Finance Minister Nirmala Sitharaman on Thursday said that the Centre and states should talk to each other about reducing taxes on fuel, reported PTI. The prices of petrol and diesel have risen sharply in recent days.

When asked if the Centre was thinking about reducing cess or other taxes on fuel, she said that the question has put her in a dilemma.

“No hiding of the fact that the Centre gets revenue from it,” she said at the Indian Institute of Management in Ahmedabad. “Same is the case with states. I agree that there should be less burden on the consumers. For that, both the Centre and states should talk with each other.”

Earlier in the day, Reserve Bank of India Governor Shaktikanta Das had also said that the Centre and states needed to act in a coordinated manner to reduce taxes on petrol and diesel.

The RBI governor also said that revenue pressures on the government were completely understandable, since they had to spend more to tide over the impact of the coronavirus crisis. “But having said that, the impact on inflation also is something which comes in from the fact that petrol and diesel prices do have an impact on the cost of manufacturing, production,” Das said.

Petrol and diesel prices, which have been soaring over the past few weeks, have remained steady for three consecutive days, reported NDTV. Petrol cost Rs 90.93 in Delhi, while the price of diesel was Rs 81.32 on Friday. In Mumbai, petrol was priced at Rs 97.34, while diesel cost Rs 88.44.

States such as Rajasthan, Nagaland, West Bengal and Assam have cut taxes on fuel to provide some relief to the people.

Opposition parties have blamed Prime Minister Narendra Modi’s government for the exorbitant fuel prices, accusing it of raising taxes to scoop out the benefit reaped from international oil rates plunging to a two-decade low in April and May. They have been accusing the government of profiting off the suffering of people.

As per an analysis by BloombergQuint, the key factor for costlier petrol and diesel are taxes that account for about 55% to 60% of what consumers pay at the petrol pump. In the last year, the two fuels have turned costlier by Rs 17.35 and Rs 15 a litre, respectively.

However, Prime Minister Narendra Modi had last week blamed earlier governments for the skyrocketing fuel prices. He claimed that if the previous governments had focussed on reducing the country’s energy import dependence, the middle class would not have been this burdened today.

Why didn’t UPA bring MSP under purview of law, asks Sitharaman


On those demanding that the Minimum Support Price, or MSP, regime be brought under the purview of law, the finance minister asked why it was not done when Congress-ruled United Progressive Alliance was in power at the Centre before 2014.

“The [farm laws] protest is about the three laws which were passed [in Parliament in September last year]... these laws have to do nothing with MSP,” she said. “And since MSP is not a part of the three laws, to come and protest against the three laws and then raise [the matter of] MSP does not add up.”

Sitharaman said that though MSP is offered on 22 items, farmers are not coming to take it. “Because, outside the market, they get much higher rates than the MSP.” she said. “This actually shows that MSP held strongly, prices are above it and farmers benefit from that.”

‘Will achieve disinvestment target set for FY22’

The finance minister said that the Centre would be able to achieve the disinvestment target set for Financial Year 2022. She said that the target could not be achieved in previous years because of different reasons.

“Last year it was Covid-19, and the year before that the economy was slowing down and there was no appetite for the market for disinvestment,” Sitharaman said. “So, no hesitation in saying we could not achieve our [previous] targets. But now, there is an appetite and I am sure we will achieve.”

She called loss-making public sector undertakings “laggards” and said the government wanted to run profitable state enterprises in a professional manner by way of disinvestment.

“For the new India, just the public sector will not be sufficient to meet the growing demands,” she said. “So when we are talking about bare minimum presence [of PSUs], we are going to ensure big, scaled up bare minimum presence. In this sense, even if they are one of two, they will be well managed. We should not continue with laggard PSUs. They can not be laggards and be in the public sector also, because they are run by tax payer’s money.”