The Centre has continued to make a killing in excise duty mop up on petrol and diesel. According to the CGA data, the Centre has mopped up over Rs 1 lakh cr between April-July and the state's share of this bounty is less than Rs 5500 crore, which is not even 5.5 percent of the total corpus.
While the impact of the steep hike in road cess and special excise duties was reflected in close to Rs 3.90 lakh crore collected in FY21 by the Centre, the impact of the cut in basic excise duties to adjust for the agriculture infra development cess in the budget is telling on the states share.
Also, while net tax revenues during April-July stand at a buoyant Rs 5.29 lakh crore, almost Rs 95,000 crore of this collection is made up of excise duties.
The Centre aims to collect Rs 3.35 lakh crore by March-end and at the current pace of growth in excise collections, almost 30 percent of the target has already been met. With a monthly asking run rate of Rs 28,000 crore in excise duties, this year again, the Centre is likely to beat its revenue aim.
Last year from November onwards the Centre was collecting over Rs 35,000 cr in excise every month, and once the demand in the busy season on fuel picks up further, the Centre may be clocking the same growth rate again this fiscal.
But despite these strong numbers, the common man continues to pay for petrol and diesel at close to Rs 100 a litre. As a thumb rule, Re 1 cut in duties is likely to cost the exchequer Rs 13,000 crore, say government officials. Also, the Centre will expect a large number of States to cut fuel taxes as well, not just one or two.
At the rate at which the retail selling price of petrol, diesel stand now, to make cuts meaningful central duties alone will need to be slashed by at least Rs 5 a litre, if not more.
But with the Centre virtually closing the doors on the states of their meaningful share of central excise revenues, a majority of the States are not in the mood to even listen, let alone act. And the Centre is definitely not letting go of the excise cash cow, at least for now.