According to Gehlot, the state government will bear the loss of annual revenue of Rs 3500 crore due to this move. It is noteworthy that after the recent reduction in excise duty on petrol and diesel by the central government, the state government was under pressure to reduce VAT. The main opposition party BJP was continuously targeting the state government for its demand for reduction in VAT.
It was told in the meeting of the Council of Ministers that due to the continuous increase in the prices of petrol and diesel by the petroleum companies, the relief given by the Central and State Governments to the common man is decreasing. The central government has consistently reduced the basic excise duty on petrol and diesel since 2016 and reduced the share of the divisable pool to be shared with the states. Due to this, the share of the states has come down, while the special and additional excise duty has been increased continuously. The states do not get any share of this increase. This move of the Center is against the spirit of financial federalism.
It was told in the meeting that during the Kovid lockdown, on 6 May 2020, the Central Government had increased the excise duty on petrol by Rs 10 and on diesel by Rs 13 per liter. After this, this year also the price of petrol has increased by about 27 rupees and diesel by about 25 rupees per liter. Now it is being said to give relief to the public by reducing petrol by only Rs 5 and diesel by Rs 10 per liter. This reduction in excise duty by the Center by Rs 5 per liter on petrol and Rs 10 per liter on diesel is insufficient and the public will not get permanent relief from it. It is noteworthy that the excise duty increased by the Center during the Corona period has been reduced significantly, while the VAT which was increased by the State Government has come back to almost pre-Corona condition.
It was also informed that VAT on petrol and diesel accounts for more than 22 per cent of the state’s total tax revenue. Due to the global pandemic of Kovid, there has been a huge reduction in the revenue of the state by 20 thousand crores till the month of October in the current financial year. One of the major reasons for this is the non-availability of GST reimbursement of Rs 5,963 crore by the Center to the state.