New Delhi: Under attack for not passing on benefits of fall in crude prices to consumers, Finance Minister Arun Jaitley on Monday said the savings are being used for developing infrastructure to push growth and create jobs besides enabling oil marketing companies meet their losses that once stood at Rs. 30,000 crore.
Arun Jaitley spoke on the issue in Lok Sabha while replying to a debate on the Budget 2016-17 during which members targeted he government for not reducing prices of petrol and diesel in proportion to the fall in crude prices in the international market.
Congress leader Mallikarjun Kharge said only 50 per cent of the gains from low crude oil prices have been passed on to the consumers.
In his response, Arun Jaitley said, "The benefit of reduction in crude oil has been divided into three portions. One goes to public sector oil marketing companies. These oil companies make future purchases of crude oil and they had incurred losses."
He said at one point of time, these oil companies were sitting on Rs. 30,000 crore loss and that couldn't have been met by increasing income tax or any other tax. "So, naturally oil companies -- which decide the price in the market -- would "wipe off their losses first", he said.
In recent months, there has been a drastic fall in global crude prices amid sluggish global economic scenario but there have been concerns that the government was not fully passing on the ensuing benefits to the consumers.
According to Arun Jaitley, many states have also hiked VAT (Value Added Tax) levied on fuel and such proceeds are used for public purpose only. Whatever has come to the central government is a small portion of excise or cess, he said, adding "we have spent a portion of that in infrastructure because spending on infrastructure helps in creating more jobs and pushes growth.
"Therefore those who buy scooter or car also uses road. So this is his contribution for building of roads.The simple explanation is that consumer is entitled to pay less for petrol. He is also entitled to good road. Therefore, consumer gets a good road," Jaitley said.
Talking about the blackmoney disclosure scheme brought by the government in the Budget, Jaitley said it was unlike the earlier VDIS or black bond scheme which favoured the black money holders.
Under the proposed scheme a declarant will have to pay 30 per cent tax and 15 per cent surcharge and penalty, he said. The Finance Minister referred to the VDIS of 1997 and said under it, no interest, no penalty was imposed and the declarants were permitted to value their assets at 1987 price.
Similar concessions were available in the black bond scheme, he said. "That is why I said that it is out of ignorance that such a phrase (is used by Rahul)... It is also borne out of ignorance of your own history," he told the Congress benches.
Jaitley, in his 2016-17 Budget, has announced a disclosure scheme under which a four-month compliance window ending September 30 will be provided to people to declare undisclosed domestic assets and income and come clean by paying 45 per cent tax and penalty.
"This is not an amnesty or VDIS. If you have any undeclared asset today, you have to declare it at today's market value and pay 50 per cent over the tax. So it is not amnesty, VDIS or concession," Jaitley said.
The United Front government, during which P Chidambaram served as Finance Minister, had given an affidavit in the Supreme Court that it was the last amnesty scheme of the government.
The government gave the affidavit thinking "after me the deluge", Jaitley said, adding "sarkar toh chali gayi, lekin Bharat toh jivit rehene wala tha (Government did change but India had to live on)... What was the need for any government to bind any future government?"
The VDIS, which was described by many as unethical, immoral and improper was challenged in the Supreme Court. "The 1997 scheme was commented upon as being discriminatory upon an honest tax payer because their was no penalty because it was valued at a 10 year old value. As a result most declarants were either house wife or minorchildren," he said.
Referring to the issue of rising bad loans of the banking sector, Jaitley admitted that it is a big challenge and one has to think whether the legal system is a hurdle in the recovery process.
India, he said, has been able to maintain 7.6 per cent growth rate despite the fact that word is passing through a difficult phase and has adversely impacted country's exports.
Describing his Budget proposals "realistic", the Finance Minister sought support from the opposition in government's endeavour to retain India's position as fastest growing large economy in times of global slowdown. He drew comfort from the fact that Current Account Deficit is less than 1.5 per cent and WPI inflation during NDA government had never crossed 6 per cent and retail inflation is also low.
However, he added that India has its own areas of concerns as private investment is weak and government is trying to step up public investment and tried to resolve the problems facing various sectors, including steel, sugarcane, discoms, highways. Jaitley said various infrastructure projects suffer from
time delay and cost overrun and there is always a fear that if some steps are taken to resolve the issues CBI and CAG would come in and even PIL could be filed.
In this regard, he referred to the projects worth Rs. 15-16 lakh crore which got stuck due to some problem or the other and no solution was forthcoming.
"We have amended the Arbitration Act and set up Commercial Division in High Courts. I have proposed a
statutory mechanism for resolution of Public Contracts, he said.
It is necessary, Jaitley said, that the effort to resolve these problems are not looked upon with suspicion and there should be legal protection for persons involved in the process.
Jaitley stressed that NDA government's budgetary accounting is different and it has not cut expenditure to
maintain fiscal deficit. He said that allocation to states have been rising and Rs. 9.11 lakh crore would be given to states in 2016-17 fiscal, up from Rs. 8.11 lakh crore in current fiscal.
With regard to rationalisation of tax laws, Jaitley said in the last two budgets he has sought to dole out benefits to salaried class and lower middle class section of population.
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