Special Correspondent

Financial health of the State will be disturbed, says Rosaiah

Subsidy on LPG cylinder to cost State exchequer Rs.300 crore

Rs.500 cr. revenue loss to State due to CST cut from 3 to 2 per cent

HYDERABAD: The State government will not, after all, reduce the value added tax (VAT) on petrol and diesel.

Contrary to indications given on Thursday, Finance Minister K. Rosaiah rejected outright the suggestion to slash the VAT rate on the plea that it would affect the State’s financial health and disturb its budgetary projections which were carefully worked out for the entire year. Commercial Taxes Minister K. Ramakrishna was present.

Asked whether this meant that Andhra Pradesh, being in the forefront of Congress-ruled states, would not implement the advice tendered by Prime Minister Manmohan Singh and UPA Chairperson Sonia Gandhi, Mr. Rosaiah said their suggestion was to provide some relief to the common man.

LPG subsidy

Each State had chosen its own way of providing relief. In Andhra Pradesh, Chief Minister Y. S. Rajasekhara Reddy had announced that the entire additional burden of Rs. 50 on each liquefied petroleum gas (LPG) cylinder would be fully subsidised by the State government at a cost of Rs. 300 crore on the exchequer.

The Minister expressed the State’s inability to reduce VAT on petrol or diesel as it had lost revenue of Rs. 500 crore following the recent reduction in Central Sales Tax from three to two per cent and on inter-State transactions.

The annual loss on this count worked out to Rs. 1,100 crore considering that the exchequer was deprived of Rs. 600 crore last year when the CST was reduced from four to three per cent.

Financial implications

Also, the State suffered another loss of Rs. 200 crore last year when it reduced tax on petrol by Re. 1 and that on diesel by 75 paise.

Moreover, “our hands are tight. We have many schemes and projects before us to implement, including a Rs 1,100-crore package now to benefit the farmers not covered by the Central loan waiver scheme”.

Mr. Rosaiah criticised Telugu Desam president N. Chandrababu Naidu for “shedding crocodile tears” at people’s plight. He recalled that Mr. Naidu never protested when the BJP-led NDA government increased the price of petrol and diesel as many as 22 times.