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This is an archive article published on September 5, 2024

Punjab raises VAT on petrol and diesel, withdraws power subsidy, increases bus fare in bid to shore up finances

Finance Minister Harpal Cheema announced the decisions after a Cabinet meeting called by Chief Minister Bhagwant Mann to address the state's current financial challenges

Punjab petrol diesel VATBy hiking VAT on every unit of diesel and petrol, the government plans to make Rs 500 crore every year. (File)

The fund-crunched Punjab government on Thursday approved an increase in value-added tax (VAT) of petrol and diesel prices by 61 paise and 92 paise per litre, respectively. It also announced the withdrawal of the Rs 3 per unit power subsidy given to consumers with loads up to 7 KW. In another major decision, it raised the bus fare by 23 paise per km.

Finance Minister Harpal Cheema announced the decisions after a Cabinet meeting in Chandigarh. Chief Minister Bhagwant Mann convened the Cabinet meeting to address the state’s current financial challenges as it was unable to pay government employees’ salaries until September 4.

The Aam Aadmi Party (AAP) government looks at saving Rs 1,500 crore per year by withdrawing the power subsidy introduced by the previous Congress government under Charanjit Singh Channi. The state is reeling under a financial crisis due to a fat power subsidy bill that is set to cross Rs 24,000 crore this year.

Highlighting the effect of the power subsidy withdrawal, a source said, “For instance, if a consumer consumed a unit worth Rs 4.50, he was given a subsidy of Rs 3 each. As many as 69 lakh consumers were enjoying this subsidy. Now, they will have to pay the entire tariff.”

Cheema, however, said all consumers would receive 300 free units of power every month, regardless of their load, and over 90 per cent of people would benefit from this subsidy.

By hiking VAT on every unit of diesel and petrol, the government plans to make Rs 500 crore every year. In addition, increasing bus fares can generate an annual revenue of Rs 150 crore.

On Wednesday, the Himachal Pradesh government announced that salaries and pensions of government employees and pensioners will be disbursed on the fifth and tenth of every month, respectively, in a bid to tide over the financial crisis.

Kanchan Vasdev is a Senior Assistant Editor in The Indian Express’ Punjab bureau. She is a highly experienced journalist with 22 years of expertise covering high-stakes politics, governance, and social issues in Northern India. Professional Background Role: Primary reporter covering the Punjab Chief Minister’s Office (CMO), government policies, and the Aam Aadmi Party (AAP) leadership in the state. Experience: She previously worked with The Tribune and has played a key role in launching various city editions. Special Projects: Abandoned Brides: Authored a monograph on brides abandoned by NRIs as part of the Prabha Dutt Memorial Fellowship. Environment: Worked as a Centre for Science and Environment (CSE) fellow, focusing on the pollution levels in the Satluj river. Recent Notable Articles (Late 2025) Her recent reporting focuses on the legislative strategies and political maneuvers of the Bhagwant Mann-led Punjab government: 1. Legislative & Governance Standoffs "Punjab govt advances special Assembly session to pass resolution against VB-G RAM G Bill" (Dec 20, 2025): Reporting on the state's move to block the Centre's "Viksit Bharat" mission, which the state claims will undermine MGNREGA. "Punjab govt doubles down on special sessions, sixth in January" (Dec 19, 2025): Detailing the AAP government's use of special sessions as a legislative tool amid tensions with the Governor. "Punjab asks 'VIP teachers' working near Chandigarh to go back to border districts" (Dec 16, 2025): Reporting on CM Mann's move to end the practice of influential teachers avoiding postings in remote areas. 2. Political Analysis & Rural Polls "Punjab rural polls: Why Akalis are likened to dinosaurs in Punjab" (Dec 19, 2025): Analyzing CM Bhagwant Mann's rhetoric against the Shiromani Akali Dal (SAD) following local body elections. "AAP claims win in 78% Punjab zila parishads as counting continues" (Dec 18, 2025): Breaking down the results of the 2025 rural elections. "Rahul Gandhi and Sidhu alike, says Bhagwant Mann" (Dec 13, 2025): Covering the CM's critique of the Congress leadership. 3. Law Enforcement & Bureaucracy "Suspended Punjab IPS officer Ravjot Kaur Grewal awaits reinstatement" (Dec 10, 2025): Investigative reporting on the bureaucratic red tape involving the Election Commission and the state government. "Punjab declines to give parole to Amritpal Singh" (Nov 27, 2025): Detailing the state government's refusal to grant parole to the radical preacher and sitting MP. 4. Welfare & Economy "Punjab government's plan to add more freebies to 'atta-dal' scheme hits funds roadblock" (Dec 4, 2024): An analysis of the fiscal challenges facing the state's flagship food security program. "Mann leads Punjab delegation to Japan and South Korea for investor outreach" (Dec 2, 2025). Signature Beat Kanchan Vasdev is known for her insider access to Punjab's political executive. Her writing provides deep insights into how state policies are formulated and the friction points between the state government and central authorities. Her dual expertise in environment and law allows her to report on complex issues like the "Farmhouse Policy" (Dec 18, 2025) and river pollution with a unique policy-oriented lens. X (Twitter): @kanchan99 ... Read More

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