High diesel prices in MP hurt pump owners, govt

High diesel prices in Madhya Pradesh have not only hit petrol pump owners’ business but have also inflicted severe losses on the government in terms of revenue.

With the neighbouring states of Rajasthan, Uttar Pradesh and Gujrat levying lower taxes on the liquid fuel, transporters in the state are giving local petrol pumps a miss deepening the dealers’ concerns.

While the retail price (inclusive of VAT) of diesel in Indore is Rs 59.60 per litre, diesel is available for Rs 57.57 per litre in Jaipur, Rs 57.42 per litre in Lucknow, and Rs 58.14 per litre in Ahmedabad.

“Transporters consume hundreds of litres of diesel daily and so it makes sense for them to fill up the tanks in the neighbouring states. While petrol consumption has not been hit after government hiked VAT by 4%, diesel sales have come down further,” Indore petrol pump dealers association secretary Paras Jain said.

In December 2014, the state government had raised the valued added tax (VAT) on diesel by 4 per cent to 27 per cent to compensate for revenue loss following a steep fall in prices. However, it has made no move to reduce the taxes now that prices have shot up once again.

“We have approached the state government over this issue but no action has been taken so far,” said G S Kohli, president of Indore petrol pump dealers association and vice-president of Consortium of Indian Petroleum Dealers.

However, state finance minister Jayant Malaiya, has ruled out any immediate cut in VAT.

“We will wait and see if the prices of petroleum products go up further before taking any decision on the matter,” he said.

A report on diesel consumption pattern in the country prepared by the Union Ministry of Petroleum and Natural Gas earlier this year too had stated that consumption of diesel in Madhya Pradesh is comparatively low than in other states.

“In the West zone, share of diesel consumption in the transportation segment is least in the state of Madhya Pradesh,” stated the report.