Thread by @jcsethi

RISING PETROL PRICES:

Congress has called Bandh today while Rajasthan reduces VAT by 4% whereas Karnataka increased VAT by 2%.

Center has little in reducing prices whereas it depends upon States. Why Congress & non-BJP states r not showcasing by reducing VAT

READ THREAD HERE👇

Many of you are confused about the RISE IN PETROL PRICES. Who can reduce it - State or Centre. Here is an extremely simple explanation. Every INDIAN MUST READ THIS.

The chief panelist is noted economist Sri.Vishwanath Bhat, Economic Cell Convenor of BJP Karnataka.
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Sri.Vishwanath Bhat - "I really feel bad when people hold Modi responsible for the weak rupee, rise of petrol prices etc.
Let me explain.

The government can control the prices of anything grown or manufactured inside the country. For example, food grains, automobiles etc.

But goods that are 85% or 100% imported, cannot be controlled price-wise. For example, we import 100% of the gold, 82.7% oil.

In June 2017, petrol price in the international market was $45. In India, it was Rs.64.50.

Since then, in 15 months, oil price in the international market has risen by 70%. But in India, in those 15 months, the price has risen from Rs.64 to Rs.80, a mere 24.5% increase.

Now, people tried to blame Modi for the price rise.

Do you know how much the Centre gains from sale of 1 litre of petrol. It is Rs.11.50 only. They show it as Rs.19.50 which is wrong because there is a cess of Rs.8 included for NHAI.

When the Vajpayee government built new highways such as the Golden Quadrilateral, the government decided to levy a cess of Rs.8 for sustaining infrastructure building. Therefore, the Rs.8 earned as cess goes directly to the National Highway Authority (NHAI).

The NHAI used to build 8-11 kms of highway per day but now it builds 40 kms of road per day. From this cess collected, the NHAI has made an allocation of Rs.1,44,000 crores to Karnataka for 3 years for the building of highways.

Of the Rs.11 which the Central government receives, 42% is given to the states as devolution of Central funds. In effect, the Centre receives Rs.7 only and Rs.4.50 goes to the state.

Coming to our state (Karnataka), the state government has raised the cess by 2% from 30%. They may have challenges which we should respect and not comment like they do. So, they get Rs.21.50 from that cess and Rs.4.50 from the Centre ; a total of Rs.26.

The state receives the full cess levied into the treasury but the Center gets only 58% of the cess.

Should the state which receives Rs.26 as cess reduce the price or should the Center which receives Rs.7 do it"

2nd panelist - "The role of states in reducing petrol price is primary because they receive the major share of revenue. The reality is that fluctuation in crude oil prices are linked to price rise and taxes have been levied which has led to further price increase.

When the prices have increased beyond Rs.80, the state government should take some steps. There is a temporary situation where the rupee has weakened to Rs.71.40 against the dollar. But there are global reasons for this.

We cannot control the actions of Donald Trump who is trying to protect his own country.

We need a permanent solution to this problem. There are 21 BJP ruled states which also need to take action. The Congress rules in Karnataka, Punjab and Mizoram.

Rahul Gandhi should not point fingers at Modi when his own government in Karnataka raised cess by 2%. What are the parties within the Mahaghatbandhan led by Mamata Banerjee, KCR, Chandrababu Naidu etc doing in their own states.

Naidu has recently said that petrol prices will increase to Rs.100. The truth is that after Maharashtra, Andhra Pradesh has levied the highest VAT. How ready are the non-BJP state leaders ready to reduce cess in their states".

Sri.Vishwanath Bhat - "The Center receives a flat component which is Rs.11.50 only. But the state receives a percentage of the rate decided by the international markets. It is now 32% of the price in the international market.

They are lucky people (the Congress). When we took over the reigns, we had to pay for oil bonds worth Rs.2 lakh crores that they had purchased. They purchased oil bonds that would mature after 12 years. They never solved problems but postponed their impact.

In 2017-18, our government had to pay up for Rs.2 lakh crores worth of oil bonds. We have paid Rs.70,000 crores of interest also. In 2007-8, the rupee value was Rs.46 against the dollar.

If the rupee has weakened to Rs.70 today, the price of petrol has risen automatically by almost 50% due to this.

The revenues that the Central government has received, have been utilised for the right things. They had given 13 crore gas connections.

BJP identified & removed 3 crore bogus connections Of 10 crore connections, BJP have given 4 crore connections to BPL families FREE OF COST. Even 70 years after independence, 70% of rural households did not have sanitation facilities. It is a shame for India.

BJP have built 7.5 crore toilets.
The oil sector is the only sector where there is tax compliance. If prices are reduced by Re.1, there will be a reduction of Rs.13,000 crores in revenue. The fiscal deficit will increase to that extent.

Only if macro economic stability is achieved, the rupee can remain strong. In 5 years, the rupee has weakened only by 9%, Russian rouble by 52%, Bra zilian real by 42%"
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Excerpts from a Kannada TV panel discussion