States are between devil and deep sea: Chidambaram on excise reduction on fuel

New Delhi, May 22

Former Finance Minister P. Chidambaram on Sunday slammed the Union government for not giving states more funds, though reducing additional excise duty on fuel which will be borne by the Center.

He said that the notification on the reduction of duty on petrol and diesel is available and, "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."

"The states are getting very little by way of share of duties on Petrol and Diesel. 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. The situation is like being between "the devil and the deep sea"," he tweeted.

On Saturday, he said, "Raise Rs 10 per litre in two months and cut Rs 9.50 per litre on petrol and Rs 7 per litre on diesel. This is equal to rob Peter more and pay Peter less!"

Chidambaram has alleged that, "FM's exhortation to States is meaningless. When she cuts Central Excise by one rupee, 41 paise of that rupee belongs to the States."

"It means that Centre has cut 59 paise and the States have cut 41 paise. So, dont point fingers The true cut will be if the Centre cuts from the cess it levies on petrol and diesel (which is not shared with the states)," he had added in his tweet.