Mamata Banerjee to Narendra Modi: Reduce price of petrol, diesel; share revenues with states

West Bengal Chief Minister Mamata Banerjee on Monday wrote to Prime Minister Narendra Modi urging him to bring down taxes on petrol and diesel and also flagging that the states are not getting the stipulated 42% share of the revenue collected by the Centre on these fuels.

Though the price of both petrol and diesel crossed Rs 100 a litre a few weeks ago in a few states, the psychological barrier was crossed in West Bengal over the past weekend.

The Trinamool Congress chief alleged that the Centre raised as many as 8 times since May 4, 2021. “Prices were hiked 6 times in the month of June 2021 only and shockingly, 4 times in one week,” she wrote.

 The letter also stated how the wholesale price-based inflation rose by 12.94% in May and consumer price index-based inflation rose by 6.3%, driven by a rise in the prices of food products that were substantially attributed to the rise of petrol and diesel prices.

Rs 3.71 lakh crore

The two-page letter mentioned that the Centre has collected Rs 3,71,725 crore revenue from oil and petroleum products in 2020-21.

“In fact, over the last six years of your Government, Government of India’s tax collection from oil and petroleum products has jumped by a staggering 370% since 2014-15, due to constant hikes in Central Excise Duty on oil and petroleum products including cesses and surcharges, at the cost of the common people,” Banerjee wrote in the letter.

Cess flagged

She also urged the Prime Minister to stop raising cess on these products that allows the Centre not to share the revenue with the states.

“I am alarmed by the fact that the Government of India is constantly increasing the Cess component of Central tax revenues which results in denying the States its legitimate share of 42% of tax collected by Government of India, since Cess accrues wholly with the Government of India, without sharing with the States,” she added.

Jump in FY21

Incidentally, according to the data of Petroleum Planning and Analysis Cell, an arm of the Union petroleum ministry, in 2020-21 the contribution of the petroleum sector to the central exchequer was Rs 418,637 crore in the form of tax and duties. The amount was Rs 287,540 crore in 2019-20.

The contribution to the states in 2020-21 was Rs 217,271 crore. The amount in 2019-20 was Rs 220,841 crore.

In her letter, she also mentioned that her government reduced VAT by Re 1 per litre of petrol and diesel (in February this year).

Footing welfare bill

Though there has been a clamour from different sections about bringing petrol and diesel within the ambit of GST to give relief to the common man, no government has submitted the proposal in writing to the GST Council.

A lot of the increased expenditure of the government is paid from the additional mobilisation of revenue from petrol and diesel.

Last month, Union petroleum minister Dharmendra Pradhan said the Centre needed the revenues to foot the bill for Covid-related welfare measures for a large section of the population.