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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Trump administration says its war in Iran has been 'terminated' before 60-day deadline

01-05-2026 ¦ 01-05-2026 IST

Us president Donald Trump (PTI)

Washington (AP): The Trump administration is arguing that the war in Iran has already ended because of the ceasefire that began in early April, an interpretation that would allow the White House to avoid the need to seek congressional approval.

The statement furthers an argument laid out by Defense Secretary Pete Hegseth during testimony in the Senate earlier Thursday, when he said the ceasefire effectively paused the war. Under that rationale, the administration has not yet met the requirement mandated by a 1973 law to seek formal approval from Congress for military action that extends beyond 60 days.

A senior administration official, who spoke on condition of anonymity to discuss the administration's position, said for purposes of that law, “the hostilities that began on Saturday, Feb 28 have terminated.” The official said the US military and Iran have not exchanged fire since the two-week ceasefire that began April 7.

While the ceasefire has since been extended, Iran maintains its chokehold on the Strait of Hormuz, and the US Navy is maintaining a blockade to prevent Iran's oil tankers from getting out to sea.

Under the War Powers Resolution, the law that sought to constrain a president's military powers, President Donald Trump had until Friday to seek congressional authorisation or cease fighting. The law also allows an administration to extend that deadline by 30 days.

Democrats have pushed the administration for formal approval of the Iran war, and the 60-day mark would likely have been a turning point for a swath of Republican lawmakers who backed temporary action against Tehran but insisted on congressional input for something longer.

“That deadline is not a suggestion; it is a requirement,” said Sen Susan Collins, R-Maine, who voted Thursday in favour of a measure that would end military action in Iran since Congress hadn't given its approval. She added that “further military action against Iran must have a clear mission, achievable goals, and a defined strategy for bringing the conflict to a close."

Richard Goldberg, who served as director for countering Iranian weapons of mass destruction for the National Security Council during Trump's first term, said he has recommended to administration officials to simply transition to a new operation, which he suggested could be called “Epic Passage,” a sequel to Operation Epic Fury.

That new mission, he said, “would inherently be a mission of self-defence focused on reopening the strait while reserving the right to offensive action in support of restoring freedom of navigation.”

“That to me solves it all,” added Goldberg, who is now a senior adviser at the Foundation for Defense of Democracies, a hawkish Washington think tank.

During testimony before the Senate Armed Services Committee on Thursday, Hegseth said it was the administration's “understanding” that the 60-day clock was on pause while the two countries were in a ceasefire.

Katherine Yon Ebright, counsel at the Brennan Center's Liberty and National Security Program and an expert on war powers, said that interpretation would be a “sizeable extension of previous legal gamesmanship” related to the 1973 law.

“To be very, very clear and unambiguous, nothing in the text or design of the War Powers Resolution suggests that the 60-day clock can be paused or terminated,” she said.

Other presidents have argued that the military action they've taken was not intense enough or was too intermittent to qualify under the War Powers Resolution. But Trump's war in Iran would certainly not be such a case, Ebright said, adding that lawmakers need to push back against the administration on that kind of argument.