Amid the clamour for a reduction in taxes on petrol and diesel in the wake of the relentless rise in retail prices of the two fuels, finance minister Nirmala Sitharaman on Thursday said that the issue needed to be resolved jointly by the Centre and state governments.

The minister said she would not be able to say whether and when the taxes on fuels would be reduced, but added that retail fuel prices were not all about cesses levied by the Centre, but included excise duty (shared with states) as well as VAT levied by states. “There is no hiding the fact that revenue for the governments is there in fuel. At the same time, the government wants the end consumer to pay less for the fuel. For the purpose central and state governments need to decide mutually,” she said.

As the government and the Reserve Bank of India (RBI) gear up for a review of a medium-term inflation targeting framework in March, the minster said the government was committed to ensure that inflation doesn’t go beyond acceptable levels. Economists have cautioned against a dilution of the extant target, especially given the elevated fiscal deficit projections, until FY26.

Under the current framework, headline retail inflation has to be in the 4 (+/-2)% band

A day after prime minister Narendra Modi stated that the government has no business to be in business and that un-utilised public assets will be monetised under a medium-term plan, Sitharaman also said that the focus would be on privatising CPSEs functioning in the non-strategic sectors.

Stressing the need for big but nimble banks, Sitharaman said that banks got caught up with providing long-term capital instead of focussing on their core banking operations. Indicating public participation, especially retail investors in bonds and government securities (G-Sec) markets, she said that time has come for the government to get funding support from retail investors.

Speaking at an interactive session with the students of Indian Institute of Management (IIM), Ahmedabad on ‘The Economic Rebound and the Indian Economy in 2021 and Beyond’, Sitharaman went on to say that even after the privatisation of disinvestment process, presence of remaining PSUs would be solid.

“The central government’s intention is to improve efficiency of public sector units, even by the way of privatisation. Public money runs them. These organisations are people owned. It is the tax payers’ money, which are invested in PSUs. They need to be well managed and professionally run apart from being nimble in the operations,” she said.

Source : Times of India