Within a week of raising petrol prices by Rs. 7.54, the Delhi government has announced that it will waive off the 20 per cent Value Added Tax (VAT) levied on the fuel in order to bring down the price. If this comes into effect, the price of petrol in the national capital will decrease from Rs. 73.18 to Rs. 71.92, a reduction of Rs. 1.26.
In the 2012-13 budget proposal, the government declared that it will do away with the VAT on the price increase (Rs. 6.28). It will announce the implementation of the new prices when the assembly passes the proposed budget. On May 28 2012, Indian Oil Corporation (IOC) also stated that it will reassess the cost of petrol on June 01 2012, indicating a small reduction in price, which will amount to Rs. 1.5 to Rs. 2.
On the other hand, the government also announced that it has raised the VAT on Compressed Natural Gas (CNG) by 5 per cent. This move will increase the price of the eco-friendly fuel, which currently stands at Rs. 35.45 per kg, by Rs. 1.77. However, the Chief Minister of Delhi, Sheila Dikshit, also said that the proposal is yet to be approved by the assembly. She continued, saying that her government may eventually reconsider this increase in VAT on CNG after the house has discussed the same.
Since the whole public transport infrastructure of the national capital is dependent on CNG, this increase in the cost of CNG will result in a fare hike, which will again hurt the public after the petrol price hike. At present, close to 5.5 lac CNG-powered vehicles ply on Delhi roads, including private and public transport.
While speaking about the elimination of VAT, Dikshit said that the government wanted to give some respite to the citizens from this hike. The CM, who also heads finance department of the state, commented, "We gave relief to the people when there was an increase in the price of diesel last year."
On the other hand, union bodies of auto rickshaw and taxi operators declared a strike on May 31 2012 in order to protest against this hike in CNG price. Rajendra Soni, who works with Bhartiya Mazdoor Sangh, the body that governs auto rickshaws and taxis in Delhi, commented, "The government should either roll back the CNG price hike or should immediately announce increase on auto and taxi fare." However, the government had waived off the VAT on CNG till now, whereas neighbouring states like UP and Haryana levied it at 12.5 and 5 per cent, respectively.
