The Maharashtra government Wednesday increased the surcharge on petrol by Rs 2 a litre. The hike comes barely two days after a Rs 2.16 per litre cut in petrol prices riding on a fall in global crude oil prices and a favourable rupee-dollar exchange rate.
The actual reduction in price was Rs 2.93 per litre after taking into account local value-added tax (VAT). But just as petrol consumers had begun to rejoice, the state government offset almost the entire benefit by hiking the surcharge.
The total surcharge on petrol has now gone up to Rs 11 per litre. This is in addition to the 26 per cent VAT charged in Mumbai, Thane, and Navi Mumbai. For the rest of the state, the revised tax rate will be 25 per cent plus Rs 11 surcharge per litre.
For retail consumers in Mumbai, the state’s move means the petrol price, which had dropped to Rs 74.55 per litre following the Monday cut, will rise again to Rs 76.55 per litre.
Incidentally, the state government did not revise the surcharge on diesel. Diesel prices were also cut by Rs 2.10 per litre Monday. Finance Minister Sudhir Mungantiwar said this had been done consciously. “Our experience has been that any hike in diesel rates directly impacts inflation numbers. Increasing surcharge on diesel would have also meant losing revenue to neighbouring states,” he said.
This is the second time in less than a month that the Devendra Fadnavis-led government has hiked petrol surcharge. On April 23, the government had levied an additional surcharge of Rs 3 on petrol to defray revenue losses.
Justifying the hike, Mungantiwar said: “Our estimates were that the cut in petrol and diesel prices would collectively result in a Rs 750-crore loss to the state exchequer. It would have adversely impacted state’s plans for funding development projects. We have brought down the loss to the exchequer by hiking the surcharge.” Claiming that the decision was driven more out of compulsion than choice, the minister said the consumer was not being burdened with a further increase in prices. “A benefit of Rs 2.93 per litre would have flown to the consumer following this week’s price cut. All we have done is offset Rs 2 per litre from the benefit. The retail price of petrol will still be lower than what it was last week,” he said, adding: “The public money, thus saved, will go towards development activities.”
There was a mixed response from petrol dealers. Welcoming the decision of not hiking surcharge on diesel, Uday Lodh, president, Federation of All Maharashtra Petrol Dealers Association, said, “Taxes and surcharge on fuel have become a milch cow for the government. Whenever they face a revenue shortfall, they increase taxes on petrol and diesel. The retail consumer, who should have benefitted from the cut in prices, has lost out.”
The state’s revenue has been hit hard post demonetisation and the Supreme Court’s ban on liquor vends near highways. The Opposition criticised the government for the latest hike in petrol surcharge. Nationalist Congress Party leader Nawab Malik said: “The government is basically stealing money from the people’s purses to cover up for the fiscal mismanagement. It keeps hiking taxes and levies every month.”