Too little, too late

THE Modi government has finally slashed excise duty on petrol and diesel by Rs 2 per litre each after continuously raising it in small doses nearly a dozen times in less than three years. Maybe the Finance Ministry yielded to public pressure and slashed excise duty; many others see it as a political compulsion ahead of the crucial Gujarat election, the home turf of PM Modi. With public anger building up, the government could not remain indifferent to the demand of providing relief from rising fuel prices. The Finance Ministry has, however, justified it as a move to quell rising inflation, ignoring minister KJ Alphons’ cocky comment that those who own vehicles could also pay higher fuel prices. 

The Finance Ministry had been a silent spectator to the gradual increase in fuel rates because there was no immediate political compulsion. Undoubtedly, petrol and diesel are the biggest revenue earners for both the Centre and states. But, indirect taxes on fuels ultimately hit the common man. The poor are being asked to pay for roads, airports, educational institutions and hospitals, which are mainly patronised by the affluent sections of society. All good governments instead choose the direct tax option to increase their revenues, where people are taxed as per their income and ability to contribute. 

Not only has the government taken its own time in reducing duty but also the quantum of the cut is inadequate. This half-hearted move will neither provide the desired relief to the consumer nor save the Finance Ministry from missing the revenue deficit target as it will still lose a revenue of Rs 13,000 crore. If the government is serious about protecting the consumer’s interest and shielding the poor from the cascading impact of transportation fuel on essential commodities, it needs to slash excise duties by another Rs 3-4 per litre to align retail prices that existed three years ago. Simultaneously, the Centre and states should work together to bring auto fuels under the GST regime to bring predictability in pricing and have a one-nation one-tax policy.