New Delhi, June 6
After countrywide agitations, the Central government is now in a rollback mode and is planning to reduce petrol and diesel prices by Re 1 and Rs 0.50 per litre, respectively.
Petroleum minister Murli Deora has laid down a condition for the rollback saying if states agree to forgo incremental sales tax revenue, the government will reduce the prices.
Sources say there are differences in the UPA government over the rollback issue as Prime Minister Manmohan Singh in deliberations before affecting the price rise had categorically stated that whatever the quantum of hike it had to be maximum, since the decision could not be revisited.
The decision of the price hike had taken too long as the political fallout and economic impact of it was deliberated at length, sources added. The hike was affected to get the oil companies out of the precarious situation and hence now there was no reason to roll it back.
Murli Deora has written to the chief ministers of 30 states and union territories asking them to at least forgo the incremental tax revenues so as to ease the burden of hike in international oil prices on common
man.
States like Andhra Pradesh, Kerala, Karnataka, Punjab and Uttar Pradesh stand to gain over a rupee in sales tax on every litre of petrol sold and over Rs 0.50 on diesel.
The oil minister has stated that it was the duty of both Centre and state governments to provide maximum relief to the consumers. While the Centre was contributing over Rs 120,000 crore, it was also expected that the state governments would not lag behind in sharing the burden of the hike.
The Centre had cut customs and excise duties on crude oil and products to protect consumers and foregoing the incremental sales tax revenues would not in any way impact the state earnings, he explained.
Stating the plight of the oil companies, the minister wrote that if the present international oil prices continued without any domestic retail price adjustments, PSU marketing companies would incur a revenue loss of Rs 245,300 crore during the current year, which is simply far too heavy.
Congress-ruled Andhra Pradesh and Mumbai have the highest sales tax of 33 and 22.25 per cent and 30.64 and 28 per cent on petrol and diesel, respectively. The incremental earning of Andhra Pradesh is Rs 1.38 from petrol and Rs 0.59 a litre from diesel. Mumbai earns incremental revenue of Rs 1.17 a litre from petrol and Rs 0.75 from diesel.
Delhi yesterday slashed the Rs 50 per cylinder rise in LPG price by Rs 40. But the state was still earning Rs 0.83 per litre additional sales tax revenue on petrol and Rs 0.33 a litre on diesel.
Akali Dal-BJP ruled Punjab levies a 31.68 per cent sales tax on petrol and will earn Rs 1.16 per litre more sales tax.
Only West Bengal, Bihar and Tamil Nadu have cut sales tax on the fuels.
BJP-ruled Madhya Pradesh has gained Rs 1.21 additional revenue on every litre of petrol sold in the state and Rs 0.67 per litre on diesel, while Rajasthan with 29.36 per cent sales tax on petrol and 21.82 per cent on diesel is getting Rs 1.16 and Rs 0.53 per litre incremental revenue, respectively.
Another BJP-ruled state of Karnataka has a 28 per cent sales tax on petrol and 20 per cent on diesel and will earn Rs 1.44 and Rs 0.69 per litre of additional revenue from the two fuels.
Post-hike, BSP-ruled Uttar Pradesh will earn Rs 1.08 per litre incremental revenue on petrol and Rs 0.56 a litre on diesel.
