Applications for LAMP Fellowship 2025-26 are now open. Apply here. The last date for submitting applications is December 21, 2024
In light of recent debates surrounding the implementation of the Mid Day Meal Scheme (MDMS) in certain states, it is useful to understand the basic features of the scheme. The MDMS is the world’s largest school meal programme and reaches an estimated 12 crore children across 12 lakh schools in India. A brief introduction follows, outlining the key objectives and provisions of the scheme; modes of financing; monitoring and evaluation mechanisms and issues with implementation of the scheme. Examples of 'best practices' and major recommendations made by the Planning Commission to improve the implementation of the scheme are also mentioned. Provisions: The MDMS emerged out of the National Programme of Nutritional Support to Primary Education (NP – NSPE), a centrally sponsored scheme formulated in 1995 to improve enrollment, attendance and retention by providing free food grains to government run primary schools. In 2002, the Supreme Court directed the government to provide cooked mid day meals (as opposed to providing dry rations) in all government and government aided primary schools.[1] Calorie norms for the meals have been regularly revised starting from 300 calories in 2004, when the scheme was relaunched as the Mid Day Meal Scheme. At present the MDMS provides children in government aided schools and education centres a cooked meal for a minimum of 200 days.[2] Table 1 outlines the prescribed nutritional content of the meals. Table 1: Prescribed nutritional content for mid day meals
| Item | Primary (grade 1-5) | Upper Primary(grade 6-8) |
| Calories | 450 | 700 |
| Protein (in grams) | 12 | 20 |
Source: Annual Report, 2011 – 12, Ministry of Human Resource Development, Government of India; PRS. Objectives: The key objectives of the MDMS are to address the issues of hunger and education in schools by serving hot cooked meals; improve the nutritional status of children and improve enrollment, attendance and retention rates in schools and other education centres. Finances: The cost of the MDMS is shared between the central and state governments. The central government provides free food grains to the states. The cost of cooking, infrastructure development, transportation of food grains and payment of honorarium to cooks and helpers is shared by the centre with the state governments. The central government provides a greater share of funds. The contribution of state governments differs from state to state. Table 2 outlines the key areas of expenditure incurred by the central government under the MDMS for the year 2012 – 2013. Table 2: Key areas of expenditure in the MDMS (2012 - 2013)
| Area of expenditure | Percentage of total cost allocated |
| Cooking cost | 53 |
| Cook / helper | 20 |
| Cost of food grain | 14 |
| Transportation assistance | 2 |
| Management monitoring and evaluation | 2 |
| Non recurring costs | 10 |
Source: Ministry of Human Resource Development; Fourth NSCM Committee meeting, August 24, 2012; PRS. Monitoring and Evaluation: There are some inter state variations in the monitoring and evaluation mechanisms of the MDMS. A National Steering cum Monitoring Committee and a Programme Approval Board have been established at the national level, to monitor the programme, conduct impact assessments, coordinate between state governments and provide policy advice to central and state governments. Review Missions consisting of representatives from central and state governments and non governmental agencies have been established. In addition, independent monitoring institutions such as state universities and research institutions monitor the implementation of the scheme. At the state level, a three tier monitoring mechanism exists in the form of state, district and block level steering cum monitoring committees. Gram panchayats and municipalities are responsible for day to day supervision and may assign the supervision of the programme at the school level to the Village Education Committee, School Management and Development Committee or Parent Teacher Association. Key issues with implementation: While there is significant inter-state variation in the implementation of the MDSM, there are some common concerns with the implementation of the scheme. Some of the concerns highlighted by the Ministry for Human Resource Development based on progress reports submitted by the states in 2012 are detailed in Table 3. Table 3: Key implementation issues in the MDMS
