For the first time since July this year, petrol in 15 states and three Union Territories (UT) is being sold at less than Rs 100 from Thursday. Incidentally, all 15 states are ruled by the BJP and its allies. Except for Odisha, no other non-BJP-ruled state or UT has slashed fuel prices yet.

Overall, 23 states and UTs have undertaken a commensurate reduction of Value Added Tax (VAT) on petrol and diesel to give relief to consumers. Karnataka, Bihar, and Madhya Pradesh are the only BJP-ruled states where petrol still costs more than Rs 100 despite heavy cuts by the Centre and state. Petrol in the UT of Ladakh is also being sold at more than Rs 100.

A day ahead of Diwali, the Centre announced rate cuts on petrol and diesel prices. With this move, the central levy on petrol and diesel was cut by Rs 5 and Rs 10.

Fuel prices had touched the Rs 100-mark at the beginning of the second week of July almost everywhere in the country. Petrol was a little over Rs 69 per litre in April 2020 and had touched over Rs 90 at the end of March this year.

WHICH STATES/UTS HAVE REDUCED PETROL, DIESEL PRICES?

Following the Centre’s move, 16 states and seven Union Territories announced commensurate cuts in VAT, while 12 states and 1 UT desisted from making a move.

The states/UTs which are selling petrol below Rs 100 are Uttar Pradesh, Uttarakhand, Gujarat, Haryana, Assam, Chandigarh, Goa, Himachal Pradesh, Jammu and Kashmir, Sikkim, Arunachal Pradesh, Mizoram, Nagaland, Tripura and Puducherry.

The states/UTs which have not undertaken any reduction in VAT on petrol and diesel are Maharashtra, Delhi, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Kerala, Meghalaya, Jharkhand, Chhattisgarh, Punjab, Rajasthan and Andaman and Nicobar. All these states are ruled by non-BJP parties.

In fact, Odisha is the only opposition-ruled state that has announced a VAT reduction of Rs 3 per litre on both petrol and diesel.

With this distinction, the BJP and its allies in NDA are expected to extract political mileage.

DIFFERENT CUTS FOR DIFFERENT STATES

The heaviest reduction in petrol prices has been in Ladakh with a Rs 13.43 cut. However, the fuel is still being sold at Rs 102.99 in the UT.

Read: Diwali bonanza for citizens as Centre, states slash fuel prices

Among the states which have announced the sharpest cut in fuel prices are Karnataka, Puducherry and Mizoram, where the petrol price per litre has come down by Rs 12.62 and Rs 13.35.

Similarly, the highest reduction in diesel prices is in Ladakh with a Rs 19.61 price cut. Among states, the maximum price cut for diesel is in Karnataka with Rs 19.49 per litre, followed by Puducherry and Mizoram.

There were variations in the cuts in different states as the rate of VAT is neither uniform nor is it levied on the same base.

Some states charge the vat on the base price of fuels and others include the central excise in the base price for levy of VAT.

In states which charge VAT on the base price, which includes the central levies, the total incidence of price reduction was higher along with the states which charge higher VAT. These include Karnataka, Assam, Goa, Uttar Pradesh, Tripura, Manipur, Gujarat, Himachal Pradesh, Uttarakhand, Bihar, Odisha, Haryana, and Arunachal Pradesh.

While the Centre’s levy cut was fixed, most states responded differently. Karnataka, Assam, Tripura, Manipur, Gujarat and Goa announced a cut of Rs 7 on both petrol and diesel in addition to the Centre’s cut.

In Odisha, VAT has been reduced by Rs 3 per litre on both petrol and diesel. In Bihar, there has been a cut of Rs 3.20 per litre on petrol and Rs 3.90 on diesel. Uttarakhand reduced the VAT by Rs 2.

In Arunachal Pradesh, consumers will benefit from a Rs 10.20 price cut on petrol and Rs 15.22 on diesel after the relief given both by the Centre and the state government.

In Delhi, with the AAP government not backing up the Centre’s price cut, the reduction in petrol price was Rs 6.07 and that on diesel was Rs 11.75.

The minimum fall in petrol prices was in Dadra and Nagar Haveli and Daman and Diu, where fuel prices were cut by Rs 5.7.

