Following the reduction in excise duty on petrol and diesel by the government of India, Finance Minister Nirmala Sitharaman issued a clarification on Sunday to the opposition’s criticism of the excise duty drop affecting states’ share of central taxes.
In response to the Opposition’s criticism of the excise duty cut, the Finance Minister stated that the central government will bear the full cost of the Rs 8 per litre reduction on petrol and Rs 6 reduction on diesel. This information was shared by the Finance Minister in a series of tweets.
The Finance Minister stated that Basic Excise Duty (BED), Special Additional Excise duty (SAED), Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel. Only the Basic ED is sharable with states whereas SAED, RIC & AIDC are non-shareable. The excise duty cut has only come from this non-shareable part which is totally borne by the centre.
3/ The excise duty reduction of ₹ 8/litre on petrol and ₹6/litre on diesel (effective from today) has entirely been made in Road & Infrastructure Cess (RIC).— Nirmala Sitharaman (@nsitharaman) May 22, 2022
Even in November ‘21, the reduction of ₹ 5/litre in petrol and ₹ 10/litre in diesel was entirely made in RIC.
She stated that the Rs 8/litre reduction in fuel excise duty and Rs 6/litre reduction in diesel excise duty (both effective from 22nd May 2022) was totally funded by the Road and Infrastructure Cess (RIC). She went on to say that even in November 2021, the Rs 5/litre petrol and Rs 10/litre diesel price reductions were made totally in RIC.
“Basic ED which is sharable with states has not been touched. Therefore, the entire burden of these two duty cuts (made in Nov, 21 and yesterday) is borne by the Centre,” she said.
4/ Basic ED which is sharable with states has not been touched.— Nirmala Sitharaman (@nsitharaman) May 22, 2022
Therefore, the entire burden of these two duty cuts (made in Nov, 21 and yesterday) is borne by the Centre.
Further slamming the opposition, the Finance Minister maintained that data from the Reserve Bank of India indicated that the Modi government spent Rs 90.9 lakh crores on developmental spending from 2014 to 2022, compared to only Rs 49.2 lakh crores from 2004 to 2014.
She stated that the duty reduction from Sunday will cost the government Rs 1,000,000 crores per year, while the duty reduction in November 2021 will cost the government Rs 1,20,000 crores per year.
6/ RBI data shows total developmental expenditure incurred by the @PMOIndia @narendramodi Govt during 2014-‘22 was ₹ 90.9 lakh crore.— Nirmala Sitharaman (@nsitharaman) May 22, 2022
In contrast, only ₹ 49.2 lakh crore was spent on developmental expenditure during 2004-‘14.
Ms Sitharaman concluded that the entire spending made by the Modi government on food, fuel, and fertiliser subsidies so far comprises Rs 24.85 lakh crores, plus the Rs 26.3 lakh crores spent as capital expenditure. During the UPA’s ten years in power, just Rs 13.9 lakh crores were spent on subsidies.
On Saturday, May 21, 2022, Finance Minister Nirmala Sitharaman announced that the central government will lower the central excise duty on petrol and diesel. This has eventually cut the retail price of petrol by Rs 9.5 and diesel by Rs 7.