Delhi govt refuses VAT cut on fuel prices. Is AAP govt really ‘running in losses’?

New Delhi: Despite Centre’s announcement of reducing value-added tax (VAT) by Rs 2.50 per litre on both petrol and diesel, the Delhi government has refused to slash the indirect tax on fuel prices as the state government is “already running in loss”.

“The state believed in the Centre over the implementation of the Goods and Services Tax (GST) implementation, with a hope that Prime Minister Narendra Modi would take care of states’ interests. But, now when the Centre says it has hiked prices of petrol and diesel by Rs 10, but the profit is going to the Centre. However, if it reduces the rates by Rs1.5, states are expected to cut down the price by Rs 2.5,” Delhi Deputy Chief Minister Manish Sisodia was quoted as saying in media reports.

On October 4, the Centre had slashed the price of petrol and diesel by Rs 2.50 per litre each and directed the state governments to implement the same.

Soon after the announcement, many states including Madhya Pradesh, Rajasthan, Uttar Pradesh, Chhattisgarh, Bihar and Maharashtra announced an additional concession on the fuel prices.

Let’s take a look at reported instances where Delhi government incurred losses in 2018:

  • An RTI query by activist Sanjeev Jain revealed that Aam Aadmi Party-led Delhi government, in three years of coming to power, had turned profit making Delhi Jal Board (DJB) to an Rs 800 crore loss-making unit. With a revenue loss of Rs 516 crore in 2016-2017 and Rs 209 crore in the fiscal year before that, the state govt had to subsequently hike the charges for water across the national capital.
  • In January, the Delhi government lost Rs 125 crore in revenue after seven lakh traders under the aegis of 2,000 trade associations kept their shutters down to protest against unprecedented sealing drive in Delhi. The protest caused business loss worth Rs 1,500 crore in the national capital.
  • The protests against sealing drive – based on the directive of a Supreme Court appointed committee – resurfaced in the national capital late in March where the government once again faced revenue loss of over 150 crores owing to business loss worth 1,800 crore during the one-day Bandh.
  • Later in the year, a CAG report stated that Delhi Transport Corporation (DTC) “failed” to recover losses from its maintenance contractor for 17 AC buses that were gutted in fires in 2015 resulting in total loss of Rs 2.82 crore to the public transporter up to June 2017.