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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Congress cites Maniben Patel's diary entries, asks Rajnath to apologise for Babri claim

06-12-2025 ¦ 06-12-2025 IST

Rajnath Singh (PTI)

New Delhi (PTI): The Congress on Saturday shared diary entries of Vallabhbhai Patel's daughter from a book to rebut Defence Minister Rajnath Singh's claim that India's first prime minister, Jawaharlal Nehru, wanted to build the Babri masjid using public funds, and demanded that Singh apologise for spreading "falsehoods".

Congress general secretary in charge of communications, Jairam Ramesh, claimed the defence minister was spreading falsehoods to “improve his relationship” with Prime Minister Narendra Modi.

“Here is Maniben's original diary entry in Gujarati on pages 212-213 in the book ‘Samarpit Padchhayo Sardarno’ by CA R S Patel 'Aaresh', published by Sardar Patel Vallabhbhai Patel Memorial Society, 2025,” Ramesh said on X, sharing screenshots of the relevant pages from the book.

“There is a huge difference between what is contained in the original diary entry and what Rajnath Singh ji and his fellow ‘distorians’ are propagating,” Ramesh said.

“The Defence Minister must apologise for the falsehoods he is spreading, simply to improve his relationship with the PM,” he claimed.

The Congress had earlier termed Singh's claim that Nehru wanted to build the Babri masjid using public funds a “lie” and “WhatsApp university story”, and said the defence minister should not walk in Prime Minister Narendra Modi's path.

Addressing a gathering at Sadhli village in Gujarat's Vadodara district last Tuesday, Singh said Nehru wanted to build the Babri masjid using public funds, but Sardar Vallabhbhai Patel didn't allow his plans to succeed.

The BJP had cited a book by Vallabhbhai Patel's daughter to double down on Singh's claims, and said the first prime minister also said he felt "repelled" by some of the temples in south India despite their beauty.

“The source of what Rajnath Singh said is the 'Inside Story of Sardar Patel, Diary of Maniben Patel'," BJP Rajya Sabha MP and national spokesperson Sudhanshu Trivedi had said at a press conference at the party headquarters while responding to media queries on the issue.

Trivedi claimed that on Page 24 of the book, it is written that Nehru also raised the question of the Babri mosque, but Sardar Patel made it clear that the government could not spend any money on building a mosque.