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

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.