Higher Fuel Prices May Give States A ₹22,700-crore Windfall

Higher Fuel Prices May Give States A ₹22,700-crore Windfall

State governments will likely reap a windfall gain of around ₹22,700 crore this fiscal from the increase in the prices of petrol and diesel, a report by the State Bank of India’s Economic Research Wing has claimed. “We also estimate that since the States have an incremental revenue over the budgeted one, they could cut, on an average, petrol prices by ₹3.20 a litre and diesel by ₹ 2.30 per litre, without affecting their revenue arithmetic,” said the report, authored by Soumya Kanti Ghosh, Group Chief Economic Adviser of SBI.

The report released on Tuesday comes at a time when the Narendra Modi government has come in for harsh criticism for repeated hikes in fuel prices.

Currently, fuel is under a dual taxation regime. The Centre levies excise duty at specific rates — ₹19.48 for petrol and ₹15.33 for diesel. The States impose sales tax or VAT ad valorem. Some States also collect a cess. Read more

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