Petrol pump owners in MP cry foul over VAT hike

Petrol pump owners on Saturday warned of a shut-down to protest 5 per cent hike in Value Added Tax (VAT) on petrol and diesel, claiming that prices of two fuels in Madhya Pradesh are now highest in the country.

The Congress government on Friday hiked the VAT on two fuels and liquor from midnight, saying it needed additional revenue to tackle the massive damage caused by torrential rains this monsoon.

"Diesel and petrol in Madhya Pradesh have become the costliest in the country. We are planning to hold protest by shutting down petrol pumps soon," Madhya Pradesh Petrol Pump Owners Association's president Ajay Singh told PTI.

In Bhopal, diesel has become costlier by Rs 3.13 per liter and petrol by Rs 3.24, he said.

Petrol was sold at Rs 81.49 per liter and diesel at Rs 72.78 per liter in Bhopal on Saturday.

Both fuels were cheaper in neighbouring states of Rajasthan, Maharashtra, Uttar Pradesh and Chhattisgarh, Singh claimed.

With the increase, the VAT on diesel is 23 per cent, in addition to a cess of about Rs 2 per liter. The VAT on petrol has gone up to 33 per cent besides a cess of about Rs 3.5 per liter.

"There is price difference of Rs 4.99 per liter for petrol and Rs 1.86 per liter for diesel, compared to Rajasthan. The difference is up to Rs 2.50 for both fuels in comparison to Maharashtra," Singh said.

Defending the hike, a senior government official said the state is estimated to have suffered a loss of Rs 11,900 crore due to excessive rains.

The VAT hike will be a temporary measure, he added.

The opposition BJP said the Congress had promised to reduce fuel prices if elected to power but acted to the contrary.

"In August last year, Kamal Nath, as state Congress chief, had promised to reduce the prices by Rs 5 for petrol and Rs 3 for diesel. But the Nath-led government has now increased the burden on people and farmers," state BJP spokesperson Rajneesh Agrawal said.

The ruling Congress blamed the previous BJP regime's financial mismanagement for the hike.

"The Congress government inherited a debt of Rs 1.80 lakh crore. The centre has reduced the state's allocations and withheld funds for several schemes. Moreover, MP suffered huge losses due to rains and floods. So the state government had no other option," party spokesperson Narendra Saluja said.