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City fills diesel in Haryana
June, 21st 2008

Diesel users in the Capital are now heading to Haryana to buy at lower prices. With Haryana having reduced value added tax (VAT) rates on diesel from 12% to 8%, the sale of diesel in the Capital has dipped by about 30%.

The Delhi government had consciously decided to not give a subsidy or reduce VAT on petrol or diesel after the price hike on the ground that public transport was on CNG and only private vehicles used diesel and petrol. Chief minister Sheila Dikshit, while announcing a subsidy on LPG cylinders for domestic consumers, had made it clear that no such subsidy was likely in the near future as the aim was to get more people to switch to CNG-based public transport.

According to the Delhi Petrol Dealers Association, the city sells approximately 12 crore litres of diesel every month. The rate of VAT levied on diesel in Delhi is 12.5 per cent as of now. Uttar Pradesh has also brought down the VAT component on diesel by Rs 1.5.

A consumer who was buying ordinary diesel in the city at Rs 31.80 per litre is now buying it for Rs 34.80. In case of branded diesel the consumer has to shell out Rs 2.25 extra. "Figures obtained from oil companies for the first 10 days after the variations in VAT shows that there is an approximate drop of about 30 percent sale of diesel in the Capital," said sources from the Delhi Petrol Dealers Association.

The Association, affiliated with the Federation of All India Petroleum Traders, is worried that, if the trend continues, the ultimate drop in sales in Delhi may be over 50%.

Inter-state sale, mainly for industrial consumption, will also increase in Haryana. This means that inter-state diesel vehicles might also shift to the Haryana market before entering Delhi.

According to Association of Petrol Dealers, the level of purity in diesel sold from retail outlets in Delhi is presumed to be immaculate. "The drop in the sale of diesel will not only affect revenue collection from VAT but will also make the environment susceptible to pollution," members observed. They also sought uniformity in VAT as NCR has four different rates.

Delhi finance minister AK Walia said that he had not received any report on the matter or a demand for relief from Delhi Petrol Dealers Association. He also made it clear that there were no immediate plans to reduce VAT. He reiterated that after the price hike of petrol, diesel and LPG, the government had given a subsidy Rs 165 crore on LPG cylinders.

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