M A I N   N E W S

Punjab proposes cess on diesel, petrol
Sarbjit Dhaliwal
Tribune News Service

Chandigarh, March 22
With a full thrust on the investment of private capital and engaging of the private sector in the delivery of public services in all social sectors, the Punjab Finance Minister, Mr Surinder Singla, today presented his first Budget imposing the only new tax in the form of a levy chargeable at Re 1 per litre on diesel and 50 paise per litre on petrol to mop up Rs 100 crore.

Having a total outlay of Rs 27691.33 crore for the year 2005-06, the projected revenue deficit of the budget is Rs 2118.46 crore and fiscal deficit Rs 4449.26 crore, which percentagewise is significantly lower than the estimated revenue and fiscal deficit, respectively, for the current and last fiscal years.

Among the major announcements made in the Budget were the setting up of the Farmers Commission to conceptualise recommendations and guide various policies on the agriculture and allied sectors. Besides, the government also decided to set up an investment commission for promoting investment in agriculture, infrastructure, industry and the services sector on the lines of the National Investment Commission, which is headed by Mr Ratan Tata.

The Rs 100 crore levy burden would mainly be on the farming, transport and automobile sectors, all major clients of fossil oils. In fact, it will be a shocking dose for the people of the state because the Central Government is also contemplating a hike in the price of diesel by Rs 2 per litre and of petrol by Rs 2.80 from April 1. If both governments implement the proposed increases, the diesel rate will jump to almost Rs 29 per litre whereas the petrol rate will touch Rs 45 per litre in the state.

In his Budget speech, Mr Singla said that the Rs 100 crore would go to the Agri-Diversification, Infrastructure, Research and Development Fund (ADIRF). This proposed fund would be managed by professionals from amongst agricultural scientists, economists and administrators.

Though Mr Singla has not imposed any new tax except the levy on diesel and petrol, his speech was pregnant with indications of levelling of various kinds of user charges in the services sector where private investors and service providers will be involved in the delivery of services.

It is obvious that neither any private investor nor private service provider, even if he works in a tie-up with the public sector, will enter any of the services sectors without the guarantee of adequate returns. Obviously, people will have to cough up money in the form of services and other user charges with the entry of such players in the services. It is goodbye to the era of freebies.

The shift in today’s Budget marks the dawn of a new era: “pay to be paid”. Of course, the collapsing of the government delivery system in the health, education, local self-government, roads and transport sectors has paved the way for the entry of the private sector, and that, too, through the route being provided by the government itself.

In the Budget, there is good news for those industrialists who have been waiting for many years for the clearance of their dues with regard to industrial subsidies. There is a provision of Rs 50 crore in the Budget to liquidate a part of the backlog of the undisbursed subsidies. However, the total amount to be disbursed by the government is Rs 600 crore. For the clearance of the remaining amount, the industrialists concerned may have to wait for some more time.

What has been projected as a major achievement of the state government is that with tight and prudent management of fiscal affairs, the revenue deficit as a percentage of the gross state domestic product (GSDP) is expected to come down to 2.2 at the end of the next financial year whereas in 2001-02, it was 5.38. And the fiscal deficit will come down to 4.62 per cent, which was over 7 per cent in 2001-02.

And the government’s committed expenditure, which was 118.24 per cent (against the revenue receipt of Rs 100, the government had to spend Rs 118.24), has come down to 79.91 per cent with a sustained tight control on government spendings. Of course, the ban on fresh recruitment and a cut on spending on the services and welfare sectors has made this possible.

Revealing the strategic initiatives taken in the Budget, said to be prepared by a “dream team” of high-profile bureaucrats under his guidance to tackle economic slow-down and to modernise the economy, Mr Singla said knowledge centres would be set up in each village with public-private sector participation to take the new technologies to the countryside. The living conditions in villages, towns and cities would be improved through an integrated programme of rural and urban infrastructure creation.



How it will hit common man

After the levying of the proposed cess, petrol and diesel will become more costly in Punjab than either in Haryana or Chandigarh. The hike in the prices will hit an average urban man with a motorised vehicle less severely than a farmer with a tractor.

It will also hit the travel trade hard. Hundreds of families in the state have been earning their livelihood through the plying of multi-passenger diesel-driven vehicles.

Going by current prices, the costliest petrol in the region is in Punjab. While in Haryana, 1 litre of petrol is available for Rs 37.97, it costs Rs 41.40 in Punjab and Rs 38.35 in Chandigarh. After levying of 50 paise cess, petrol will sell in Punjab at Rs 41.90 a litre, almost Rs 4 per litre more than in Haryana and Rs 3.60 more than in Chandigarh.

Diesel, which has been the cheapest in the region in Punjab, will after the levy of the cess become the costliest. Against the current price of Rs 25.83 a litre now in Punjab, Rs 26.03 in Chandigarh and Rs 26.13 in Haryana, it will, after levying of cess, cost Rs 26.83 a litre.


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