Jairam, Joshi tussle over diesel cess fund

Two Congress ministers are now headed for a tug-of-war over the share of road cess from premium diesel, soon after the party's recent tussle with an ally over hike in petrol price.

Two Congress ministers are now headed for a tug-of-war over the share of road cess from premium diesel, soon after the party's recent tussle with an ally over hike in petrol price.

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Rural development minister Jairam Ramesh wants an increase in his ministry's share of the road cess, which will lead to a cut in the road transport ministry's fund for National Highways by almost Rs 2,000 crore.

Road transport minister CP Joshi is in a bind: as Ramesh's predecessor in the rural development ministry he had also favoured such a move.

Presently, the government charges Rs 2 each as cess on every litre of high speed (premium) diesel and petrol. Out of the diesel cess, 75 paisa goes to the rural development ministry for rural roads while the road ministry gets Rs 1.25.

Ramesh has shot a letter to finance minister Pranab Mukherjee demanding equal distribution of the cess.

"I have asked to raise my ministry's share to Rs 1. Till 2005-06, when the cess was Rs 1.50 per litre, the two ministries had equal shares," Ramesh told Hindustan Times.

Joshi refused to comment. However, his ministry is opposed to Ramesh's demand as any cut would affect the maintenance of National Highways.

In the 2005-06 general budget, an additional 50 paisa cess per litre was introduced on premium diesel. It was entirely earmarked for National Highways.

"If I get 25 paisa more per litre I can generate an additional Rs 2,000 crore. It will be a 10% hike in fund for rural roads (PMGSY), which now stands at around Rs 20,000 crore. This additional fund is critical as we want to build more roads in Naxal-affected areas," Ramesh told Hindustan Times.

The cess on petrol has always been entirely given to the road transport ministry.