Congress asks states to cut petrol tax; some oblige

Seeking to soften the blow of the steep and almost unprecedented hike in petrol prices announced on Wednesday, the ruling Congress party at the center has asked states where it rules or has a majority to cut taxes on the fuel.

Taxes account for about 40 per cent of the retail price of petrol. The tax rates on fuel are perhaps the steepest in Maharshtra, rapidly becoming notorious for almost insane indirect taxation levels. But since the state government is headed by the Congress, chief minister Prithviraj Chauhan may well oblige high command and cut fuel taxes.

Uttarakhand and Kerala have already announced a cut in petrol prices. Kerala has already made a sort of reputation by cutting fuel taxes to the lowest level across India; a move that is likely to help its finances in the medium term.

Petrol will now be Rs1.63 cheaper in Kerala and Rs1.87 cheaper in Uttarakhand.

Other states likely to benefit from the Congress diktat are Delhi, Haryana, Manipur, Rajasthan, Arunachal Pradesh, Mizoram, Jammu & Kashmir, Andhra Pradesh, Meghalaya, Assam, and West Bengal.

Somewhat surprisingly, West Bengal chief minister Mamata Banerjee has been muted in her response, accepting the price hike with obvious reservations. Normally, Banerjee's Trinamool Congress opposes every hike in controlled prices proposed by the government; but this time Trinamool (an important constituent of the ruling UPA at the centre) has accepted the hike – under protest, of course.