ruled states and urged these states to cut tax on petrol and diesel so as to provide relief to consumers. This was his first reaction to the rising fuel prices.

"I request states to reduce VAT on fuel prices in the spirit of cooperative federalism," the Prime Minister said during the concluding remarks of his interaction with chief ministers over rising Covid cases in the country. The Prime Minister added that the Centre had reduced excise duty last November to ease fuel prices and had also advised states to cut taxes.

Meanwhile, the Opposition slammed Modi after his appeal on fuel prices that have exploded over the past weeks. Congress leader Pawan Khera claimed that the Centre 'earned ₹26 lakh crore' from relentless hikes of petrol and diesel prices and demanded that first Central excise rates be further dropped.

"He (Modi) earned ₹26 lakh crore out of Central excise on petrol and diesel. Has he shared it? You didn't give GST share to states on time and then you ask states to further reduce VAT. He should reduce Central excise and then ask others to reduce VAT," he was quoted by ANI.

The Trinamool Congress, on the other hand, said unable to control the spiralling fuel prices, the Prime Minister was pinning the blame on Opposition-ruled states.

TMC said the Centre should clear the pending GST dues, and stop the "step-motherly treatment" of the Opposition-ruled states.

"Be it the COVID-19 pandemic or some other crisis, we have seen that whenever the Centre has failed to handle a situation, it puts the blame on the opposition-ruled states," TMC MP Saugata Roy said.

"Now, as the Centre has failed to control the fuel prices, the Prime Minister is blaming the states. He is trying to blame others to evade the responsibility for the economic mismanagement," he said.

Modi focused a big part of his concluding remarks in his meeting with chief ministers to review the Covid situation on the issue of fuel price, whose rise has been a matter of public debate and a cause behind the surge in inflation.

Boosting cooperative federalism is necessary for strengthening the Indian economy in the global scenario impacted by war, he said, in an apparent reference to the Russian attack on Ukraine, and called for better Centre-states coordination in economic decisions.

Supply chain has been impacted and challenges have been rising, he added.

Modi said the Centre had reduced excise duties on petrol and diesel in November to reduce its price burden on people. It had also urged to reduce VAT, which is imposed by states, and transfer the benefits to people, he noted, adding some states did and some did not.

It was mostly the BJP-run states which slashed VAT by different margins, taking the cue from the Centre. Most Opposition-ruled states did not while the Aam Aadmi Party government in Delhi did it much later.

In his remarks, Modi cited the example of Karnataka and Gujarat, both ruled by the BJP, saying they have suffered revenue loss of nearly Rs 5,000 crore and Rs 3,500-4,000 crore

respectively by reducing VAT but they did so

to help people. Their neighbouring states did

not, he added.

States like Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala — all ruled by different Opposition parties — have not reduced VAT for some reasons, and prices that are higher than other states, he said.

"I am not criticising anyone but am praying to you for the welfare of people of your states... I urge you to reduce VAT now even after a delay of six months to benefit people," he said, with chief ministers of most of these states listening.

In Chennai, Jaipur, Hyderabad, Kolkata and Mumbai, petrol prices (per litre) are over Rs 111, Rs 118, Rs 119, Rs 115 and Rs 120, he said, noting that they cost much lower at Rs 102 in the Union Territory of Daman and Diu, Rs 105 in Lucknow, Rs 106 in Jammu, Rs 105 in Guwahati and Rs 103 in Dehradun.

Noting that the Centre anyway shares 42 per cent of its revenue with states, the Prime Minister said it is his "special request" to these chief ministers to reduce VAT.

In this context, he also mentioned the "manifold" increase in fertilizer prices due to its rise globally, and India depends on its import.

The government does not want to transfer the burden to the farmers, Modi said, asking states to give top priority to people's interests.