Entire cost of reduction in excise duty on petrol and diesel is borne by Centre, says Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman. Pic/PTI

Union Finance Minister Nirmala Sitharaman on May 22 clarified that the entire cost of the reduction in excise duty on petrol and diesel is borne by the Central government and the state's revenue won't be impacted by the move.

Taking to Twitter, Sitharaman shared "facts" about the Centre's decision to bring an Excise Duty cut on petrol and diesel, saying that both criticism and appraisal can benefit from them.

The Finance Minister informed that the Basic Excise Duty (BED), Special Additional Excise duty (SAED), Road and Infrastructure Cess (RIC), and Agriculture and Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel. "Basic Excise Duty is sharable with states. SAED, RIC and AIDC are non-shareable," she said.

Sitharaman clarified that the Excise Duty reduction of Rs 8 per litre on petrol and Rs 6 per litre on diesel (effective from today) has entirely been made in Road and Infrastructure Cess (RIC). She also informed that the reduction of Rs 5 per litre in petrol and Rs 10 per litre in diesel in November 2021 was also entirely made in RIC.

"Basic ED which is sharable with states has not been touched. Therefore, the entire burden of these two duty cuts (made in November 2021 and yesterday) is borne by the Centre," the Finance Minister said. The duty reduction made yesterday, as per Sitharaman, has an implication of Rs 1,00,000 crore a year for Centre.

Meanwhile, the duty reduction made in November 2021 has an implication of Rs 1,20,000 crore a year for the Centre. "The total revenue implication to the Centre, on these two duty cuts is thus Rs 2,20,000 crore a year."

Further, the Finance Minister shared that the Reserve Bank of India's data reveals that the total developmental expenditure incurred by Prime Minister Narendra Modi-led Government during 2014-22 was Rs 90.9 lakh crore. Slamming the United Progressive Alliance, she said that in contrast to the PM Modi-led government, only Rs 49.2 lakh crore was spent on developmental expenditure during 2004-14.

"The expenditure incurred by our government under Prime Minister Narendra Modi includes Rs 24.85 lakh crore spent so far on food, fuel and fertiliser subsidies and Rs 26.3 lakh crore on capital creation. Over the 10 years of United Progressive Alliance, only Rs 13.9 lakh crore was spent on subsidies," Sitharaman added.

Notably, after taking a critical view of the central government's request to the states to cut taxes on petrol and diesel, former Union Finance Minister P Chidambaram on Sunday said the facts about the states' share of tax reduction are contrary to what he had said previously as the entire burden of the duty cut would fall on the centre.

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