Govt diverting around Rs 17,000 crore from petrol and diesel cess kitty

The government raised the price of petrol and diesel by increasing the cess and surcharge on them. But Budget numbers indicate that around Rs 17,000 crore collected through cess during 2018-19 and 2019-20 would not be utilised for designated purposes.
 
The government had increased the cess on fuel by Rs 1 a litre from July 6. Money collected thus flows into the Central Road and Infrastructure Fund (CRIF). The collection on account of cess on diesel and petrol yielded the government Rs 1.13 trillion in 2018-19 and is estimated to bring in Rs 1.27 trillion in 2019-20. But all this would not be flowing into CRIF.
 
This comes at a time when the National Highways Authority of India (NHAI) and the road ministry are finding it hard to fund highway construction and are looking at reviving private investment through build-operate-transfer model and monetisation.
 
Finance ministry officials were unavailable for a comment. A senior official, however, said collection figures for this year are only estimates.
 
Vishwas Udgirkar, partner, Deloitte India, said, “The government is now thinly spreading the money collected through cess, while the cash flow requirement of NHAI has increased because of EPC (engineering, procurement and construction) and hybrid annuity projects.”
 
The government used up Rs 9,013 crore in 2018-19 and is estimated to use Rs 7,920 crore in 2019-20 for funding its other unspecified demands.
 
Besides cess, Finance Minister Nirmala Sitharaman also increased the surcharge on petrol and diesel by Rs 1 each, taking the total increase in government levies to Rs 2 a litre. Since cess is also levied on Customs duty, which leads to an increase in benchmark pricing, the total increase was slightly higher than Rs 2 a litre. Collection from surcharge, as against cess, can be used for any purpose.
 
The total Central levy, including the basic excise duty on petrol, now stands at Rs 19.98 and is as high as Rs 21.16 on branded petrol. The total excise duty on diesel is Rs 15.83 and on branded diesel is Rs 18.19 a litre.
 
Every one litre sale of petrol and diesel gives the government Rs 9 for infrastructure building.
 
In 1998, the Atal Bihari Vajpayee government introduced the road cess on petrol and next year extended the cess to diesel to fund road construction. The Narendra Modi government, however, amended the Central Reserve Fund Act to use the non-lapsable kitty and renamed the fund as Central Road and Infrastructure Fund.      
 
The amendment prescribed that road cess be first credited to the Consolidated Fund of India and later, after adjusting for the cost of tax collection, should go to the CRIF.
 
The government is even funding Navodaya schools through Rs 2,926 crore from CRIF. Currently, a committee decides on where the CRIF money will be used unlike earlier where a prescribed portion had to be allotted to designated purposes.
 
Prior to the amendment, half of the cess on diesel was spent on rural roads. Of the remaining collection from diesel and all of the petrol cess, 57.5 per cent was for maintenance and development of highways while construction of railway over/under bridges and safety infrastructure was given 12.5 per cent and maintenance of state roads got 30 per cent.