Heavy Duty

Will the new fuel cess cost Chouhan in an elec­tion year?

India Today - - STATES - By Rahul Noronha

Not many would risk this in an elec­tion year. Ef­fec­tive mid­night Jan­uary 29, the Shivraj Singh Chouhan gov­ern­ment im­posed a new 1 per cent cess on petrol and diesel prices, push­ing their prices, al­ready among the high­est in the coun­try, fur­ther up. The Mad­hya Pradesh Mo­tor Spirit Cess is ex­pected to earn the state an ad­di­tional Rs 200 crore a year. For com­par­i­son, on Jan­uary 29 when petrol was at Rs 78.73 in Bhopal, it was sell­ing at Rs 71.27 in Delhi. The price dif­fer­en­tial for diesel was sim­i­larly steep: Delhi, Rs 61.88; Bhopal, Rs 67.53. (‘Ad­min­is­tered prices’ of petrol and petroleum prod­ucts have tra­di­tion­ally been high for in­land cities com­pared with port cities un­less there is a spe­cial city sub­sidy like in the case of Delhi or the North­east­ern states.)

So, what prompted this dar­ing gam­bit? Well, the fis­cal sit­u­a­tion is pre­car­i­ous, and taxes on fu­els are a very im­por­tant source of rev­enue—at Rs 9,000 crore, col­lec­tions are al­most a third of the ap­prox­i­mately Rs 30,000 crore of the state’s yearly com­mer­cial tax earn­ings. With bor­row­ings at an all-time high of

Rs 1.75 lakh crore, chief min­is­ter Chouhan has vir­tu­ally no re­sources to pay for his nu­mer­ous wel­fare schemes, par­tic­u­larly for the dis­tressed farm sec­tor.

Some of the cash crunch may also be due to the re­duc­tion in VAT ad­vised by petroleum min­is­ter Dhar­men­dra Prad­han in Oc­to­ber 2017 to bring con­sumers re­lief. Sev­eral BJP­ruled states, in­clud­ing MP, had then cut VAT on diesel (5 per cent) and petrol (3 per cent) bring­ing diesel prices be­low Rs 60 per litre. But fuel prices have been climb­ing steadily since then. After the new cess, it is back to the lev­els they were at when the cut was made in Oc­to­ber. This has pre­dictably stoked a storm of protests.

“The chief min­is­ter loved rid­ing a bi­cy­cle ev­ery time the UPA gov­ern­ment in­creased diesel/ petrol prices due to sky­rock­et­ing [global] crude prices. He chooses to for­get all this now,” says state Congress pres­i­dent Arun Ya­dav who, in­ci­den­tally, has also got out his bi­cy­cle to protest the new cess.

Spot­ting a po­lit­i­cal op­por­tu­nity, Congress lead­ers have come out strongly, crit­i­cis­ing Chouhan’s move. “Loans taken by the MP gov­ern­ment are used in po­lit­i­cal pro­grammes like the Nar­mada ya­tra and Shankaracharya ya­tra,” says leader of the Op­po­si­tion Ajay Singh, ac­cus­ing the gov­ern­ment of squan­der­ing funds on giv­ing the CM an image boost. Singh sought a white pa­per de­tail­ing how funds bor­rowed by the state have been spent. State cabi­net spokesper­son Narot­tam Mishra says the new cess will be utilised to im­prove the road in­fra­struc­ture. But no one’s re­ally buy­ing his ex­pla­na­tion.


NO BRAKES Con­gress­men protest the new petrol cess

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