Taking the cue from the Prime Minister Manmohan Singh and Congress president and UPA chairperson Sonia Gandhi asking states to cut duties on petrol products, the Congress governments of Haryana and Goa slashed the Value Added Tax applicable on LPG, diesel and petrol.
Though the YS Reddy-led Congress government in Andhra Pradesh refused to cut its duties on petro-products, which are the highest in the country at 33%, it is open to the idea of subsidising the entire Rs 50 hike in LPG cylinders? prices.
The moves follow decisions by the governments of West Bengal, Bihar, Maharashtra and Delhi, to slash duties on petro products or increase subsidies on LPG cylinders in the two days since the Centre announced the highest-ever hike in fuel prices.
Union petroleum minister Murli Deora talked to chief ministers of 30 states and union territories, asking them to ?at least forego the incremental tax? revenues so as to ease the burden of the spike in international oil prices on common consumers.
?It is the duty of both Central and state governments to provide maximum relief to the consumers. The central government is contributing over Rs 120,000 crore, it is also expected that the state governments will not lag behind in helping the consumers in sharing their burden,? Deora urged.
Petrol and diesel price will be reduced by about Re one per litre and 50 paise, respectively, if states agree to forego incremental sales tax revenues they stand to earn on this week?s fuel price hike.
States like Andhra Pradesh, Kerala, Karnataka, Punjab and Uttar Pradesh stand to gain over a rupee in sales tax on every litre of petrol sold and over 50 paise on diesel after this week?s Rs 5 and Rs 3 hike in the two auto fuel prices.
Haryana became the first state to waive off VAT on LPG and make diesel cheapest in the country, in a bid to ease the pain of the fuel price hike on the common man. Haryana chief minister, Bhupinder Singh Hooda said that the decision to give relief to consumers on petroleum products has been taken in an emergent meeting of the state Cabinet on Friday.
Haryana has waived off the 4% VAT on LPG , foregoing Rs 45 crore in revenue. VAT on diesel has been reduced from 12 to 8.8% in a move that Hooda said would benefit consumers to the tune of Rs 312 crore. This will bring down the diesel rate from Rs 34.66 per litre in the state to Rs 33.66. These concessions would be immediately effective.
Hooda admitted that the decision to convene a meeting of the state Cabinet to discuss these issues had been taken following the desire expressed by AICC president, Sonia Gandhi that states should also share the increase made in prices of petroleum products so that the people might not feel over burdened.
The Digamber Kamat-led Goa government reduced the value added tax (VAT) on petrol, diesel and LPG, ?with immediate effect.? Consequently, petrol will be cheaper by 84 paise per litre, diesel by 64 paise per litre and LPG by Rs 10 on every domestic cylinder. While the VAT on petrol was reduced from 22% to 20% and diesel from 21% to 19%, the 4% VAT on LPG was brought to zero.
The Andhra Pradesh government, however decided against reducing the value-added tax (VAT) on petrol and diesel even as it expressed readiness to subsidise the total amount of increase of Rs 50 per cylinder on domestic LPG. Announcing the decision, finance minister K Rosaiah said, ?We have proposed to benefit more number of families, hence decided to fully absorb the increased cost of domestic gas.?
Rosaiah said it would be difficult for the government to absorb the increased prices of petrol and diesel considering the present fiscal situation in the state. The state is levying 33% on petrol and 22.25% on diesel.
Denying that the state government had dishonoured the advice of Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi, Rosaiah said, ?We have, in fact, honoured their advice and tried to reduce the burden on the common man, by absorbing the increased price of domestic gas, it would benefit majority of families? rural and urban?in the state,? he pointed out.
In fact, he pointed to states like Delhi (another Congress-ruled state) subsidising only Rs 40 of the hike per gas cylinder. While the state will have to absorb Rs 350 crore subsidies annually on LPG, it would generate an almost equal amount from the VAT on petrol and diesel.
Meanwhile, a key impact of the fuel price hikes? burden on the common man is becoming inevitable?increase in public transport fares. While Haryana?s Hooda said there was no proposal to hike bus fares, West Bengal and Himachal Pradesh are likely to resort to nominal fare hikes.
?There is a plan to increase transport fare, but no discussion has yet been held with bus operators and unions,? West Bengal transport minister Subhas Chakraborty said in Kolkata.
However, he stressed that the hike won?t be too high. ?There may be a 50 paise fare hike in the first stage of travel by bus,? he said.
HP?s transport minister Kishan Kapoor wasn?t as optimistic though. ?All options are open. The Himachal Pradesh road transport corporation is already running in losses. So, we have to take a decision how to meet this further burden in view of hike in diesel price by Rs 3 a litre,? he said.