Coercive federalism, not cooperative, says Opposition after Modi asks states to cut fuel tax
At a meeting to discuss the Covid-19 situation, the prime minister on Wednesday flagged higher fuel prices in states ruled by Opposition parties.
Opposition leaders on Thursday criticised Prime Minister Narendra Modi a day after he said that states ruled by them did not pass on the benefits of reduction of the excise duty on fuel by the central government, leading to higher price of petrol and diesel.
At a meeting with chief ministers on Wednesday to discuss the coronavirus situation in India, Modi said that by not passing on the benefits to the citizens, the Opposition was doing them an injustice and harming neighbouring states.
Modi urged Maharashtra, West Bengal, Telangana, Andhra Pradesh, Kerala, Jharkhand and Tamil Nadu to reduce the value added tax on fuel “in the spirit of cooperative federalism” at the earliest to help consumers.
On Thursday, Congress leader Rahul Gandhi said the prime minister’s federalism was “not cooperative but coercive”.
Gandhi accused Modi of abdicating his responsibility by blaming states for the high petrol and diesel rates, even when the central government gets 68% of all fuel taxes.
“High fuel prices – blame states,” he said in a tweet. “Coal shortage – blame states. Oxygen shortage – blame states.”
West Bengal Chief Minister Mamata Banerjee and her Maharashtra counterpart Uddhav Thackeray pointed out that the Centre owed money to their governments, PTI reported.
“We have dues of Rs 97,000 crore with the Centre,” Banerjee told reporters at the state secretariat. “The day we get half of the amount, the next day we will give Rs 3,000 crore petrol and diesel subsidy. I have no problem with subsidy but how will I run my government?”
The Trinamool Congress chief said that there was no scope for the Opposition leaders to speak during Wednesday’s meeting with the prime minister and so they could not raise objections.
“PM Narendra Modi has delivered a completely one-sided and misleading speech,” she added. “Facts shared by him were wrong. We have been providing a subsidy of Re 1 on every litre of petrol and diesel for the last three years. We have spent Rs 1,500 crore on this.”
She also accused the Modi-led government of allocating more funds to the Bharatiya Janata Party-ruled states and neglecting others. “It would have been better had the PM not spoken on fuel price hike in a Covid-19 review meeting, it was his agenda,” she added.
Thackeray, meanwhile, said Maharashtra had been receiving “stepmotherly treatment” from the Centre despite being the highest contributor of direct taxes and the goods and services tax.
“The Centre has not paid the dues towards the GST compensation worth Rs 26,500 crore accrued till March 2022,” he added.
The Maharashtra chief minister also said that under a federal structure, the Centre should treat states equally, The New Indian Express reported.
Tamil Nadu Finance Minister Palanivel Thiaga Rajan said it was neither fair nor feasible for the state government to reduce taxes further, The Indian Express reported.
“Though the revenue to the Union government has increased manifold, there has not been a matching increase in the revenue to states,” he said in a statement. “This is because the Union government has increased the cess and surcharge on petrol and diesel while reducing the basic excise duty that is shareable with the states.”
The Tamil Nadu government, Rajan said, has repeatedly urged the Centre to reduce the cesses and surcharges and merge them with the basic tax rates so that the states got their rightful share from the proceeds of the Union government taxes.
Refuting the prime minister’s remarks, the finance minister also pointed out that the Tamil Nadu government has cut value added tax on petrol in September last year.
“It was estimated that the state government would incur a loss of Rs 1,160 crore annually due to this reduction,” he said. “Yet this was done, despite the financial strain inherited from the previous government, to reduce the burden on the people.”
Kerala Finance Minister KN Balagopal said that Modi’s comments blaming Opposition states are misleading. He said that the state government has not raised tax over the last six years and there was no need for a cut.