In Congress-ruled Rajasthan, petrol prices dropped by Rs 6.35. For diesel, Chennai witnessed a reduction of Rs 11.16 per litre and the price for petrol was reduced by Rs 5.26.

The Rs 5 cut in the central levy on petrol and Rs 10 on diesel is the highest-ever reduction after the Rs 13 and Rs 16 per litre increase in taxes on fuels effected between March 2020 and May 2020.

The twin hikes in central levies had taken the Centre’s collection on each litre of petrol to their highest level of Rs 32.9 and diesel to Rs 31.8 a litre.

The costliest diesel is now sold in Rajasthan at Rs 95.71 a litre (Jaipur), followed by Andhra Pradesh (Rs 95.18) and Mumbai (Rs 94.14). The cheapest diesel is in Mizoram at Rs 79.55 a litre. The additional reduction, on top of the excise duty cut, is the lowest in Uttarakhand because of lower duty cuts and the highest in UT of Ladakh.

Read: Rajasthan ready to reduce excise duty if…: Minister Pratap Singh Khachariyawas

LOW CUTS IN FOUR METROS RULED BY NON-BJP PARTIES

Citizens of four big metros of the country – Delhi, Kolkata, Mumbai and Chennai — however, are not as fortunate as their counterparts in other big or small cities. The governments of their respective states are run by the opposition parties which haven’t announced price cuts on fuel following the Centre’s move.

On Thursday, the petrol price in Delhi was Rs 103.97 against Rs 110.04 per litre on Wednesday. Diesel was down to Rs 86.67 per litre from Rs 98.42.

In Mumbai, petrol was being sold at Rs 109.98 per litre with a Rs 5.87 cut and diesel at Rs 94.14 per litre with a Rs 12.48 cut.

In Kolkata, petrol was being sold at Rs 104.67 with a Rs 5.82 cut and diesel at Rs 89.79 per litre with a Rs 11.77 cut.

In Chennai, a litre of petrol was priced at Rs 101.40 after a cut of Rs 5.26 and diesel was Rs 91.43 per litre, cheaper by Rs 11.16.

IMPACT OF LEVY CUT ON CENTRE’S COLLECTION

Based on April to October consumption numbers, the loss of revenue to the central government due to the levy cut will be Rs 8,700 crore per month, which totals to an annual impact of over Rs 1 lakh crore. However, for the remainder of the current fiscal, the impact is likely to be Rs 43,500 crore.

Data available from the Controller General of Accounts (CGA) in the Union Ministry of Finance showed excise duty collections during April-September 2021 surged to over Rs 1.71 lakh crore, from Rs 1.28 lakh crore mop-up in the same period of the previous fiscal.

For the full 2020-21 fiscal, excise collections were Rs 3.89 lakh crore and Rs 2.39 lakh crore in 2019-20, the CGA data showed.

After the introduction of the Goods and Services Tax (GST) regime, excise duty is levied only on petrol, diesel, ATF and natural gas. All other goods and services are under the GST regime. Minister of State for Petroleum and Natural Gas Rameswar Teli had in July told Parliament that the Union government’s tax collections on petrol and diesel jumped by 88 per cent to Rs 3.35 lakh crore in the year to March 31, 2021 (2020-21 fiscal) from Rs 1.78 lakh crore a year back. Excise collection in pre-pandemic 2018-19 was Rs 2.13 lakh crore.

OPPOSITION STATES CRY FOUL

The Centre had lowered not the excise component but the road and infra cess to Rs 13 from Rs 18 on petrol and to Rs 8 from Rs 18 on diesel. Since the Centre has cut cess and not the excise on fuels, there is going to be no change in the revenue share states get from the Centre. They will continue to get 41 per cent of Rs 12.40 per litre among states for unbranded petrol and Rs 9.80 a litre for diesel as per the recommendation of the 15th Finance Commission.

Chhattisgarh Chief Minister Bhupesh Baghel criticised the Centre for making minor tweaks to fuel prices that don’t make an impact. He claimed that the Centre first raised the price of petrol and diesel by up to Rs 30 and then decreased it by Rs 5.

Punjab Finance Minister Manpreet Singh Badal confirmed that the state government will soon take a call on the Centre’s demand to reduce state levies on fuel. The Kerala government has also spoken up against the Centre’s move on fuel prices.