Despite the government’s attempt to collect funds through fuel cess, a significant amount of arrears remains uncollected, reaching a total of INR 12923.21 crore as of January this year. According to a report by the Comptroller and Auditor General (CAG), there was a record arrear of INR 21,797 crore in the 2020-21 financial year, and the total arrears are expected to exceed INR 34,000 crore by the end of this financial year. If a cess of INR 2 is collected for each litre of petrol and diesel, an annual income of INR 750 crore will be obtained, and only INR 307 crore will be obtained by increasing the fair value of land by 20 percent. Additionally, the increase in diesel prices will also result in an inflationary burden. Last year’s tax revenue was INR 29002.48 crore.
The CAG report also stated that even if various departments’ irregularities and indirect benefits are avoided, an additional income of 25 percent of the current amount can be obtained. The report also alleges that irregularities in the Excise and Registration departments may result in the loss of an amount twice the original dues. The report highlights that the original survey number is not used as the basis for fixing the fair value while calculating the stamp duty, leading to the loss of crores.
Furthermore, the report suggests that there may be political motives behind the government’s introduction of fuel cess. The Chief Minister claimed in a press conference that the cess was imposed due to restrictions on credit limits imposed by the central government. However, the CAG report stated that there was no significant reduction in the central government’s allocation, with INR 42628 crore being allotted as grants and tax shares last year, which is almost double the amount given in 2016, the first year of the first Pinarayi government. At that time, the central allocation was INR 23735.37 crore. Although INR 11000 crore is needed to provide welfare pensions, the central government is only reducing the loan limit by INR 4000 crore due to the state’s loan guarantee.
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