| Issue | State(s) where these problems have been reported |
| Irregularity in serving meals | Karnataka, Madhya Pradesh, Orissa, Rajasthan, Maharashtra, Arunachal Pradesh |
| Irregularity in supply of food grains to schools | Orissa, Maharashtra, Tripura, Karnataka, Arunachal Pradesh, Meghalaya, Delhi, Andhra Pradesh |
| Caste based discrimination in serving of food | Orissa, Rajasthan, Madhya Pradesh |
| Poor quality of food | Rajasthan, Tamil Nadu, Delhi, Chhattisgarh |
| Poor coverage under School Health Programme | Orissa, Jharkhand, Madhya Pradesh, Rajasthan, Uttar Pradesh, Manipur, Arunachal Pradesh, Himachal Pradesh, Chhattisgarh |
| Poor infrastructure (kitchen sheds in particular) | Andhra Pradesh, Tamil Nadu, Puducherry, Gujarat, Chandigarh, Himachal Pradesh, Jammu and Kashmir, Orissa |
| Poor hygiene | Delhi, Rajasthan, Puducherry, |
| Poor community participation | Most states – Delhi, Jharkhand, Manipur, Andhra Pradesh in particular |
Source: Ministry of Human Resource Development; PRS. Best practices: Several state governments have evolved practices to improve the implementation of the MDMS in their states. These include involving mothers of students in implementation of the scheme in Uttarakhand and Jharkhand; creation of kitchen gardens, i.e., food is grown in the premises of the school, in Andhra Pradesh, Karnataka, Punjab and West Bengal; construction of dining halls in Tamil Nadu; and increased community participation in the implementation of the scheme Gujarat. More information is available here. Planning Commission evaluation of MDMS: In 2010, a Planning Commission evaluation of the MDMS made the following recommendations to improve implementation of the scheme: i. Steering cum monitoring committees at the district and block levels should be made more effective. ii. Food grains must be delivered directly to the school by the PDS dealer. iii. The key implementation authority must be made responsible for cooking, serving food and cleaning utensils, and school staff should have a supervisory role. The authority should consist of local women’s self help groups or mothers of children studying in the schools. iv. Given the fluctuating cost of food grains, a review of the funds allocated to the key implementation authority must be done at least once in 6 months. v. Services might be delivered through private providers under a public private partnership model, as has been done in Andhra Pradesh.
[1] PUCL vs. Union of India, Writ Petition (Civil) 196 of 2001. [2] The following institutions are covered: Government and government aided schools, National Child Labour Project (NCLP) schools, Education Guarantee Scheme (EGS) and Alternative and Innovative Education (AIE) centres including Madrasas and Maqtabs supported under the SSA
In the past few months, retail prices of petrol and diesel have consistently increased to all-time high levels. On October 16, 2021, the retail price of petrol in Delhi was Rs 105.5 per litre, and that of diesel was Rs 94.2 per litre. In Mumbai, these prices were even higher at Rs 111.7 per litre and Rs 102.5 per litre, respectively.
The difference in fuel retail prices in the two cities is due to the different tax rates levied by the respective state governments on the same products. In this blog post, we look at the tax components in the price structure of petrol and diesel, the variation in these across states, and the major changes in taxation of these products in the recent years. We also discuss changes in the retail prices over the past few years and how it compares vis-à-vis the global crude oil prices.
Taxes make up around 50% of the retail price
Public sector Oil Marketing Companies (OMCs) revise the retail prices of petrol and diesel in India on a daily basis, according to changes in the price of global crude oil. The price charged to dealers includes the base price set by OMCs and the freight price. As on October 16, 2021, the price charged to dealers makes up 42% of the retail price in the case of petrol, and 49% of the retail price in the case of diesel (Table 1).
The break-up of retail prices of petrol and diesel in Delhi (as on October 16, 2021), shows that around 54% of the retail price of petrol comprises central and states taxes. In the case of diesel, this is close to 49%. The central government taxes the production of petroleum products, while states tax their sale. The central government levies an excise duty of Rs 32.9 per litre on petrol and Rs 31.8 per litre on diesel. These make up 31% and 34% of the current retail prices of petrol and diesel, respectively.
