Budget unlikely to raise cess on petrol, diesel

The Budget is not likely to raise the much-talked-about cess on diesel and petrol, used for building roads and highway infrastructure, from the present Rs 2 a litre.

The cess is not likely to be increased even as the Ministry of Road Transport and Highways is pressing for a hike, sources said.

Under the formula for sharing the cess, half of it on diesel goes for rural development. The remaining part of the diesel cess and the entire collection from petrol is shared among the National Highway Authority of India (NHAI) (57.5 per cent), the Railways (12.5 per cent) and state road projects (30 per cent).

Earlier, Road Transport and Highways Minister Kamal Nath had said the Railways and Rural Development Ministries have to be consulted before a decision in this regard can be taken.

Meanwhile, Amarchand Mangaldas partner Aseem Chawla said, "Instead of the Union government raising cess, states should be encouraged to assess whether any cess can be imposed."

The pre-Budget Economic Survey, tabled in Parliament, also suggested reviewing and phasing out various forms of cess.

The government collected around Rs 30,000 crore through the cess on diesel and petrol. Going by that trend, it could collect about Rs 15,000 crore from any additional Re one cess a litre.

The additional cess is required to keep the long-term pace of the road sector. Currently, funds are not much of a problem because projects are moving at very slow pace.

However, Nath is looking at a target of laying 20 km of highways per day against the below five km average at present.

The NHAI has not been able to utilise the funds allotted to it, Nath had said earlier.

The NHAI, which was assigned the target of awarding 60 projects worth Rs 70,000 crore under the National Highways Development Project, could not attract bidders for most of them as contractors found them inviable.