States' sharable pool not to be impacted by excise cut on petrol, diesel: FM

Sitharaman said RBI data shows total developmental expenditure incurred by the Modi government during 2014-22 was Rs 90.9 lakh crore

A day after the excise duty reduction on petrol and diesel, the government, on Sunday, clarified that the move will not impact the state's sharable pool as the reduction has been done only in the road and infrastructure, which goes entirely to the Centre. The basic excise duty from which the Centre shares 41% with states has not been touched.

Separately, the traders' body says the reduction in excise and customs will cut rates of consumer goods by 10%.

"The excise duty reduction of Rs 8/litre on petrol and 6s /litre on diesel (effective from today) has entirely been made in Road & Infrastructure Cess (RIC). Even in November ‘21, the reduction of Rs 5/litre in petrol and Rs 10/litre in diesel was entirely made in RIC," Finance Minister Nirmala Sithraman said.

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"Basic Excise Duty (BED), Special Additional Excise duty (SAED), Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel. Basic ED is shareable with states. SAED,RIC & AIDC are non-shareable," she said in a series of tweets.

Soon after the Centre reduced duty on the transport fuel,former finance minister P Chidambaram had said that the reduction was in Additional Excise Duty which was not shared with the states.

Separately, small traders body CAIT said that the latest cut on petrol and diesel should reduce the prices of everyday items by an average of at least 10% and similarly prices of other commodities should also come down because the cost of transportation of raw materials will also be cheaper now which may cause lowering of prices.

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CAIT also added that following the footstep of the central government, all the states should also reduce the rates of VAT, only then the public will get good relief from inflation.

CAIT also suggest to the government that it should direct the manufacturers, especially those manufacturing everyday items, food items, and oils to make public a comparative chart of the prices of items before and after the exemption of excise duty on petrol and diesel so that it can be clearly seen that whether the prices have been reduced or not.