Being between 'devil and deep sea': Chidambaram on states' situation after Centre's excise cut on fuel

New Delhi, May 22: 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. His statement comes a day after the Centre reduced the excise duty on petrol and diesel.

On Twitter, the former Union Minister said that the situation of the states is like being between "the devil and the deep sea. "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.

The Congress leader said that contrary to what he 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, [sic]" he said.

"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," he tweeted.

On Saturday, Chidambaram, responding to the Centre's announcement on slashing fuel price report, said that the government raised 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 & pay Peter less!" he commented.

"FM's exhortation to States is meaningless. When she cuts Central Excise by one rupee,41 paise of that rupee belongs to the States," he slammed the Finance Minister, who asked the state governments to reduce the price on the fuel.

Giving relief to consumers, the 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. PTI