Centre's revenues from petrol and diesel this year far higher than budget outlay of most states

In April last year, the first month of the lockdown, the common man used to buy a litre of petrol between Rs 69 and 76, depending on which state he was located. The price of a litre of diesel was between Rs 62 and 66. By January, just 10 months later, the price of petrol rose steadily to Rs 86-92 a litre – a rise of nearly 25%. The price of diesel, the fuel on which all commodities move in India, rose at a similar pace.

The price rise generated a record Rs 2.94 lakh crore as revenue from the two fuels in the first 10 months of the current fiscal year despite a sharp fall in demand due to the lockdown.

Annualised, the tax collection can go up to Rs 3.528 lakh crore, an amount that can fund the entire budget of any of the major states of the country for the coming fiscal except Maharashtra and Uttar Pradesh.

In 2019-20, the Centre collected Rs 3.34 lakh crore as excise duty from diesel and petrol.

Interestingly, the size of the entire budget of a number states such as Gujarat, West Bengal, Tamil Nadu, Karnataka, Madhya Pradesh, Kerala, Rajasthan, Telangana and Bihar are well below the Rs 3.528 lakh crore mark that the Centre is set to earn from petrol and diesel.

The size of the budget of Gujarat for 2021-22 is Rs 2.27 lakh crore, while that of West Bengal is Rs 2.99 lakh crore and that of Telangana is Rs 2.30 lakh crore.

The Tamil Nadu government’s total expenditure for the next fiscal is projected at Rs 3.03 lakh crore while Karnataka’s budget is projected at Rs 2.46 lakh crore.

The size of Rajasthan government’s budget has been estimated at Rs 2.50 lakh crore while that of Odisha, Madhya Pradesh and Kerala are Rs 1.70 lakh crore, Rs 2.41 lakh crore and Rs 2.12 lakh crore.

The outlays for Punjab and Haryana are Rs 1.68 lakh crore and 1.55 lakh crore respectively.

While it is clear that the Centre’s revenues from petrol and diesel can fund the budget of any of these states with a lot of money to spare, the two states that have bigger outlays are Uttar Pradesh (Rs 5.5 lakh crore and Maharashtra (Rs 4.37 lakh crore).

MoS (Finance) Anurag Thakur disclosed the figures on revenue collection on Monday in the Lok Sabha in response to a question.

Taxes levied by both the Centre and the state governments constitute over 60% of the retail price of petrol and diesel in most of the states making Indian petro products the most highly taxed in the world.

“The total central excise duty (including basic excise duty, cess and surcharge) was increased by Rs 3 per litre on petrol and diesel with effect from March 14, 2020. It was further revised upwards by Rs 10 per litre on petrol and Rs 13 per litre on diesel with effect from May 6, 2020,” said the minister.

Thakur also revealed that the Centre’s tax collections from petrol and diesel jumped 300% in the past six years.

While the Union government collected Rs 72,160 crore — Rs 29,279 crore from excise duty on petrol and Rs 42,881 crore on diesel — in 2014-15, the amount rose to Rs 2.94 lakh crore in the first 10 months of the current fiscal.

While the governments of a few states such as Rajasthan, Assam, West Bengal and Meghalaya have reduced VAT on petrol and diesel to provide the common man some relief, the Centre is yet to respond with a slash of excise duty.