Mumbai: “Mai sabhi state governments ko likh raha hu abhi ki jasa Rs 2.50 ki katoti central government absorb kar rahi hai, through the revenue and Oil marketing companies, toh equivalent ammount state governments bhi absorb kare.”
(I will be writing to all the state governments, like how the central government is cutting Rs. 2.50 and absorbing the costs, through excise and oil marketing companies, state governments should also absorb the same), finance minister Arun Jaitley said on October 4, 2018 while briefing the media after announcing the Centre’s decision to cut petrol and diesel prices by Rs 2.50/litre.
VAT is the tax levied by state governments on petroleum products apart from the excise duty levied by the central government.
Some states had not waited for the Centre to reduce fuel prices. Kerala reduced the price by Rs 1 per litre with effect from June 1, Business Today reported on May 30, 2018.
Andhra Pradesh reduced VAT on petrol and diesel by Rs 2/litre from September 11, The Hindu BusinessLine reported on September 10, 2018.
Rajasthan cut VAT on petrol and diesel by Rs 2.5/litre from September 9, The Times of India reported on September 9, 2018.
West Bengal reduced VAT on petrol and diesel by Rs 1/litre, Livemint reported on September 12, 2018.
Karnataka reduced VAT on petrol and diesel by Rs 2/litre, The Hindu BusinessLine reported on September 17, 2018.
After the Centre cut fuel prices, 14 BJP-NDA ruled states & one under President rule (Jammu and Kashmir), and one union territory (Chandigarh) announced reduction in VAT as on October 8, 2018 (here, here, and here).
“Apko yaad hoga ki pichle saal jab oil prices baad rahe the, toh October me, humne kendre ki taraf se Rs 2 excise duty cut kiya tha. Phir kahin rajya sarkano ne, vishesh rup se jo BJP ke saath sambandith hai aur NDA ka saath sambandith the, unhone bhi correspondingly cut kiya the. (As you remember, last year in October when oil prices were rising that time the central government had cut Rs 2 on excise duty and then many states especially associated with the BJP and NDA correspondingly cut it. This situation has arised mainly due to International crude prices and I have always said that if our domestic parameters are strong then that increases our capacity to provide relief), the finance minister said.
“Ab sab rajyo ki pariksha hogi ki jin rajyo ke neta keval lip sympathy kar rahe the aur tweet kar rahe tha, woh rajya kya karte hai? (It will be a test for those states whose leaders were only tweeting and indulging in lip sympathy. What will they do now?)
Subsequently, five states – Madhya Pradesh, Gujarat, Maharashtra, Himachal Pradesh, Uttarakhand and one union territory – Chandigarh – had reduced VAT. At that time, four states were ruled by the Bharatiya Janata Party (BJP) while one (Himachal Pradesh) by the Congress.
Update: The story has been modified to incorporate the Karnataka government decision to reduce fuel prices on September 17, 2018.
(Alphonso is an intern with IndiaSpend & FactChecker)