The central government may have declined to reduce excise duty on fuel, but two states, Rajasthan and Andhra Pradesh, have shown the way by reducing VAT to provide some relief from the continuously rising petrol and diesel prices. Rajasthan Chief Minister Vasundhara Raje announced a four per cent reduction in value-added tax (VAT) on petrol and diesel a day before the Congress-led 'Bharat Bandh'. Similarly, the Andhra Pradesh Assembly passed a resolution to reduce petrol and diesel prices by Rs 2 per litre on Monday. The slashing of 4 per cent VAT -- from 30 to 26 per cent and on diesel from 22 to 18 per cent -- would reduce fuel prices by Rs 2.5 per litre in Rajasthan.
The measures will cost the Vasundhara Raje government around Rs 2,000 crore due to a reduction in price, while Andhra will lose around Rs 1,120 crore. "We have decided to reduce VAT on diesel and petrol by 4 per cent, which will provide much-needed relief to the people of the state, be it farmers or women or others," Raje told reporters.
Chief Minister N Chandrababu Naidu said that the prices of petrol and diesel reached its peak with the anti-people policies of central govt for the past four years. "Though the state is faced with a deficit budget, we have decided to reduce the tax and ease the burden on people," the chief minister said. Naidu said the Centre pocketed a staggering Rs 23-lakh crore in the last four-and-a-half years by way of various duties and dividends but failed to take steps to mitigate the burden on common people as petrol and diesel prices touched unprecedented levels.
Petrol was priced between Rs 81 and Rs 83 per litre in parts of Rajasthan on Tuesday, while diesel hovered around Rs 75-78 per litre. In Andhra, petrol was priced at Rs 84-85 per litre while diesel touched Rs 79 per litre in some parts.
Since mid-August, the price of petrol has now risen by Rs 3.42 a litre and that of diesel by Rs 3.84 per litre as the rupee hit record low against the US dollar, making imports costlier. While the base price of the two fuels is around Rs 40 per litre the rest of the cost to consumers comprises of Central excise and VAT levied by state governments.
The Centre currently levies a total excise duty of Rs 19.48 per litre of petrol and Rs 15.33 per litre on diesel. VAT varies amongst states. Consumers in Mumbai have to shell out the highest for VAT at 39.12 per cent on petrol. Delhi charges a VAT of 27 per cent on petrol and 17.24 per cent on diesel. The Central government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by 13.47 a litre in nine installments between November 2014 and January 2016 to shore up finances as global oil prices fell.
(Edited by Manoj Sharma)