PM Modi points to higher fuel prices in opposition-ruled states and calls for a VAT cut


PM Modi said the center cut excise taxes on gasoline and diesel in November to ease the price burden on people

PM Modi said the center cut excise taxes on gasoline and diesel in November to ease the price burden on people

Prime Minister Narendra Modi pointed to higher fuel prices in many opposition-ruled states and on Wednesday urged them to cut VAT in the “national interest” to help the common man and in the spirit of cooperative federalism at this time of global crisis to work.

Mr Modi addressed the issue of many states not complying with the center’s call to reduce value added tax (VAT) on gasoline and diesel after his government cut excise taxes on them last November, calling it a “Injustice” for the people living there and also harmful for neighboring states.

The prime minister focused much of his concluding remarks at his meeting with the prime ministers to review the COVID-19 situation on the issue of the fuel price, the rise of which has been the subject of public debate and a cause of the inflation surge.

Strengthening cooperative federalism is necessary to boost India’s economy in the war-torn global scenario, he said in an apparent reference to the Russian attack on Ukraine, calling for better center-state coordination on economic decisions.

The supply chain has been impacted and challenges have increased, he added.

Mr Modi said the center cut excise taxes on gasoline and diesel in November to ease the price burden on people. It has also pushed to reduce the sales tax that states collect and pass the benefits on to the people, he noted, adding that some states were doing it and others weren’t.

It was primarily the BJP-led states that reduced sales tax by varying margins at the direction of the center. Most of the opposition-ruled states did not, while the Aam Aadmi party government in Delhi did much later.

In his remarks, Mr Modi cited the example of Karnataka and Gujarat, both governed by the BJP, and said they suffered a revenue loss of almost 5,000 crore and 3,500-4,000 crore respectively from the VAT cut, but they did this to help people. Their neighboring states don’t, he added.

States such as Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu and Kerala – all governed by different opposition parties – have not reduced VAT for specific reasons, and prices there are higher than other states, he said.

“I am not criticizing anyone but praying to you for the well-being of the people of your states… I urge you to reduce VAT now, even after a six-month delay, to benefit the people,” he said with the Prime Ministers of the most of these states are listening.

In Chennai, Jaipur, Hyderabad, Kolkata and Mumbai, petrol prices (per litre) are above £111, £118, £119, £115 and £120 respectively, he said, noting they are much lower at £102 in the Union area of ​​Daman and Diu , ₹105 in Lucknow, ₹106 in Jammu, ₹105 in Guwahati and ₹103 in Dehradun.

Noting that the center shares 42 per cent of its revenue with states anyway, the prime minister said it was his “special request” for those prime ministers to cut VAT.

In this regard, he also mentioned the “multiple” rise in fertilizer prices due to its global surge, and India relies on its imports.

The government does not want to shift the burden onto farmers, Mr Modi said, urging states to put people’s interests first.

The opposition has often blamed the central government for high fuel prices, while the BJP has blamed rising crude oil prices on the international market and has also attacked states run by rival parties for not doing enough.

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