NEW DELHI: Prime Minister Modi stirred a hornet’s nest when, during a meeting on Wednesday afternoon, he asked the Opposition-ruled states to reduce taxes and pass on the benefit to the people.
To buttress his point, he cited the instances of Karnataka and Gujarat which have reduced the Value Added Tax on fuel and given much-needed relief to the common man, despite the move hurting the State coffers.
Flagging the high prices, he urged Tamil Nadu, West Bengal, Telangana, Maharashtra, Kerala and Jharkhand – all Opposition ruled states – to reduce VAT in national interest and thereby benefit the common man.
He further invoked the spirit of cooperative federalism in a scenario impacted by the Ukraine war and called for better Centre-State coordination in the economic sphere. ‘‘It has become imperative to increase the coordination between the Centre and the states and uphold the values of cooperative federalism,’’ he underscored.
The supply chain has been impacted and challenges are mounting, he explained.
Modi said the Centre had reduced excise duties on petrol and diesel in November to diminish the price burden. The states were, in turn, asked to reduce VAT, which is imposed by them and transfer the benefit; however, only some states -- mostly BJP-ruled -- had done the needful.
"I am not criticising anyone but praying to you for the welfare of people of your states...I urge you to reduce VAT now, even after a delay of six months, to benefit the people," he said, with chief ministers of most of these states listening.
Noting that the Centre anyway shares 42 per cent of its revenue with the states, the prime minister said it is his "special request" to these chief ministers to reduce VAT.