Kolkata: With the
centre advising states to lower taxes on petro products, the West
Bengal government Monday accused it of attempts to destroy India's
federal structure by trying to block the limited avenues of
"I don't know the game plan behind this advertisement, but it is
for sure they (union government) are trying to destroy the
country's federal structure. The states have very limited avenues
of income and by asking the states to slash taxes they are trying
to destroy the federal structure," said Subrata Mukherjee, the
state's panchayat minister.
"Our party leader Mamata Banerjee will never allow this to
The central government, under attack for hiking diesel prices,
Monday issued a strong data-supported defence of its decision,
saying oil marketing companies (OMCs) are incurring huge losses
due to under-recoveries, which is threatening oil supplies and the
The petroleum ministry said India needed to import 74 percent of
its crude oil requirements at international rates, which had risen
sharply, and this was compounded by the rupee's steep fall against
the US dollar. The ministry put out its stand in a notice, "Was
the increase in price of diesel and capping of domestic LPG
avoidable?", published in leading English and regional language
dailies of the country.
Consequently, state-run oil marketing companies (OMC) had
under-recoveries amounting to Rs.1,38,541 crore in 2011-12, which
for 2012-13 are projected to rise to Rs.1,87,127 crore, posing a
threat to oil supplies and the country's economy.
The government has incurred a net loss of Rs.54,800 crore on
account of subsidising fuel supplies.
The ministry said the state governments do not bear the subsidy
burden and the record Rs.5 hike in diesel price per litre will
yield states an additional revenue of Rs.8,200 crore per annum.
Therefore, it argued, the states can forgo this additional revenue
to provide relief to the common man by lowering state taxes.
In response to the Left parties' charge that OMCs were showing
profits in their balance sheets, the ministry clarified that the
profit of Rs.6,177 crore shown on this count is only 0.7 percent
of the OMCs' turnover, which too had been realised owing to the
subsidy of Rs.1,38,500 crore provided by the government.
Mukherjee added that the central government should lead the way by
reducing the taxes.
"They (centre) should lead by example. First, they should slash
the central taxes on petrol products and then they should ask the
states to cut down on the taxes," he said.
Mukherjee's comments come at a time when his party Trinamool
Congress is considering a "hard decision" if the union government
does not roll back, within a 72-hour deadline ending Monday, the
twin decisions on FDI in retail and diesel price hike.