Andhra Pradesh CM Announces cut on VAT to Reduce Petrol & Diesel Prices

The cut in VAT prices will cost the Andhra Pradesh exchequer around Rs 1,120 crore a year, chief minister Chandrababu Naidu told the state assembly today.

Andhra Pradesh chief minister, N Chandrababu Naidu today announced a reduction in value-added tax (VAT) on the price of petrol and diesel by Rs 2 per litre in the state amid a countrywide shutdown by Congress-led opposition to protest the spiralling fuel prices.

Naidu, the chief of the Telugu Desam Party that was part of the ruling National Democratic Alliance till recently, made the announcement in the state assembly after holding a high-level meeting in the wake of the Bharat Bandh call given by the Congress and other opposition parties in the country. The TDP also took part in the agitations across the state.

Naidu accused the NDA government at the Centre of misleading the people by attributing the steep hike in the prices of petrol and diesel to growing crude oil prices globally.

“During 2013-14, the crude oil prices were $105.52 per barrel. But when the price fell down to $46 dollars, too, the Centre did not reduce the petrol and diesel prices. Now, the crude oil costs $70 per barrel, but the Centre is increasing the petrol and diesel prices abnormally every day,” he said.

The chief minister said his government took a decision to give partial relief to the people by reducing VAT keeping in view their sufferings and their anger, which was reflected in the form of the Bharat Bandh.

“This will cause an additional burden on state exchequer to the tune of Rs 1,120 crore annually,” he said.

Andhra Pradesh has the third highest percentage of VAT on petrol at 35.77% after Maharashtra and Madhya Pradesh and the highest on diesel at 28.08%.

“Since the central government is not responding on (reducing the) petrol prices, Naidu is doing the exercise to give relief to the public,” sources in the TDP said.

Though it is financially a tough decision, Naidu thinks it will give a tremendous political mileage to the TDP. Since the Centre might also go in for a reduction of central excise duty in the wake of elections, it will give a big relief to the consumers.

The TDP had earlier this year ended its four-year-long alliance with the Bharatiya Janata Party (BJP), complaining that Prime Minister Narendra Modi did not deliver on his promise to give Andhra Pradesh a special category status that could have given the state access to higher central funding.

Its exit from the national coalition also coincided with sharper attacks on the Centre on the economy and his assessment of Modi’s surprise decision to ban high-value currency notes in 2016.

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