Finance minister Pranab Mukherjee on Wednesday asked state finance ministers to remove the supply bottlenecks that led to a rise in commodity prices, but state ministers in turn asked the Centre to cut taxes on crude oil, petrol and diesel to check the price rise. The suggestions were exchanged at the Centre?s pre-Budget meeting with the states.
Mukherjee asked the state finance ministers to examine the supply management of items that are driving the current round of food inflation. He wants state ministers to address the local factors that widen the gap between the wholesale and retail prices.
While advocating a cut down on wastage of food, he asked states to review all local level levies like mandi tax and octroi, which add to prices of food articles and impede smooth movement of essential commodities.
Delhi?s finance minister AK Walia said, ?Vegetables, pulses have already been exempted from VAT (Value Added Tax) in Delhi.? Bihar?s FM Sushil Modi said, ?The 5% import duty on crude oil should be abolished.?
Haryana?s FM Ajay Singh Yadav said states needed to work in coordination to deal with the problem of hoarding.
Mukherjee said an important component of fiscal efforts (in tackling inflation) is tax reforms in both direct and indirect taxes. He said while the Direct Tax Code (DTC) is now being rolled-out with specific time lines, implementation of the goods and services tax (GST) requires consensus among states as well as between states and the Centre.