Being between 'devil and deep sea': Chidambaram on govt's excise cut on fuel

The former finance minister's remarks come a day after the government announced Rs 8 per litre cut in excise duty on petrol and Rs 6 reduction on diesel.

New Delhi: Senior Congress leader P Chidambaram on Sunday wondered whether the states can afford to give up revenue from VAT on petrol and diesel. Unless the Centre devolves more funds or gives them more grants, likening their situation to being between the devil and the deep sea, he expressed. The former finance minister's remarks come a day after the government announced Rs 8 per litre cut in excise duty on petrol and Rs 6 reduction on diesel.

"The notification on reduction of duty on Petrol and Diesel is now available. FM used the words 'Excise Duty', but the reduction is in Additional Excise Duty which is not shared with the states. Hence, contrary to what I said yesterday, the entire burden of the reduction falls on the Centre. To that extent, I stand corrected," Chidambaram said. The states are getting very little by way of share of duties on petrol and diesel, he said, noting that their revenue is from VAT on petrol and diesel.

"I wonder if they can afford to give up that revenue unless the Centre devolved more funds or gave them more grants," Chidambaram said. Earlier on Saturday, Chidambaram also reacted to the Center's decision of slashing fuel prices. He said that the true cut will be if the Centre decreases the cess it levies on petrol and diesel that is not shared with the states, adding that the Finance Minister's exhortation to states to reduce taxes is meaningless.'

'When she cuts Central Excise by one rupee, 41 paise of that rupee belongs to the States. It means that the Centre has cut 59 paise and the States have cut 41 paise. So, don't point fingers,'' the former Finance Minister said. ''Raise Rs 10 per litre in 2 months and cut Rs 9.50 per litre on petrol and Rs 7 per litre on diesel. This is equal to rob Peter more & pay Peter less!'' Chidambaram had tweeted earleir.

The government had on Saturday announced a record Rs 8 per litre cut in excise duty on petrol and Rs 6 reduction on diesel. Petrol price on Sunday was slashed by Rs 8.69 a litre and that of diesel by Rs 7.05 per litre following the government's decision to cut excise duty on auto fuels, giving relief to consumers battered by high fuel prices that had pushed inflation to a record high.