The Hindu : Front Page : Delhi decides to cut petrol price marginally

Online edition of India's National Newspaper
Wednesday, Jun 14, 2006

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Front Page

Delhi decides to cut petrol price marginally

Staff Reporter

NO RELIEF HERE: Samajwadi Party workers squatting on railway track hold up a train in Lucknow on Tuesday as part of "U.P. bandh" in protest against the increase in petrol and diesel prices. - PHOTO: SUBIR ROY. (REPORT ON PAGE 5)

NEW DELHI: Giving a marginal relief to consumers in the Capital, the Sheila Dikshit Government on Tuesday decided to reduce the recently increased price of petrol by 67 paise a litre and diesel by 22 paise through a cut in the Value Added Tax (VAT). The new prices would come into effect from next week after a formal notification.

Announcing this after a meeting of the Delhi Cabinet chaired by Chief Minister Sheila Dikshit, Finance Minister A. K. Walia said the Government had decided to forgo its share of VAT in the increased prices of petrol and diesel and pass on the benefit to the consumers.

In the wake of the Union Government's decision last week the oil companies had raised the petrol price by Rs. 4 per litre and diesel by Rs. 2. Under the new price regime in the Capital, petrol will cost Rs. 46.84 per litre instead of Rs. 47.51 now and diesel Rs. 32.25 per litre instead of Rs. 32.47 now. The reduction is estimated to result in a loss of about Rs. 110 crores in revenue for the Delhi Government.

At present, petrol is charged 20 per cent VAT in the Capital and diesel 12.5 per cent. "The Government has decided to part with its own share of taxes in the Rs. 4 and Rs. 2 hike. It was decided that relief should be given to the common man. Some calculations had to be done and clarifications had to be sought before a final view was taken,'' Dr. Walia explained.

He said that in keeping with the directions of Congress president Sonia Gandhi it was decided to pass on the benefit to the consumers instead of waiting for other States to follow suit. The Delhi Government earns about Rs. 1,500 crores every year from sale of diesel and petrol.

Initially there was a view within the Delhi Government that instead of going in for a tax cut, efforts should be made to convey to the party high command that the Union Government be asked to rationalise the duty structures on petroleum products and pass on the resultant benefit to consumers. But it was felt that such a move would lead to a massive loss in revenue and have an adverse impact on development projects. The political leadership made it clear to officialdom that since the directions had come from the party high command there was no looking back and the tax cut had to take place.

However, the marginal reduction in the prices of diesel and petrol has left the city truckers and transporters unimpressed. Various transporters in the Capital have already raised the inter-State and local charges for carriage of goods by 6 per cent to 10 per cent in the wake of the recent petroleum and diesel price increases and ruled out any revision of charges in view of the meagre tax cut now.

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