Politics apart the rising fuel prices have made the Union Government a helpless victim of its own policies. The statement not to cut excise duty on the fuel as the prices touch a new high every day tells government’s haplessness on this front. Opposition led by Congress as usual called for a nationwide Bandh with hardly any response effectively for support. On the other hand some of the states are not in favour of cutting down Value Added Tax (VAT) on the products. This divided stand has made the life of common man difficult. The prices of fuel have never seen such high rise blame it on the upturned policy on taxation. Worst is in most of the BJP ruled states the prices of these commodities are the highest like Maharashtra, Madhya Pradesh and Uttar Pradesh. Madhya Pradesh has the highest VAT with 22 per cent on diesel and 28 per cent on petrol. This is after the state has reduced duties 3 per cent for petrol and 5 per cent on diesel. The situation has worsened to the extent that MP petrol dealers are offering incentives like free food, air-conditioners, mobiles and silver coins to attract customers to buy fuel in bulk so that their cash flow is kept intact. After Rajasthan and Andhra Pradesh, West Bengal on Tuesday announced slashing of the prices of petrol and diesel by one rupee per litre. West Bengal Mamata Banerjee, who is at the forefront in the fight against the Bharatiya Janata Party (BJP), made a political statement by announcing the cut in petrol and diesel prices and said the Centre should also withdraw the cess on petroleum products. Andhra and West Bengal are non-BJP ruled states. The government decision not to cut excise duty is because it does not want to take any dent in revenue collections due to limited fiscal space available. With imports becoming costlier because of a free-fall in rupee against the US dollar, the government believes the current account deficit will overshoot the target and it cannot “disturb fiscal maths by cutting excise duty on petrol and diesel.” In an election year, the spending cut is not an option as it would hamper government’s spending on development schemes. The fears are genuine but haplessness reflects on government’s face as the rising fuel prices can dent the electoral prospects for BJP but in any case won’t enhance opposition’s fortunes too.
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