Andhra Pradesh Reduces VAT on Fuel

Chief Minister of Andhra Pradesh, Chandrababu Naidu aimed to bring some relief to the people of his state when he reduced the VAT on diesel and petrol by Rs. 2.00 today. Fearing that the people of Andhra Pradesh would have to brave the dual burdens of unchecked fuel prices reaching Rs. 100 in the near future, as well as battling the effects of the Indian rupee reaching Rs. 100 to the US dollar, the Chief Minister carried forth his plan to reduce the state tax on fuel. Some say that his move is politically motivated, and not unique because of the reduction of VAT in the state of Rajasthan, just a day earlier. Whatever the case may be, the fact of the matter is that diesel and petrol are once again slightly more affordable in the state.

The other side of the equation presents problems for the state, however, with the reduced VAT meaning lower earnings for the state to the tune of Rs. 1,120 crores a year, something of a serious matter because the state is suffering a budget deficit already with no requests for assistance from the center being met. Andhra Pradesh levies a VAT of Rs. 4.00 per litre of fuel on both diesel and petrol, so it is rather significant for the amount to be reduced this significantly. Again, fingers are pointed at the BJP government in New Delhi who have not seen fit to act with some urgency on the matter of the price rise, and furthermore, have not attempted to reduce the price of fuels when the price of crude oil came down.