There Is a Way to Cut Petrol, Diesel Prices But the Modi Government Isn't Interested

Prasenjit Bose thewire.in , Vartha Bharati | 12-09-2018 | 17:46:00 IST

An employee of Bharat Petroleum waits for customers in Mumbai. Credit: Danish Siddiqui/Reuters

The prices of petrol and diesel have reached unprecedented levels, leading to massive discontent and protests organised by the opposition. Petrol in Delhi has crossed Rs 80 per litre and diesel Rs 72 per litre. In most other cities, the prices have reached higher levels, depending on the rates of VAT imposed by state governments.

Spokespersons of the Narendra Modi government are pleading helplessness over the situation, citing the hardening of global crude oil prices and the devaluation of the rupee. This is a lame excuse. The current prices of petrol and diesel in India’s neighbouring countries Asia are much lower, as can be seen from Table 1.

Table1: Retail price of petrol and diesel (1 litre) in India and neighbouring countries (in Indian rupee) on September 1, 2018

Source: Petroleum Planning & Analysis Cell (PPAC), Ministry of Petroleum & Natural Gas

Why are the retail prices of petrol and diesel higher in India? It is because of the high incidence of Central excise and state VAT imposed on these commodities. For every litre of petrol, the Central government currently collects an excise duty of Rs 19.48; for diesel the excise duty is Rs 15.33 per litre. The state governments impose VAT over and above this. The rate of indirect taxes (central excise and VAT taken together) have crossed 100% in the case of petrol and 70% in the case of diesel. Without taxes, the retail price of a litre of petrol and diesel should have been around Rs. 40, even at the current level of international crude oil prices.

Table 2: Tax Revenues of the Union government

Source: Receipts Budget, 2018-19; CAG Report Nos. 42 of 2017, Department of Revenue (Indirect Taxes – Central Excise) & CAG Report No. 17 of 2013, Department of Revenue (Compliance Audit on Indirect Taxes-Central Excise and Service)

*Note: Data on excise duties on petro-products for 2017-18 is provisional and has been sourced from PPAC Ready Reckoner, June 2018, Ministry of Petroleum & Natural Gas    

Table 2 provides the annual estimates of gross tax revenues of the union government under the UPA-II and the Modi regime along with the break-up of major tax-heads, namely excise duties on petro-products, corporate tax and income tax. Table 3 provides the share of these three major tax heads in gross tax revenue, calculated from Table 2.

It can be seen clearly from Table 3 that the reliance of the Union government on excise collections from petro-products have gone up considerably under the NDA. In the five years from 2009-10 to 2013-14, the share of excise collections from petro-products in gross tax revenues (GTR) averaged around 8.8%. From 2014-15 to 2017-18, the average went up to 12.5%. Simultaneously, the share of corporate tax collections in GTR fell from an average of 36.5% under UPA-II to 30.7%. The average share of income tax collections in GTR have increased from 19% under UPA-II to 21%.

Table 3: Share of Major Taxes in Gross Tax Revenues (GTR) of the Union government

Source: Same as Table 2

This exposes the class bias in the NDA’s revenue mobilisation strategy. While the tax share of large corporations have come down substantially, the tax share of fuel consumers and income tax payers has risen. The corporate class has benefitted at the cost of the poor and the middle class. This socially iniquitous and unjust revenue mobilisation strategy needs to be abandoned forthwith.

Petrol and diesel need to be brought under GST, just like kerosene and LPG. Even if the highest GST rate of 28% is applied, petrol and diesel would not cost more than Rs 55 per litre. The resulting revenue losses can be compensated through higher mobilisation of corporate taxes and doing away with corporate tax exemptions. Revenue foregone on account of corporate tax incentives have totalled over Rs 85,000 crore per year in the last two financial years, as per the receipts budget 2018-19. The pro-corporate bias in the revenue mobilisation strategy needs to be corrected.

Prasenjit Bose is an economist and political activist.

Courtesy: thewire.in

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Denied party funding, Congress Puri LS candidate Sucharita Mohanty returns ticket

04-05-2024 ¦ 04-05-2024 IST

Sucharita Mohanty | PC: PTI

Bhubaneswar, May 4: Congress candidate for the Puri Lok Sabha constituency Sucharita Mohanty has declined to contest the elections and returned the party ticket alleging lack of funding from the party.

Mohanty, daughter of former Congress MP Brajamohan Mohanty in a mail to AICC general secretary (organization) K C Venugopal on Friday claimed that her campaign in the Puri Lok Sabha constituency has been hit hard because the party has denied funding.

She alleged that AICC Odisha in-charge Ajoy Kumar "categorically" asked her to fight from her own resources.

Elections to the Puri Lok Sabha constituency will be held on May 25.

"I was a salaried professional journalist who entered electoral politics 10 years ago. I have given all I have into my campaign in Puri. I tried a public donation drive to support my campaign for progressive politics without much success so far. I also tried to cut down the projected campaign spending to the minimum," she said.

As she was not able to raise funds on her own, the Congress leader had approached all senior leaders including the party's central leadership for funds for an impactful campaign in the Puri Lok Sabha constituency.

"It is clear that only fund crunch is holding us back from a winning campaign in Puri. I regret that without party funding, it won't be possible to carry out the campaign in Puri. I, therefore, return the party ticket for the Puri Lok Sabha constituency herewith," she said in her mail to the AICC.

However, Mohanty said she will remain a loyal Congress worker and her leader is Rahul Gandhi.

Speaking to media persons, Mohanty said "I was denied funds from the party. In Assembly segments under the Puri LS constituency, weak candidates were given tickets. BJP and BJD are sitting on mountains of money. Vulgar displays of wealth are everywhere. It was difficult for me to fight the election."

The Congress leader said she wanted a people-oriented campaign but that was also not possible with the lack of funds. The party is also not responsible for that as the BJP government has crippled the party. There are a lot of curbs on expenditure and many bank accounts have been frozen, she added.

AICC in-charge of Odisha, Ajoy Kumar said "Mohanty is saying that no fund provided and weak MLA candidates have been fielded. The party has nominated its best candidate for the MLA seats and funds will be provided to a candidate when the candidate launches the campaign and seriously fights at the ground."

Before coming to the ground, she (Mohanty) has alleged that no funds were given. But, at the time when she was requesting a party ticket, Mohanty had said that she would seriously fight the election, Kumar said.

The party has already decided to change the Puri LS candidate and a proposal was submitted to the Congress high command. The name of the new candidate will be announced very soon, he said.

Sucharita has been fielded by the Congress from the Puri Lok Sabha seat against BJP national spokesperson Sambit Patra and BJD candidate Arup Patnaik, a former Mumbai Police Commissioner.