The new Bharatiya Janata Party government in Rajasthan may reduce petrol rates by ₹8-10 per litre and consider cutting diesel prices marginally by reducing value-added tax to fulfil a poll promise made by Prime Minister Narendra Modi, two officials said.
“The state government is expected to review VAT on petrol and diesel after the full cabinet is in place. It will take a view in lines with the Prime Minister’s guarantee to the people of Rajasthan during his Bharatpur rally on November 18,” one of them said, seeking anonymity.
The government will factor in resources before announcing a VAT rate cut as the state already has a debt burden of over ₹5 lakh crore and the new administration has also committed to provide cooking gas for ₹450 per cylinder, he said.
In Bharatpur a month ago, Modi said there was a disparity in petrol prices between Congress-ruled Rajasthan (about ₹109 per litre) and its BJP-ruled neighbours Uttar Pradesh, Gujarat and Haryana (approximately ₹97 per litre). “I’m giving you this assurance that petrol pricing will be reviewed immediately after formation of the BJP government, and as soon as possible, a decision in public interest will be taken,” he had said.
“There is a scope to reduce petrol prices by ₹8-10 per litre, while keeping precarious financial state of Rajasthan in mind. A balance could be made by a token reduction in diesel rate also. But, a review will take place only after the cabinet is formed,” a second official said, declining to be named.
Petrol in state capital Jaipur is sold at ₹108.48 per litre, which costs ₹96.57 a litre in Lucknow in Uttar Pradesh, according to state-run Indian Oil Corporation, India’s largest fuel retailer. It costs ₹96.42 a litre in Ahmedabad and ₹97.18 in Gurugram.
Diesel in Jaipur pumps is sold at ₹ 93.72 per litre, Lucknow ( ₹ 89.76), Ahmedabad ( ₹ 92.17) and Gurugram ( ₹90.05).
Petrol and diesel rates vary because of state levies and other local charges. Pump prices of transport fuels are comparatively higher in Rajasthan because of high VAT and other levies, an executive working for a state-run refiner said, requesting anonymity.
Rajasthan charges 31.04% VAT and ₹1,500 per kilolitre road development cess on petrol, and 19.30% VAT and ₹ 1,750 per kilolitre road development cess on diesel. Comparatively, Uttar Pradesh levies 19.36%, or ₹ 14.85, per litre VAT, whichever is higher, on petrol and 17.08%, or ₹10.41 a litre, whichever is higher, on diesel. VAT on petrol in Gujarat is 13.7% plus 4% cess and VAT on diesel is 14.9% plus 4% cess. In Haryana, the key tax on petrol is 18.2%, or ₹14.50 a litre, whichever is higher; on diesel, it is 16%, or ₹11.86 a litre, whichever is higher.
Two other states, Madhya Pradesh and Chhattisgarh, where BJP has formed new governments, may also review tax rates on petrol and diesel and consider reducing pump rates of the two fuels, the first official said. State governments of Rajasthan, Madhya Pradesh and Chhattisgarh did not respond to emailed queries.
“There is a scope to reduce petrol and diesel prices in these states by reducing VAT,” the official said. Vat on petrol in Chhattisgarh is 24% plus ₹ 2 per litre and on diesel, it is 23% plus ₹ 1 per litre. In Madhya Pradesh, VAT on petrol is 29% plus ₹2.5 a litre plus 1% cess, and on diesel, it is 19% plus ₹ 1.5 per litre VAT and 1% cess.
