Assam finance minister Himanta Biswa Sarma on Wednesday said the hike in prices of petroleum products was a temporary measure to compensate for the loss the state government is suffering because of the global meltdown in oil prices.
The notification of the hike came into effect on Wednesday.
Considering a hike in value added tax (VAT) by 1.76 per cent, petrol price rose to Rs 77.46 per litre from Rs 71.59 per litre, a hike of Rs 5.87 per litre.
A hike in VAT by 1.11 per cent saw diesel price rise to Rs 70.50 per litre from Rs 65.05 per litre, a hike of Rs 5.45 per litre.
Sarma said as there was very less movement of private vehicles, the people would not be affected too much.
“Due to the global crash in oil prices, the state government will lose a lot of royalty that it was receiving from OIL and ONGC. The hike is just a temporary measure to cover a loss of around Rs 50 crore in the next one month. In this time of crisis, everyone will have to bear the brunt,” Sarma said, adding that the state usually receives around Rs 166 crore as oil royalty per month.
Assam’s oil royalty is directly linked to the international oil prices.
Sarma had earlier said: “As a state, we can hike taxes only on petrol, diesel and liquor. Probably at some point of time, we may revise tax on petrol and diesel, provided the prices in the international market go down so that the consumers are not affected.”
Finer president Pabitra Buragohain said: “Substantial hike in diesel price will increase transportation costs considerably, resulting in increase in the cost of production, specially foodgrain. The poor and marginalised people will face immense hardship. At the same time, it is imperative that the government exchequer should go up. This increase in government revenue can also be used to overcome the current crisis to support the poor and marginalised people of the state.”
Kamrup Chamber of Commerce president Mahavir Jain told The Telegraph: “The government has spent a lot of money to tackle the medical costs of the Covid-19 pandemic. The Assam government has run out of funds and has no option but to impose a hike on petroleum products. The government is spending heavily on medical costs and providing relief to needy people. There is enough foodgrain in the state and more is on the way.”
Chairman of the Assam State Council of Ficci Ashish Phookan said: “The impact of the Covid-19 outbreak is being felt in every sphere of human activity and business and economy are no exceptions. The current hike in tax on fuel, petrol and diesel, has come as a surprise; however we understand that the current situation has robbed the state government of most sources of revenue and the government needs money to fight the pandemic. We hope that the government will take necessary steps to support industry and as the situation improves, we also hope the higher tax on fuel will be rolled back in due course,” he said.
“Resources are already limited and the cost of manufacturing has gone up. Price hike in fuel will only increase their manufacturing cost which may ultimately lead to inflation,” a trader said.
Reacting to the announcement to increase tax on petrol and diesel, president of the All India Professionals’ Congress and spokesperson for Assam Congress, Gauravv Somani, said: “The state government’s decision is regressive and very discouraging specially at a time when the prices of essentials are already at an increased level and the logistic supply costs are extremely high. This will trigger inflationary trend and to show off, the government will again target the poor and helpless SME sector of business class,” he said.
Additional reporting by Ali Fauz Hassan