Table 1: Break-up of petrol and diesel retail prices in Delhi (as on October 16, 2021)
|
Component |
Petrol |
Diesel |
||
|
Rs/litre |
% of retail price |
Rs/litre |
% of retail price |
|
|
Price Charged to Dealers |
44.4 |
42% |
46.0 |
49% |
|
Excise Duty (levied by centre) |
32.9 |
31% |
31.8 |
34% |
|
Dealer Commission (average) |
3.9 |
4% |
2.6 |
3% |
|
Sales Tax/ VAT (levied by state) |
24.3 |
23% |
13.8 |
15% |
|
Retail Price |
105.5 |
100% |
94.2 |
100% |
Note: Delhi levies 30% VAT on petrol and 16.75% VAT on diesel.
Sources: Indian Oil Corporation Limited; PRS.
While excise duty rates are uniform across the country, states levy sales tax/ Value Added Tax (VAT) which varies across states. For instance, Odisha levies 32% VAT on petrol, while Uttar Pradesh levies 26.8% VAT or Rs 18.74 per litre, whichever is higher. Refer to the table 3 in annexure for sales taxes/VAT levied across the country. The figure below shows the different tax rates levied by states on petrol and diesel. In addition to the tax rates shown in the graph, many state governments, such as Tamil Nadu, also levy certain additional levies such as cess (Rs 11.5 per litre).
Figure 1: Sales tax/VAT rates levied by states on petrol and diesel (as on October 1, 2021)
Note: The rates shown for Maharashtra are averages of the rates levied in the Mumbai-Thane region and in the rest of the state. Only percentages are being shown in this graph.
Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS.
Note that unlike excise duty, sales tax is an ad valorem tax, i.e., it does not have a fixed value, and is charged as a percentage of the price of the product. This implies that while the value of excise duty component of the price structure is fixed, the value of the sales tax component is dependent on the other three components, i.e., price charged to dealers, dealer commission, and excise duty.
Retail prices in India compared to global crude oil price
India’s dependence on imports for consumption of petroleum products has increased over the years. For instance, in 1998-99, net imports of petroleum products were 69% of the total consumption, which increased to around 95% in 2020-21. Because of a large share of imports in the domestic consumption, any change in the global price of crude oil has a significant impact on the domestic prices of petroleum products. The two figures below show the trend in the price of global crude oil and retail prices of petrol and diesel in India, over the last nine years.
Figure 2: Trend of the global crude oil price vis-à-vis retail prices of petrol and diesel (in Delhi)
Note: Global Crude Oil Price is for the Indian basket. Petrol and diesel retail prices are for Delhi. Figures reflect average monthly price.
Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS.
Between June 2014 and October 2018, the retail selling prices did not adhere to change in global crude oil prices. The global prices fell sharply between June 2014 and January 2016, and then subsequently increased between February 2016 and October 2018. However, the retail selling prices remained stable during the entire period. This disparity in the change in global and Indian retail prices was because of the subsequent changes in taxes. For instance, central taxes were increased by Rs 11 and 13 between June 2014 and January 2016 on petrol and diesel respectively. Subsequently, taxes were decreased by four rupees between February 2016 and October 2018 for petrol and diesel. Similarly, during January-April 2020, following a sharp decline of 69% in the global crude oil prices, the central government increased the excise duty on petrol and diesel by Rs 10 per litre and Rs 13 per litre, respectively in May 2020.
Sharp increase in excise duty collections
As a result of the increase in excise duty in May 2020, the excise duty collection increased sharply from Rs 2.38 lakh crore in 2019-20 to Rs 3.84 lakh crore in 2020-21. The year-on-year growth rate of excise duty collection increased from 4% in 2019-20 to 67% in 2020-21. However, sales tax collections (from petroleum products) during that period remained more or less constant (Figure 3).
Figure 3: Excise duty and sales tax/ VAT collection from petroleum products (in Rs lakh crore)
Note: The excise duty component in the figure includes cess on crude oil.
Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS.
Share of states in excise duty has decreased over the years
Though central taxes (such as excise duty) are levied by the centre, it has only 59% of the revenue from these taxes. The remaining 41% of the revenue is required to be devolved to the state governments as per the recommendations of the 15th Finance Commission. These devolved taxes are un-tied in nature, states can spend them according to their own discretion. The excise duty levied on petrol and diesel consists of two broad components: (i) tax component (i.e., basic excise duty), and (ii) cess and surcharge component. Of this, only the revenue generated from the tax component is devolved to states. Revenue generated by the centre from any cess or surcharge is not devolved to states. Currently, the Agriculture Infrastructure and Development Cess, and the Road and Infrastructure Cess are levied on the sale of petrol and diesel in addition to the surcharge.
