New Delhi: Finance Minister Arun Jaitley remained non-committal on cutting on fuel prices during the two-day review of the economy, even as the petrol touched a record high of Rs 81.91 per litre and diesel reached Rs 73.72 a litre in the national capital on Sunday.
Assuring that the government will strictly meet the 3.3 per cent fiscal deficit target of the current fiscal, the Finance Minister said that the government will end the financial year without any cuts in the budgeted expenditure as it is extremely necessary for economic growth.
Jaitley exuded confidence of surpassing the 7-7.5 per cent GDP growth target projected in the last Budget presented on February 1, meeting capital expenditure targets, surpassing tax collections projections and exceeding the record Rs 1 lakh crore target of revenue mobilisation from government stake sale in PSUs.
However, he did not say if the meeting discussed the recent spike in fuel prices that have been hitting record high due to the falling rupee and high global crude prices.
There were expectations that the government may cut excise duty on the two fuels to ease burden on the consumers but it seems it didn’t want to take chance as it stands to lose Rs 14,000 crore in revenue from a Re 1 per litre cut in excise.
It feels that the country cannot afford to have a twin deficit problem — a depreciating rupee and high crude import bill putting pressure on the country’s current account deficit (CAD), and a fiscal slippage.
It has been reported that the Centre may not lower taxes as a Rs 2 per litre reduction would impact the revenue by Rs 28,000 crore to Rs 30,000 crore. Instead, more states are expected to reduce VAT on fuel prices so that the Centre’s tax collection is not affected.
In the recent days, Rajasthan, Andhra Pradesh and West Bengal have announced deduction in VAT on petrol and diesel prices by Rs 2.5, 2 and Re 1 respectively.
While the Centre seems to be holding out against a cut in taxes on fuels, BJP President Amit Shah on Saturday said that the government will soon come out with a solution on the issue.