FM asks states to end levies;states blame centre for inflation

New Delhi, Jan 19 (PTI) Finance Minister Pranab Mukherjeetoday asked the state governments to abolish octroi and manditax to check rising prices, even as the opposition- ruledstates held the Centre squarely responsible for highinflation.

Addressing the pre-budget consultation meeting with thestate Finance Ministers, Mukherjee said the state governmentsshould end local taxes and bridge the gap between farmgate andretail prices.

The states on their part attributed the rise in prices topolicies of the Centre and urged the union government toremove or lower duties on crude oil, petrol and diesel.

Asking state governments to play their part in controllinginflation, Mukherjee said, "I would urge you to review alllocal levies like mandi tax and octroi duty which add toprices of food articles and impede smooth movement ofessential commodities."

Uttrakhand Chief Minister and Finance Minister RameshPokhariyal Nishank, however, retorted by saying that, "pricerise is not a subject of states. It is totally Centre''ssubject. We are ready to sit with the Centre and arrive atsolutions. Inflation is high because of Centre''s export-importpolicy".

Bihar''s Deputy Chief Minister and Finance MinisterSushil Modi wanted the Centre to reduce duties on petroleumproducts to tame rising inflation which soared to 8.43 percent in December, up from 7.45 per cent a month ago.

"Inflation, particularly in food and primary articles... fuelled by petrol and diesel increases has been aparticular worry for all of us. While price increase due tointernational price movements is to some extentunderstandable, the commensurate increase in taxes, which arelevied ad valorem can be avoided", Modi said.

Inflation, despite persistent efforts of the governmentand the Reserve Bank of India to check price, rose to 8.43 percent in December, up from 7.45 per cent a month ago.

Food inflation had soared to a year''s high of 18.32per cent for the week ending December 25 before declining to16.91 per cent in the subsequent week.

These figures do not reflect the recent decision of thecentre to increase price of petrol by about Rs 2.50 a litre inview of the rising price of crude oil in the internationalmarket.

Referring to bottlenecks in supply chain, Mukherjee alsoasked the states to review and reform their agricultureproduce and marketing laws.