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Delhi proposes, Chidambaram disposes

Sujay Mehdudia

The 20-rupee cut in the price of the cooking gas cylinder proposed in the Delhi budget is not coming... .


NEW DELHI: After all the talk about water getting costlier from next month, there is another bit of bad news for the Capital's citizens, particularly housewives. The much-awaited 20-rupee cut in the price of LPG cooking gas cylinders will not come about now with the Centre overruling the State Government on passing the benefit on to consumers.

The consumers' worst fears came true after Delhi Finance Minister A.K. Walia met Union Finance Minister P. Chidambaram on Wednesday evening. Dr. Walia was told by Mr. Chidambaram in no uncertain terms that the reduction announced earlier this month in the Delhi budget would not be allowed to be passed on to the consumers; instead, oil companies would be allowed to absorb the benefit in order to cut down on their losses due to the subsidy borne by them on the cooking gas cylinders.

Presenting the Delhi budget in the State Assembly on March 9, Dr. Walia had announced a reduction of 8.5 per cent in the Value Added Tax (VAT) on cooking gas cylinders, bringing it down from a steep 12.5 per cent to 4 per cent. Subsequently it was announced that the price of cooking gas cylinder in the Capital would come down by Rs. 20 giving a big relief to the overburdened housewives. However, even before the decision could be implemented, dealers and oil companies refused to pass on the benefit to consumers.

This forced the Delhi Government to take up the matter with the United Progressive Alliance Government at the Centre but Mr. Chidambaram refused to yield any relief and said the oil companies and dealers could not be forced to implement the VAT cut.

"The Empowered Committee on VAT had also met Mr. Chidambaram on the issue but that did not help matters. The Centre explained that it had undertaken the cut in Central excise and Customs duty to benefit oil companies and now the State Governments would also have to share some burden of the subsidy. We are virtually helpless in this situation," Dr. Walia admitted on Thursday.

Government officials said the whole issue was handled in a callous manner right from the day the concession was incorporated into the budget. "It was clear from the beginning that the relief on cooking gas cylinders had come about after the Centre reduced the tax structure in the Union Budget and directed the State governments to do the same. It was wrong to include that benefit in the Delhi budget and pass it on to consumers when the step was only meant to provide relief to oil companies and dealers," a senior official remarked.

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