[<\/p>\n
Context<\/strong>: A few days ago, Prime Minister said that several Opposition-ruled states did not heed the Centre\u2019s call to lower taxes on petrol and diesel.<\/p>\n While several chief ministers contradicted the PM, the situation is particularly challenging for both the Centre and states as revenue from fuel taxes accounts for a sizeable share of general government revenues.<\/p>\n As per the Petroleum Planning & Analysis Cell,<\/p>\n – For Centre<\/strong>: The sector\u2019s contribution to the Union government exchequer stood at Rs 4.55 lakh crore<\/strong> in 2020-21, up from Rs 1.72 lakh crore in 2014-15.<\/p>\n – For states<\/strong>: In the case of states, it rose from Rs 1.6 lakh crore to Rs 2.17 lakh crore<\/strong> over the same period.<\/p>\n States are likely to face a revenue shortfall this year as the collections through the GST compensation cess will possibly cease at the end of June. Thereby, lowering of sales tax\/VAT on POL (petroleum oil lubricants) products will be fiscally challenging.<\/p>\n Since the revisions began in March, Oil Marketing Companies (OMCs) have raised prices of petrol and diesel by Rs 12 and Rs 10 per litre respectively.<\/p>\n The cumulative price of fuel includes an excise duty levy<\/strong> of Rs 27.9 and a VAT<\/strong> of Rs 17.13 which works out to around 43% of the retail selling price.<\/p>\n As these taxes are levied at both the central and state level, calibrated action will be required at both levels<\/strong> \u2014 even the monetary policy committee has in the past called for cuts at both levels.<\/p>\n Also, governments at both the central and state level could perhaps consider building in some counter-cyclicality in the taxes<\/strong> levied i.e. cut taxes when prices are high, maintain stability when prices fall. This would factor in concerns over both revenue and inflation.<\/p>\n Source<\/strong>: This post is based on the article \u201cCalibrated, coordinated action is needed by Centre & states to address the issue of high fuel prices<\/strong>\u201d published in The Indian Express<\/strong> on 30th Apr 22<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":" [ Context: A few days ago, Prime Minister said that several Opposition-ruled states did not heed the Centre\u2019s call to lower taxes on petrol and diesel. While several chief ministers contradicted the PM, the situation is particularly challenging for both the Centre and states as revenue from fuel taxes accounts for a sizeable share of… Continue reading Calibrated, coordinated action is needed by Centre & states to address the issue of high fuel prices<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[212,10500],"class_list":["post-182087","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704873924},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/182087","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=182087"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/182087\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=182087"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=182087"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=182087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What is the revenue contribution of fuel taxes to the Centre and the States?<\/h5>\n
What is the way forward?<\/h5>\n