Bengaluru: Karnataka Chief Minister Siddaramaiah Monday justified the fuel price hike implemented in the state Saturday, calling it a “course correction” of sorts to get on par with neighbouring regions, as well as to mitigate the reduction in capital inflows from the Centre.
The state government had Saturday increased the price of petrol and diesel by around Rs 3. Following the announcement, the BJP held statewide protests Monday to try and corner the state government over the price hike and alleged that most funds for development were being diverted to bankroll Congress’s guarantees.
The Karnataka government has been at the receiving end of criticism for its five guarantees which cost the state around Rs 60,000 crore annually.
In light of these protests, CM Siddaramaiah Monday launched a scathing attack on the BJP and its alliance partner Janata Dal (Secular), or JD(S), and said that the Congress has led the charge against the Prime Minister Narendra Modi-led National Democratic Alliance (NDA) for denying states their “rightful” share in central taxes, “forcing” it to go in for higher borrowings to fund its development projects.
“Don’t we need money for development? After GST (was introduced), we (state) have limited sources for income,” Siddaramaiah told reporters in Bengaluru.
ThePrint Saturday reported that the price hike of petrol and diesel will bring in an additional Rs 3,000 crore.
“The hike is to increase resource mobilisation, and to ensure there are no problems, not because we don’t have money for salaries or for guarantees. We don’t have surplus revenue. This is to increase income,” he said.
In the post-GST regime, states are left with few income sources, like cess on petrol and diesel, excise on liquor, stamps and registration, and motor vehicles, among a few others.
However, even as the state government continues to increase collection targets of several departments like motor vehicles, excise, stamps and registration, according to the budget presented in February, it has fallen behind on its collection of state taxes.
Siddaramaiah said last Wednesday that he had asked officials to make sure tax collections are on target and that a review of these departments had not been possible in the past two months due to the restrictions in place on account of the Lok Sabha elections.
He added that the price of fuel was revised downward during the Basavaraj Bommai-led BJP government in 2022.
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‘Anti-people hike’
The BJP led protests across Karnataka Monday, calling the hike “anti-people”.
“On one side (there is) blatant corruption, (on) the other, the CM has completely failed in managing finances of the state. Amid this, the government has created a bigger burden on the state’s population,” B.Y. Vijayendra, the state president of the BJP said to reporters Monday.
Siddaramaiah said that the guarantees are targeted at aiding the poor unlike how Modi was using public funds to waive off loans to “Adani, Ambani and other rich people”.
Meanwhile, there is pressure from within the Congress in Karnataka to do away with the guarantees, with the MLAs pointing out that they did not bring the desired result in the Lok Sabha elections.
In July last year, Deputy CM and state Congress president, D.K. Shivakumar had told party MLAs that no funds will be released for development since a significant chunk of the budget was earmarked to fulfil the five guarantees.
Saying that Karnataka was among the more industrious states in the country, Siddaramaiah blamed the Modi-led Centre for the poor financial condition of the state. He said that Karnataka had lost over Rs 1.87 lakh crore since the 15th finance commission came into effect.
The state’s debt burden has increased with the size of the state’s budget (Rs 1.05 lakh crore), taking total liabilities to over Rs 6.65 lakh crore. This, however, is still lower than what is stipulated under Fiscal Responsibility and Budget Management Act, 2003.
Siddaramaiah said that when Modi took over as PM in 2014, crude oil prices were $113 a barrel compared to around $82 a barrel now, but the Centre did not allow this price decrease to translate into savings for the general population.
He added that when Modi came to power in 2014, the central excise duty on petrol and diesel was Rs 9.48 per litre and Rs 3.56 per litre, respectively. In May 2020, this stood at Rs 32.98 per litre and Rs 31.83 per litre, he said. As of May 2022, the per litre central taxes on fuel came down to Rs 19.90 on petrol and Rs 15.80 for diesel.
Siddaramaiah added that prices of petrol and diesel were higher in all adjoining states.
According to him, petrol prices are Rs 102.84 in Hosur (Tamil Nadu), Rs 106.66 in Kasargod (Kerala), Rs 109.44 in Anantapur (Andhra Pradesh), Rs 107.40 in Hyderabad (Telangana) and Rs 104.46 in Kagal (Maharashtra), compared to Rs 102.85 in Bengaluru (Karnataka) after the Rs 3 hike.
Similarly in diesel, prices are Rs 94.41 in Hosur, Rs 95.60 in Kasargod, Rs 97.29 in Anantapur, Rs 95.64 in Hyderabad, and Rs 91.01 in Kagal, when compared to Rs 88.94 in Bengaluru post the Rs 3 hike.