PM Modi calls on states again to bring down VAT on fuel

Prime Minister Narendra Modi said on Wednesday the Centre and states should work in tandem, reiterating the theme of cooperative federalism, calling on states that haven't followed the reduction in excise duty on petrol and diesel by the Centre in November with a decrease in value added tax (VAT) to do so. He emphasised that high taxes on petrol and diesel in such states - almost all opposition-led - are an injustice to the people.

Beginning his virtual address with the steps taken by the Centre and states to combat the Omicron wave and the way forward, the PM shifted to address the global situation and its impact on India. He mentioned the Russia-Ukraine war and the consequent disruption in the supply chain, saying this has made coordination between the Centre and states even more essential now.

'Guj, K'taka Took Positive Step'

The prime minister said he did not wish to criticise any state but in November, when he had entreated the states to reduce VAT, some heeded his request, some did not. He made the same plea to all states again on Wednesday.

"The central government had reduced the excise duty on petrol and diesel in November to reduce the burden of high prices on the people," he said. "The Centre had also requested the states to reduce tax (VAT) and transfer this benefit to the citizens. After this, some states, in keeping with the views of the Centre, reduced tax but some states did not give any benefit to the people. Due to this, the price of petrol and diesel even today is more in these states than in others. In a way, this is not just injustice to the people of these states, but it also harms the neighbouring states."

Since November, when the Centre reduced excise on petrol and diesel, it has been at loggerheads with opposition-ruled states over VAT cuts. The issue was aggravated in February-end when Russia invaded Ukraine. Though India imports only 1% of its petroleum from Russia, the jump in international crude prices pushed up costs. India meets 80% of its oil requirement through imports.

Modi's words on Wednesday were aimed at opposition-ruled states that have been loath to lose revenue from petrol and diesel.