In a major decision to strengthen the financial stability of the state, the Punjab Cabinet led by Chief Minister Bhagwant Mann has given a go-ahead for increasing the VAT on petrol and diesel. This was decided on Thursday, which raised the VAT on petrol by 61 paise per litre and on diesel by 92 paise per litre.
The increase in VAT is one of the measures that the AAP government in Punjab has taken in order to improve the state’s financial situation. Apart from the increase in the VAT, the government has also put into effect the decision of cancelling the Rs 3 per unit electricity subsidy for the consumer with loads up to 7 KW. This step is likely to reduce the subsidy bill by Rs 1,500 crore per annum as the power subsidy was estimated to touch Rs 24,000 crore this fiscal. The subsidy was introduced by the previous Congress administration of the Congress party, headed by Charanjit Singh Channi.
When questioned, State Finance Minister Harpal Singh Cheema defended the VAT increase, saying that it would help the state to collect a significantly higher amount of revenues. Cheema has said that the government anticipates earning Rs 395 crore per annum from diesel sale and Rs 150 crore per annum from petrol sale. This increase in revenue is important in supporting the different development projects and meeting the financial requirements of the state.
In another significant step, the state government has raised the bus fares by 23 paise per kilometre. This is expected to generate an additional Re 150 crore of revenue per annum and thus help the state in its financial management.
Such decisions indicate the government’s efforts in the Punjab province to solve the problems of a financial deficit and to achieve economic stability. The AAP government through the policy change in VAT on fuels, scrapping of power subsidy, and hiking of bus fares intends to improve its cash flow and properly prioritize the use of resources for more development and welfare oriented projects.
