Petrol price cut to bring revenue loss of Rs 1,160 cr to state exchequer
The Dravida Munnetra Kazhagam government in Tamil Nadu, led by Muthuvel Karunanidhi Stalin, has done what most other states have hitherto hesitated to do. In his maiden budget on Friday, Tamil Nadu’s Finance Minister P T Palanivel Thiagarajan (PTR as he is popularly known as) thought from the side of the people to bring forth a Rs 3 cut in the price of petrol – much to the relief of the commoner.
PTR, presenting the revised budget estimate for the state for 2021-2022, announced a slash in petrol price by Rs 3, stating that he was going for the price reduction as per the directions of Chief Minister M K Stalin. He hastily added that the price cut would bring a revenue loss of Rs 1,160 crore to the state exchequer.
Petrol price cut brings relief to people
The price reduction move comes as a relief to customers who have been reeling under the continuous hike in fuel prices. People across the country have been clamouring to reduce petrol and diesel prices but in vain. Petrol prices have been going up and had risen for 41 days during the ongoing financial year. The metros, including Chennai, had been paying over Rs 100 per litre.
The latest budget announcement comes as a surprise to many, as PTR himself had stated in June 2021 that bringing down the Value Added Tax (VAT) on petrol and diesel will be possible only when the state’s finances show an improvement. When implemented, the latest announcement would bring in a sense of relief to those affected by the high fuel price.
Going by a Money Control report, the Finance Ministry’s revised budget estimates stated that the government has decided to reduce the effective tax rate on petrol by Rs 3 per litre. This, added the report, would “provide major relief to the toiling working-class people in the State”.
It needs to be noted that petrol price has seen record highs recently. On the day of the budget presentation, the price stood at Rs 102.49 per litre.
Petrol price cut burden to be borne by state govt
Apart from the base price of petrol, the Union and state governments both add their respective taxes. The lion’s share of the tax levied on petrol goes to the Union government. This is besides the base price of the fuel. With the new announcement, the state government stands to bear its share from the sale.
PTR, in July, had termed the tax structure unjust and added that the Union government’s taxes made up a large portion of the cost. He complained that though Rs 32.90 tax is imposed, Rs 31.50 is not being shared with states.
The fuel price cut was part of the DMK manifesto for the elections held earlier this year. In its poll manifesto, the party had said the petrol price would be reduced by Rs 5 per litre, and diesel by Rs 4. The Finance Minister had later stated that though some assurances would not turn real immediately, they indeed would over time.