In Delhi, petrol prices have gone up by ₹1.67/litre, whereas diesel prices saw a huge jump of ₹7.10/litre.
The Delhi government, with immediate effect, has announced a hike on the Value Added Tax (VAT) levied on petrol (from 27% to 30%) & diesel (from 16.75% to 30%). Consequently, a litre of petrol in Delhi now costs ₹71.26/litre and a litre of diesel will now be sold at ₹69.39/litre. This news will be particularly hard to digest for the residents of Delhi, keeping in mind that just a few days back, global crude oil prices had fallen below $0/barrel.
The Delhi government officials, including Deputy CM Manish Sisodia, have condoned the move, claiming that the government is operating on virtually empty coffers and, therefore, tough measures need to be implemented to boost revenue collection. Apart from Delhi, similar VAT hikes on auto fuel have been imposed in other states like West Bengal, Karnataka, Nagaland, Assam, & Haryana.
While this VAT hike is likely to help the government pocket higher revenue, it can also have a potentially negative impact on retail inflation, as goods and services are likely to undergo similar price hikes to offset the rising transportation costs. Therefore, in a time of large-scale layoffs, pay cuts, and increasing unemployment, be prepared to shell out more money!