Prime Minister Narendra Modi on Wednesday invoked cooperative federalism to urge opposition-ruled states to provide consumers relief from high fuel prices by reducing VAT (value added tax) on petrol and diesel in step with the excise duty reduction by the Centre in November last year.
"Many states like, Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala, Jharkhand did not agree to our request for some reason or the other, and the burden on the people of these states continued," he said during a virtual meeting with CMs to discuss the Covid situation. Pointing out the economic challenges arising from the Russia-Ukraine conflict, he said, "I request all states that during the current global challenges, we should work as a team in line with the ethos of cooperative federalism."
The states that reduced VAT on petrol and diesel (by Rs 5 and Rs 6 a litre, respectively) are estimated to have forgone revenue of around Rs 16,000 crore between November and March. On its part, the Centre is seen to have taken a monthly hit of around Rs 8,700 crore as it lowered excise duty on petrol by Rs 5 a litre and on diesel by Rs 10 a litre.