Petrol pumps in Delhi will shut shop on April 9 to protest the increase in VAT rate on diesel that has made the fuel costlier in the national capital in comparison to neighbouring Haryana, pump dealers union said.
"Sale is drying up as differential in diesel prices in Delhi and Haryana is almost Rs 4 per litre," the Delhi Petrol Dealers Association said in a press statement.
In June 2008, Haryana reduced the value added tax (VAT) on diesel to 8.8 per cent from 12 per cent, thereby making it cheaper than in Delhi where VAT on the fuel was 12.5 per cent. "From 13.5 crore litres a month, sale of diesel in Delhi came down to 8.5 crore litres a month (loss of 37 per cent)," it said.
The already "bleeding" dealers were further handed with a bodyblow when the Delhi Government on April 1 raised VAT on diesel to 20 per cent.
"This has resulted in a difference of almost Rs 4 per litre in the price of diesel between Delhi and Haryana," it said.
Delhi shares border with Haryana on north, south and west. It has Uttar Pradesh in the eastern border.
The increase in VAT has made diesel in Delhi more expensive than even UP. A large number of vehicles coming into the national capital from Haryana or UP daily would prefer refueling outside.
"Due to this price differential, we expect a further drop in sale from the present 8.5 crore litre per month to three crore litre per month (a total loss of 80 per cent)," the Association said. "As a result, the state is going to suffer heavy revenue loss, to the tune of Rs 325 crore per annum."
"This loss in sales of Delhi petrol pumps will make a very large percentage of them unviable, who will have to close down," it said.
The increase in price of diesel would have a cascading effect on the whole economy. "The price of almost all items of daily needs will go up since transportation will become more expensive."
The Association claimed that the differential price would also encourage smuggling and black marketing of cheaper low grade diesel into Delhi which from April 1 has moved to Euro-IV compliant fuel. "The unviable petrol dealers will have to resort to cost- cutting for survival," it said listing steps like reducing manpower and reduced working hours. PTI