In the Union Budget 2021-22, the Agriculture Infrastructure and Development cess on petrol and diesel was announced at Rs 2.5 per litre and Rs 4 per litre, respectively. However, simultaneously, the basic excise duty and surcharge were reduced by equal amounts, so that the overall rate remains the same. Essentially, this provision shifted a revenue of Rs 1.5 per litre of petrol and Rs 3 per litre of diesel from the states’ divisible pool of taxes to the cess and surcharge revenue, which is entirely with the centre. Similarly, over the last four years, the share of tax component in the excise duty has decreased by 40% in petrol and 59% in diesel (table 2). At present, majority of the excise duty levied on petrol (96%) and diesel (94%) is in the form of cess and surcharge, due to which it is entirely under the centre’s share (Table 2).
Table 2: Break up of excise duty (Rs per litre)
|
Excise duty |
Petrol |
Diesel |
||||||
|
Apr-17 |
% share of total |
Feb-21 |
% share |
Apr-17 |
% share of total |
Feb-21 |
% share |
|
|
Tax (devolved to states) |
9.48 |
44% |
1.4 |
4% |
11.33 |
65% |
1.8 |
6% |
|
Cess and surcharge (centre) |
12 |
56% |
31.5 |
96% |
6 |
35% |
30 |
94% |
|
Total |
21.48 |
100% |
32.9 |
100% |
17.33 |
100% |
31.8 |
100% |
Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS
As a result, the devolution to states out of the excise duty has declined over the last four years. Even though the excise duty collections have increased sharply between 2019-20 and 2020-21, the devolved component has declined from Rs 26,464 to Rs 19,578 (revised estimate) in the same period.
Annexure
Table 3: Sales taxes/VAT rates levied on petrol and diesel across states (as on October 1, 2021)
|
State/UT |
Petrol |
Diesel |
|
Andaman & Nicobar Islands |
6% |
6% |
|
Andhra Pradesh |
31% VAT + Rs.4/litre VAT+Rs.1/litre Road Development Cess an d Vat thereon |
22.25% VAT + Rs.4/litre VAT+Rs.1/litre Road Development Cess and Vat thereon |
|
Arunachal Pradesh |
20% |
13% |
|
Assam |
32.66% or Rs.22.63 per litre whichever is higher as VAT minus Rebate of Rs.5 per Litre |
23.66% or Rs.17.45 per litre whichever is higher as VAT minus Rebate of Rs.5 per Litre |
|
Bihar |
26% or Rs 16.65/Litre whichever is higher (30% Surcharge on VAT as irrecoverable tax) |
19% or Rs 12.33/Litre whichever is higher (30% Surcharge on VAT as irrecoverable tax) |
|
Chandigarh |
Rs.10/KL cess +22.45% or Rs.12.58/Litre whichever is higher |
Rs.10/KL cess + 14.02% or Rs.7.63/Litre whichever is higher |
|
Chhattisgarh |
25% VAT + Rs.2/litre VAT |
25% VAT + Rs.1/litre VAT |
|
Dadra and Nagar Haveli and Daman and Diu |
20% VAT |
20% VAT |
|
Delhi |
30% VAT |
Rs.250/KL air ambience charges + 16.75% VAT |
|
Goa |
27% VAT + 0.5% Green cess |
23% VAT + 0.5% Green cess |
|
Gujarat |
20.1% VAT+ 4% Cess on Town Rate & VAT |
20.2% VAT + 4 % Cess on Town Rate & VAT |
|
Haryana |
25% or Rs.15.62/litre whichever is higher as VAT+5% additional tax on VAT |
16.40% VAT or Rs.10.08/litre whichever is higher as VAT+5% additional tax on VAT |
