Andhra Pradesh

Burning a hole in the pocket: on rising fuel prices

The prices of petrol and diesel touched a new high on Friday with Mumbai paying the maximum among the four metros.   | Photo Credit: K. Pichumani

Flight in prices of petroleum products nearly brought the State to a halt with Opposition parties participating in a nation-wide bandh demanding reduction in the rates. Cadres of the ruling Telugu Desam Party (TDP) too extended support by registering their protest.

Notwithstanding the protests, it has been a fact that neither the State nor Union governments is willing to slash taxes on auto fuels for many months. Instead, both of them apparently indulged in a slugfest, pointing fingers at each other for the steep rise in prices. The spiralling prices of petroleum products have been affecting all sectors and sections of people, having a cascading effect resulting in skyrocketing of prices of essential commodities.

Though there has been a demand from various quarters, including petroleum dealers, to cut tax, the State government has been deferring the decision for more than a year, as petroleum and liquor are major sources of revenue. A major chunk (18% to 19%) of revenue of the Commercial Taxes Department comes from VAT on petrol and diesel.


The government has set a target of a revenue of ₹10,600 crore on petroleum products for the 2018-19 fiscal. There were apprehensions that the government may have to forego the possibility of reaching the target if it cut down the additional VAT. But, in a dramatic development, coinciding with national bandh, the State government announced that a VAT of ₹2 per litre of fuel would be waived.

The State would lose ₹1,120 crore in revenues annually owing to the decision. Sensing the mood of public, the ruling and Opposition parties alike tried to turn the tide in their favour.

The Centre too is equally to be blamed. It has been looking at petroleum as a source of revenue and had been levying heavy excise duties. It revised excise duties about a dozen times between 2014 and now. Chief Minister. N. Chandrababu Naidu revealed an interesting piece of data in the Assembly the other day.

With “abnormal increase” in taxes levied by the Centre in the last four years, Mr. Naidu said, the Union government had collected ₹23 lakh crore. As the Centre had increased the tax by more than 90% and filled its coffers at the cost of the economy, its decisions had resulted in prices of essential commodities going up. “The Centre should release a White Paper on the utilisation of the ₹23 lakh crore,” he demanded.

On its part, the State government has been collecting ₹4 per litre (fixed charge) as additional Value Added Tax (VAT). As a result, the petroleum dealers in he border areas are suffering losses as the prices in Tamil Nadu, Karnataka and Odisha are less compared to Andhra Pradesh.

After the advent of the Goods and Service Tax (GST), petroleum and liquor are the only sources of direct tax for the State government. The government is collecting VAT at the rate of 31% on petrol and 22.25% on diesel.


Petroleum products target:

Rs. 12,958.01 crore for the year 2018-19

Actuals for the year 2017-18 Rs. 9,785 crore

Revenue through petroleum products

Rs. 5,269.74 crore in 2014-15

Rs. 8,074.71 crore in 2015-17

Rs. 8,979.99 crore in 2016-17

Rs. 9,694 crore in 2017-18

Rs.3,728 crore in 2018-19 till July

Average revenue

Rs. 439 crore in 2014-15

Rs. 672 crore in 2015-16

Rs. 748 crore in 2016-17

Rs. 807 crore in 2017-18

Post GST impact on prices of diesel

Tamil Nadu Rs. 72.46 per litre

Karnataka Ra. 70.80

Odisha Rs. 73.59

Andhra Pradesh Rs. 75.04

Telangana Rs.74.63

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Printable version | Jan 29, 2022 5:28:44 AM |

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