After the Rajasthan government announced reduction of VAT on fuel prices, Union minister Piyush Goyal Wednesday said that all state governments have been requested to take such measures. Goyal also claimed that inflation is under control. Addressing the media at the BJP headquarters, Goyal said that taxes of Central government mostly have specific rates, and thus when fuel price rises the Centre does not get an additional share but that goes to the state governments.
“Hence, state governments have been requested that in view of rising prices, they should either make ad valorem rate specific or they should reduce it. Rajasthan government has taken the initiative, and I am sure other (state) governments will follow,” he said. Ad valorem payment, rate, or tax is calculated according to the price of a product or service, rather than at a fixed rate.
Besides Rajasthan, Andhra Pradesh and West Bengal have cut VAT on fuel prices so far this week. Goyal said that fuel prices have increased globally, and that the government is closely monitoring the global situation and will take steps accordingly.
On the Opposition’s repeated demands for slashing fuel prices, Goyal said that “knee-jerk reactions” will not help and may harm the economy by worsening fiscal deficit and pushing up inflation. The minister said the government is working with a holistic view of the economy. Goyal said inflation rate last month was 4.17 per cent and figures of current months are yet to come. “Inflation is under control,” he said.
Goyal also claimed the previous Congress-led UPA government had left oil companies in such a bad financial situation that if the same situation had continued today there would have been a crisis of oil and gas in India.
Maintaining that only the Narendra Modi government has taken initiatives to clean the economic system, Goyal said bad loans were distributed between 2006 and 2014 (under successive UPA governments) without studying the projects and without checking ability of the promoter. Bank loans, he claimed, were increased to three times, which led to creation of a situation of over-capacity. “These promoters are these days being forced to repay their loans,” Goyal said.