|
Himachal Pradesh |
25% or Rs 15.50/Litre- whichever is higher |
14% or Rs 9.00/Litre- whichever is higher |
|
Jammu & Kashmir |
24% MST+ Rs.5/Litre employment cess, Reduction of Rs.0.50/Litre |
16% MST+ Rs.1.50/Litre employment cess |
|
Jharkhand |
22% on the sale price or Rs. 17.00 per litre , which ever is higher + Cess of Rs 1.00 per Ltr |
22% on the sale price or Rs. 12.50 per litre , which ever is higher + Cess of Rs 1.00 per Ltr |
|
Karnataka |
35% sales tax |
24% sales tax |
|
Kerala |
30.08% sales tax+ Rs.1/litre additional sales tax + 1% cess |
22.76% sales tax+ Rs.1/litre additional sales tax + 1% cess |
|
Ladakh |
24% MST+ Rs.5/Litre employment cess, Reduction of Rs.2.5/Litre |
16% MST+ Rs.1/Litre employment cess , Reduction of Rs.0.50/Litre |
|
Lakshadweep |
Nil |
Nil |
|
Madhya Pradesh |
33 % VAT + Rs.4.5/litre VAT+1%Cess |
23% VAT+ Rs.3/litre VAT+1% Cess |
|
Maharashtra – Mumbai, Thane , Navi Mumbai, Amravati & Aurangabad |
26% VAT+ Rs.10.12/Litre additional tax |
24% VAT+ Rs.3.00/Litre additional tax |
|
Maharashtra (Rest of State) |
25% VAT+ Rs.10.12/Litre additional tax |
21% VAT+ Rs.3.00/Litre additional tax |
|
Manipur |
32% VAT |
18% VAT |
|
Meghalaya |
20% or Rs15.00/Litre- whichever is higher (Rs.0.10/Litre pollution surcharge) |
12% or Rs9.00/Litre- whichever is higher (Rs.0.10/Litre pollution surcharge) |
|
Mizoram |
25% VAT |
14.5% VAT |
|
Nagaland |
25% VAT or Rs. 16.04/litre whichever is higher +5% surcharge + Rs.2.00/Litre as road maintenance cess |
16.50% VAT or Rs. 10.51/litre whichever is higher +5% surcharge + Rs.2.00/Litre as road maintenance cess |
|
Odisha |
32% VAT |
28% VAT |
|
Puducherry |
23% VAT |
17.75% VAT |
|
Punjab |
Rs.2050/KL (cess)+ Rs.0.10 per Litre (Urban Transport Fund) + 0.25 per Litre (Special Infrastructure Development Fee)+24.79% VAT+10% additional tax on VAT |
Rs.1050/KL (cess) + Rs.0.10 per Litre (Urban Transport Fund) +0.25 per Litre (Special Infrastructure Development Fee) + 15.94% VAT+10% additional tax on VAT |
|
Rajasthan |
36% VAT+Rs 1500/KL road development cess |
26% VAT+ Rs.1750/KL road development cess |
|
Sikkim |
25.25% VAT+ Rs.3000/KL cess |
14.75% VAT + Rs.2500/KL cess |
|
Tamil Nadu |
13% + Rs.11.52 per litre |
11% + Rs.9.62 per litre |
|
Telangana |
35.20% VAT |
27% VAT |
|
Tripura |
25% VAT+ 3% Tripura Road Development Cess |
16.50% VAT+ 3% Tripura Road Development Cess |
|
Uttar Pradesh |
26.80% or Rs 18.74/Litre whichever is higher |
17.48% or Rs 10.41/Litre whichever is higher |
|
Uttarakhand |
25% or Rs 19 Per Ltr whichever is greater |
17.48% or Rs Rs 10.41 Per Ltr whichever is greater |
|
West Bengal |
25% or Rs.13.12/litre whichever is higher as sales tax+ Rs.1000/KL cess – Rs 1000/KL sales tax rebate (20% Additional tax on VAT as irrecoverable tax) |
17% or Rs.7.70/litre whichever is higher as sales tax + Rs 1000/KL cess – Rs 1000/KL sales tax rebate (20% Additional tax on VAT as irrecoverable tax) |
Sources: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas; PRS.
