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No reduction in fuel prices: TN finance minister

Chennai: Tamil Nadu finance minister Palanivel Thiaga Rajan on Sunday ruled out any immediate measures to reduce excise duty on petrol and diesel due to the fiscal situation in the state
By Divya Chandrababu
PUBLISHED ON JUN 21, 2021 12:51 AM IST

Chennai: Tamil Nadu finance minister Palanivel Thiaga Rajan on Sunday ruled out any immediate measures to reduce excise duty on petrol and diesel due to the fiscal situation in the state. It was an election promise of the DMK government, and the minister said it would happen later when the situation is better.

Speaking to reporters, the minister listed reasons for not doing this immediately. He said that the Union government, in its budget, imposed and increased the cess on fuels and deprived the state of the revenue. He added that the price and taxes of fuel are high, but the dues to the states have been reduced. Taxes collected by the Union government for petrol and diesel have increased by 63%, from 2.40 lakh crore to 3.90 lakh crore, he said. He also said that states are yet to receive their dues. He added that the “fiscal situation was much worse than what they had feared,” and the second wave of Covid-19 had increased state spending to thousands of crores. The finance department is preparing a white paper on the fiscal situation, which will be released in two weeks, he said.

For these reasons, he said that the state government is unable to cut petrol prices immediately.

“But, we will not go back on our word,” the finance minister said, adding that once the ‘injustice’ is corrected, the reduction will be done. “In our history since independence, we have never seen the state rights and finances being taken away like this and laws made by the Union government on subjects that are in the state lists,” he said.

A political commentator, Sumanth Raman criticised the government on Twitter, saying that these facts were known when the DMK had made a poll promise. The DMK had stated in its election manifesto that when they come to power, they will reduce the price of petrol and diesel by 5 and 4 respectively. To this, the finance minister responded, “Things we didn’t know then: Union budget would switch 50,000 crores from excise to cess (not shared with states). The full extent of fiscal decay.” He added that they did not promise an immediate cut, but a cut during their term.

Political analyst Maalan Narayanan agreed with the state’s decision not to cut under the present circumstances.

“Technically, it is the right thing to do because VAT is one of the main resources for states,” Narayanan said. “If they introduce a reduction now, it will affect the state’s finances, which are already in bad shape. Due to the lockdown, TASMAC (Tamil Nadu State Marketing Corporation, the state-run liquor outlets) was shut, there wasn’t much revenue from GST and registrations for land and vehicles had come down. Politically, this was the same predicament that the AIADMK was in.”

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