Left seeks review of fuel cess hike

The Left parties have demanded a rethink on the imposition of additional 50 paise road cess on petrol and diesel. Petroleum Minister Mani Shankar Aiyar is likely to take up the issue with Prime Minister Manmohan Singh and Finance Minister P Chidambaram soon.

The government levies Rs 2 cess on every litre of petrol and diesel for road development. It was earlier Rs 1.50 but was increased by 50 paise from April 1.

Speaking to reporters after an hour-long meeting with CPI(M) leaders Sitaram Yechury and Deepankar Mukherjee here today, Aiyar said Rs 3,000 crore increase in the central revenue through duty changes in the Budget was due to the imposition of additional cess and not because of increase in excise duties.

"When every other sector is taking the burden of increase in international prices, the ministry of finance should also share some burden," said Mukherjee. He said the cess can be kept in abeyance till international prices were volatile.

On whether the Left would be agreeable to a marginal increase in prices, he said, "We are convinced that measures taken by the government could cover the cost. Let the government do its calculations."

Besides the roll back of additional cess, the two leaders also suggested that part of the funds collected by the government through imposition of cess on crude should be used for subsidising petroleum products.

The Standing Committee on petroleum had also recommended that the subsidy on kerosene sold through the public distribution network and domestic LPG should be continued beyond March 31, 2007 when it was scheduled to be phased out.

He said the government was too heavily dependent on the oil sector to mobilise its revenues. The oil sector contributed a giant share of the total revenue of the government through customs duty, excise duty, sales tax, cess, royalty and dividends from oil PSUs.

The sector contributed Rs 10,582.21 crore as customs duty and Rs 40,150.58 crore as excise duty during 2003-04. The percentage share of the customs duty in the gross revenue of the government is 21.77 per cent and that of excise duty is 44.17 per cent.