FM blocks MoST bid to mop more revenue from petrol

Taking cognizance of the Finance Ministry’s objections to the proposal, the Cabinet decided to take up the matter only after a hike in prices of petrol and diesel to check the soaring oil pool account deficit. It also asked the Transport Ministry to suggest alternate measures to fund road development. Though the ministry is hopeful of finding a solution shortly, the Finance Ministry is "unlikely to concede easily".

The road fund proposal had been lying with the Cabinet for quite some time. In fact, it was listed on the agenda for discussion on November 12 but no decision could be taken.

Later, the Finance Minister promised to provide to the road sector a big chunk of the money collected through the 5 per cent service tax on transportation of goods by road, consulting engineers, air travel agents, tour operators and car rental agencies.

However, the service tax too has been delayed in the wake of protests from truckers and travel agents.

The road fund, created in 1929, became operational through a resolution of the constituent assembly of India in 1947 and then by subsequent amendments in 1949, 1959 and 1977. However, there was no change in its revenue share, which has continued to be 3.5 paise per litre. The cess amounted to 15 per cent of the basic price of petrol at the time it was levied. However, even though prices of petroleum products kept increasing each year, the share that went to the road fund was never hiked.

In fact, the Parliament had passed a resolution in favour of a higher share for CRF from the revenue accruing from petrol and diesel prices on May 13, 1988 but nothing happened. As a result, the transport ministry has been getting only Rs 18-20 crore as against its requirement of nearly Rs 40,000 crore for improvement of roads.