Modi has clearly used the price cuts to exploit the festive spirit on the Diwali eve to build some favourable public opinion in favour of his saffron party. To add to the total impact, the NDA-ruled states lost no time in announcing their own cuts in addition to those announced by the Centre. The coordinated moves seem to have generated a lot of goodwill for the ruling party.

As of now, 22 states and UTs, including Uttar Pradesh, Madhya Pradesh, Haryana, Himachal Pradesh, Karnataka, Gujarat and Goa, have extended additional VAT benefits on diesel and petrol. Karnataka announced a cut of Rs 8.62 a litre for petrol and Rs 9.40 for diesel, while Madhya Pradesh offered an additional Rs 6.89 price relief on petrol and Rs 6.96 on diesel and Uttar Pradesh lowered VAT on petrol by Rs 6.96 and diesel by Rs 2.04 a litre.

The Modi government has followed up the price cut with an appeal to the states not to bring in politics in the pricing of fuels and proportionately forego a part of their taxes so as to bring relief to the people.

The smart move by the BJP has put the opposition-ruled states in an awkward position, making them spoil sports in the eyes of the general public. The ‘errant’ states include Congress-ruled Rajasthan, Punjab, Chhattisgarh, and opposition alliance ruled Maharashtra, Jharkhand and Tamil Nadu. Naturally, Mamata’s West Bengal, LDF-ruled Kerala as well as Telangana and Andhra Pradesh have also refused to oblige.

The development has put the opposition-ruled states in a dilemma as they do not want to earn the displeasure of the people, but at the same time give up on a bonanza that came their way on account of the Centre’s original action. On top of that, they could always put the blame on the Centre, because the ‘original sin’ was obviously committed by it.

For a start, the CPI-M-ruled Kerala government has flatly refused to effect any corresponding cut in the state-levied taxes, saying that the Centre should have reduced the tax by a bigger margin as in the first place it is a problem created by the central government itself.

It is as though the Centre has created a problem and left it to the state governments to grapple with it and find a solution. So far, the opposition-ruled states have acted in unison by refusing to announce their own cuts. In fact, except Orissa, no other opposition-ruled state has bitten the bullet. There is apparently a move to bring about a common stand by the opposition states on the issue and some kind of consultations are said to be currently on.

Kerala finance minister K N Balagopal sought to blow the lid off the central game and asserted that the Modi government is misleading the people on the fuel tax issue and singularly blamed the Centre for the high fuel prices. He pointed out that the states were not receiving a share of the revenue collected by the Centre by way of the additional tax.

He further pointed out that the Centre was cheating the states in the name of special tax. In 2018, the price of crude was around 80 dollars and the central tax was Rs 17.98 at that time. But when crude price dropped to one-third, the Modi government raised the tax, he pointed out. The cut of nine rupees has to be seen in the context of the Centre raising the tax by Rs 32, he added.

Irrespective of the merit of the arguments, it is an issue on which the opposition states will have to tread very carefully as it involves perceptions, which need to be managed in terms of its electoral implications. (IPA Service)