The Aam Aadmi Party (AAP)-led government in Punjab on Thursday (September 5, 2024) raised the retail price of petrol and diesel by increasing Value Added Tax (VAT), and abolishing the subsidy for consumers of power with load of over seven kilowatts (KW).
The move has brought the financial crises of cash-strapped Punjab yet again into the spotlight, even as the rise in fuel prices invited sharp criticism from several quarters, including political parties and petroleum traders.
The Cabinet meeting held here under the chairpersonship of Chief Minister Bhagwant Mann gave the nod to raise the rate of VAT on diesel and petrol. “The VAT rate of diesel will increase by 0.92 paise per litre and that of petrol will increase by 0.61 paise per litre. The state government also abolished the subsidy being given to power consumers having load of more than 7 KW,” the official statement said.
The government is hopeful that the decision would enhance the State’s revenue by about ₹2,400 crore to ₹3,000 crore annually, it added.
The Leader of the Opposition in the State Assembly, Congress’s Partap Singh Bajwa, hit out at the AAP government. “In one of its most shameless moves ever, the AAP government has increased the prices of retail fuel and also withdrawn the scheme of giving subsidised power to domestic consumers...Enhancement in the price of diesel will not only cost farmers dearly but also add fuel to inflation,” Mr. Bajwa said.
The AAP government continued to burden the general public on the pretext of raising revenue, Mr. Bajwa said. “...they promised to raise revenue from other sources, including ₹20,000 crore from mining and ₹34,000 crore by ending corruption. Exactly two weeks ago, the government hiked motor vehicle tax from 0.5% to 1%, which made cars and two-wheelers unaffordable for the middle class and weaker sections of society. Ever since the AAP assumed power in the State, it has been running its routine activities with borrowed funds. The outstanding debt in Punjab is estimated to touch ₹3.74 lakh crore by the end of the 2024-25 fiscal year. The way the AAP government is handling the economy demonstrates that Punjab has been swiftly moving towards bankruptcy under the 2.5 years of the AAP regime,” the Congress leader said.
The Shiromani Akali Dal (SAD) also criticised the government’s move. The party’s chief spokesperson Arshdeep Singh Kler accused the AAP government of playing “fraud” with the people of Punjab by taking anti-people decisions. “We condemn the decision and will oppose it firmly,” Mr. Kler said.
The Punjab Petroleum Dealers Association (PPDA) urged the State government to reconsider the hike and demanded a roll back of the increase, and parity in VAT structure with that of neighbouring States.
“The recent VAT increase will have far-reaching and devastating consequences for the already struggling petroleum industry in the State. We are already facing a significant decline in sales because the neighbouring States (Haryana, Himachal Pradesh) and Union Territory (Chandigarh) offer lower VAT rates. The increase will only exacerbate the situation, leading to a substantial loss of revenue for both petroleum dealers and the State government,” Sandeep Sehgal, PPDA’s president, said.
Published - September 05, 2024 07:06 pm IST
