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Oil ministry to oppose more cess

BS Economy Bureau in New Delhi | November 18, 2004 10:37 IST

The petroleum ministry will resist any attempt by the government to load additional cess on auto fuels.

The infrastructure ministries, especially those of road transport and Railways, have been demanding an additional levy to fund their programmes.

"We will obviously resist any cess," Petroleum Minister Mani Shankar Aiyar told reporters. He, however, remained sceptical on how far the government would accept his ministry's objections.

The government at present levies a cess of Rs 1.50 a litre on petrol and diesel. The money from this flows into the Central Road Fund, which is shared by the Union ministries of road transport and highways and rural development, besides the state governments.

The programmes, which are funded through the cess, include the National Highways Development Project, Pradhan Mantri Gram Sadak Yojana and state highway development.

The Central Road Fund Act, 2000 lays down that 50 per cent of the cess on diesel is to be used for rural roads. The balance 50 per cent and the entire cess collected on petrol are clubbed together.

Of this amount, 57.5 per cent is for the development and maintenance of national highways. An amount equal to 12.5 per cent is earmarked for the construction of roads under/over bridges and erection of safety works at unmanned level crossings. The balance 30 per cent is used for state roads.


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