The Hindu Business Line : States oppose declared goods status for aviation fuel

New Delhi, Dec. 16 The Empowered Committee of State Finance Ministers has opposed the idea of granting ‘Declared Goods’ status to aviation turbine fuel (ATF). It will be writing to the Prime Minister against the Centre unilaterally taking any such step, the Committee Chairman, Dr Asim Dasgupta, said on Tuesday.

Meanwhile, faced with the slackening growth in revenues due to the slowdown in the economy, the States are also planning to approach the Centre for an additional Rs 20,000-crore Plan grant to spend on infrastructure and social programmes, besides building houses in rural areas. The State Finance Ministers are likely to meet the Prime Minister for this, Dr Dasgupta told newspersons.

“Loss of revenue is one reason why States are opposed to ATF being given declared goods status. Anyway we are totally against any unilateral action from the Centre. The prices of ATF have recently come down, the benefit of which are not being passed on to passenger,” Dr Dasgupta said. States annually earn between Rs 3,500-4,000 crore from the taxes levied on ATF.

Besides, States are yet to receive any information about the cost structure of flight operations of various airlines and how ATF pricing is determined from the central Ministries concerned.

On the revenue position of State Governments, Dr Dasgupta said that till October this year, the cumulative tax revenue growth of all States put together was 23 per cent. In November, however, this growth has dipped to 12 per cent. So far, the cumulative growth of VAT was 24 per cent up to October. But by end-November it slipped to 19.9 per cent.

“States are rightfully worried to protect their planned expenditure and also to add stimulus for the economy in the wake of prevailing slowdown,” Dr Dasgupta said. He also expressed concern about an issue relating to pay revision of Government employees. “We are repeating our urge to the Centre to bear half of the funding for 2008-09 and 2009-10 beyond which the 13th Finance Commission will come into force. States also want option of special additional market borrowing and relaxation in FRBM target,” Dr Dasgupta said.

There is also consensus between the Centre and States that India will go in for a dual GST system from April 2010, he added.