Petrol politics kicks in as states go for tax cut

Petrol politics kicks in ahead of polls as states go for tax cut

The steady rise in fuel prices had angered people and made sections in the BJP jittery over fears of a blowback

Representative image. Credit: PTI Photo

With a number of BJP-ruled states reducing taxes on petrol and diesel on Thursday and the party trying to frame it as a “Diwali gift” by the Modi government, the Congress took a swipe at the ruling party, saying the decision to slash the excise duty was driven by fear and not by a desire to lighten the common man's burden.

The steady rise in fuel prices had angered people and made sections in the saffron party jittery over fears of a blowback. The BJP is already under pressure over its handling of the Covid-19 crisis and facing anti-incumbency in poll-bound states. The excise duty cut, interestingly, came after the bye-election results and Congress leader P Chidambaram said it was a “by-product of the bypolls”.

After BJP-ruled Madhya Pradesh, which has the costliest fuel rates, announced a reduction in VAT, the spotlight will be on Opposition states to follow suit. So far, nine BJP-ruled states and two ruled by allies have reduced VAT on petrol and diesel. UP, which goes to polls in less than five months and is crucial for the BJP, is an agrarian state where a reduction in diesel prices is good news for farmers.

Read | 'Centre reduced fuel rates by Rs 5 after bypoll defeat'

All indications are that more Opposition-ruled states will soon slash taxes even as they argue that the BJP has done this after reading the writing on the wall, having lost seats in bypolls in Karnataka, Himachal Pradesh and Rajasthan.

The ruling party believes that public pressure will finally prevail and Opposition-ruled states will have to reduce VAT on diesel as it affects farmers and the transport business substantially.

Political analyst Rasheed Kidwai said the “tax cut on petrol and diesel is being pitched as a ‘Diwali gift’ by BJP backers”.

“However, a cut in petrol prices is jarring and aimed at pleasing a largely angry and dissatisfied section of citizens. These measures, populist as they may sound, go against the grain of effective administration and market-linked price mechanisms.” 

Read | Fuel excise duty cut will give common man relief: Shah

But Kidwai added the measure is “understandable as rising fuel prices mean rising anger”, which any ruling political party can ill afford, more so with elections round the corner”.

States which reduced VAT on both fuels include Karnataka, Assam, Tripura, Manipur and Goa (all BJP-ruled). Odisha (BJD) and Bihar (NDA) Uttarakhand, Gujarat (BJP), Sikkim (NDA) , Delhi (AAP) and Rajasthan (Congress) reduced their local taxes, making the fuel cheaper by different rates.

On Thursday evening, BJP-ruled Madhya Pradesh also announced a 4% cut in the Value Added Tax (VAT) and Rs 1.50 cut in the cess on the two fuels; some states have done both.

While Home Minister Amit Shah called it “Diwali gift” by PM Modi, the Congress launched a broadside against the government, flagging the high fuel prices on Twitter under the hashtag “Bhajaapa ne nikala Diwala” (BJP made people bankrupt).

“While you’re having a happy Diwali millions of Indians are unable to go see their families because of the exorbitant fuel prices. What are you doing to control the soaring prices?” the party asked in one of the tweets. 

Interestingly, while the Congress was dismissive of the excise duty cut by the Centre, in Kerala the BJP and the Congress were on the same page.

Both criticised the CPI(M)-led Kerala government’s stand that the state cannot reduce taxes on the fuels in the same manner as the Centre did it as a “face saver”. In West Bengal, the BJP asked the Mamata government to cut VAT.

Congress leader P Chidambaram said the excise duty was due to the bypolls. “The results of the 30 Assembly and 3 LS by-elections have produced a by-product. The Centre has cut excise duties on petrol and diesel!” he tweeted

Randeep Surjewala, chief of AICC communication department, termed it “jumlanomics (slogan economics) of Modinomics (Modi economics).”

While the Congress reminded that the cut has come only after a repeated rise in fuel prices, former NDA ally Shiv Sena said the BJP has to be defeated completely if the fuel prices have to be brought down by Rs 50.

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