The entire cost of the fuel price cut announced on Saturday will be borne by the Centre, Union Finance Minister Nirmala Sitharaman said, noting that the reduction will be from the Road & Infrastructure Cess (RIC) component of the taxes levied on petroleum products.
She said that Basic Excise Duty, a component that the Centre shares with the States, would remain the same and so the burden will only be on the Centre.
Scene at a petrol pump in Jalandhar on May 21, 2022. The total revenue implication to Centre on these two duty cuts is ?2,20,000 crore a year, the Finance Minister noted.
Remarks from the minister came after some States and Opposition leaders, including former Union Finance Minister P. Chidambaram and Tamil Nadu Finance Minister Palanivel Thiaga Rajan, criticised her for calling on the States to follow suit and reduce State-levied taxes on fuel.
Further, Ms. Sitharaman also said that the latest tax reduction and the one announced in November 2021 will together cost the Centre Rs 2,20,000 crore a year. “The duty reduction made yesterday has an implication of ? 1,00,000 cr a year for Centre. The duty reduction made in November’21 has an implication of Rs 1,20,000 cr a year for Centre,” she tweeted.
RBI data shows total developmental expenditure incurred from 2014 to 2022 was ?90.9 lakh crore. In contrast, only ?49.2 lakh crore was spent on developmental expenditure during 2004-2014, she also said.
