No turning back on Covid-19 cess — Government

Says the cess on fuel will be discontinued once the challenge of Covid-19 is over

Our Correspondent
Kohima, May 1 (EMN): Nagaland government is going ahead with its decision to impose Covid-19 cess on petrol and diesel despite opposition from traders and political parties in the state.

From midnight of April 28, Nagaland started levying Covid-19 cess on diesel at INR 5 and petrol and other motor spirits at INR 6 following a notification from Finance Commissioner Sentiyanger Imchen.

“Because of the Covid-19, the state has to spend money on health infrastructure and other related activities for combating this pandemic, which was not budgeted and that came as an additional deficit,” Imchen said during a press conference in Kohima on Friday.

The state government has decided to cut down expenditures by freezing all fresh appointments; imposing a freeze on DA/DR in line with the decision of the Central government; cut on non-development expenditure including ban on purchase of vehicles; and pro-rata cuts on developmental expenditure.

However, these measures alone are not going to work, he said.

As per the estimates of Finance department, Imchen said, the negative impact on state resource will be ‘big’. 

Therefore, it was decided to impose a cess on petrol and diesel. “As far as the state government is concerned, we are very categorical that we will be spending this amount to combat Covid-19 and not for any other purpose,” he added.

‘The impact of Covid-19 pandemic is not an issue to be viewed solely from the medical angle. In fact, its devastating impact in the social and economic spheres far exceeds what the world has witnessed so far. India is no exception, having gone into lockdown since March 25,’ the finance commissioner pointed out.

According to Imchen, the cess will discontinue ‘once the challenge of Covid-19 is over’.

Recently, governments of Assam and Meghalaya hiked the prices of  of petrol and diesel by almost INR 6 with no specific mention of Covid-19.  

“Even after the cess, the price of petrol and diesel in Nagaland is much cheaper than that of Assam and Meghalaya as of now,” he said.

The finance commissioner also gave in detail the amount received from the central government to the state for Covid-19 related sanction. On two occasions, the state government received INR 3.71 crore, totalling to INR 7.42 crore. In addition, the North Eastern Council has sanctioned INR 3 crore. The state also received INR 20.50 crore as the first instalment of State Disaster Relief Fund, a maximum of 35% of the release can be used for Covid-19 related activities, he pointed out. 

Sl. No.	Particulars	INR in crore
A	North Eastern Council	3.00
B	Government of India	7.42
	Total : A+B	10.42

The Finance Commission has carried out a monthly study and found out that on an average, the monthly receipts comes to about INR 807.82 crore including the revenue deficit grant of INR 326.3 crore which is given every month. As per the projection of the Centre in its budget for Nagaland, INR 374.45 crore was state’s share of central taxes. “This was based on the presumption that the economy growth at the rate of 10%,” the finance commissioner said.

Cess to generate INR 55.58 crore in 1FY

According to the department’s estimation, the imposition of cess on Covid-19 will fetch a revenue of INR 55.58 crore for one Financial Year, said Talirenba, officer-on-special duty to Finance.

He pointed out that the annual sale average of diesel in the state is roughly INR 6.10 crore. With the imposition of INR 5 per litre, it is anticipated to come to around INR 30.5 crore. As for the petrol, the annual sale in the state is roughly INR 4.15 crore and with imposition of INR 6 rupees per litre, a revenue generation of INR 25 crore is expected.

Rio writes to Modi

Keeping in view the negative financial impact the state is experiencing, Chief Minister Neiphiu Rio had, on April 25, wrote to Prime Minister Narendra Modi to “consider a special dispensation” to help tide over the impending financial crisis in the state. The chief minister also requested Modi to release the pending liabilities of INR 529 crore under the erstwhile Special Plan Assistance which the Niti Aayog has already cleared.