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Saturday, May 15, 2010

Edition 18:Fuelling The Capital Difference

Living in the capital of India costs you less than living in the culture capital of Maharahstra, thanks to the heavy taxes levied by state government and PMC.

There could not have been a worse situation for the Puneite who loves to drive his vehicle, whether it be two wheeler or four wheeler. First, the union budget presented by finance minister Pranab Mukherjee hiked the rates of petrol and diesel all over the country. Then within a month, the fuel prices in city shoot up because of implementation of Euro IV grade standards among 13 cities all over India, including Pune.

While rest of the country sells fuels without less taxes, in Pune it is already reeling under the burden of taxes. This is the reason why you are paying for third costliest fuel in the country. Only Bangalore and Hyderabad offer costlier petrol than Pune. Consider this: after the second hike from April 1, petrol prices in New Delhi went up to Rs 47.93 (an increase of Rs 0.50) a litre and diesel to Rs 38 (increase of Rs 0.26) per litre. In comparison, petrol prices in Pune went up to Rs 52.08 (increase by Rs 0.55) per litre and diesel prices went up to Rs 39.80 (increase by Rs. 0.28) per litre. It means living in the capital of India costs you less than living in the culture capital of Maharahstra.

There are different opinions on the exact reason of such a difference of prices in Pune and that of other places. There are mainly two factors making petrol and diesel more expensive to Puneites. Pune Municipal Corporation not only charges octroi tax on petrol, it charges it on Value Added Tax also. Since 2005, PMC charged 4 percent octroi tax on the VAT-included price in addition to originally price. PMC on its part reduced the octroi from 4 percent to 2 percent two years ago. However, the double taxation still persists. As things stand today, only Mumbai, Nagpur and Pune municipal corporations charge octroi on petroleum products. On a daily basis, Pune uses 5 lakh litres of petrol and 3.60 lakh litres of diesel. The Pune municipal Corporation (PMC) is charging two per cent octroi on diesel and petrol and one per cent of education cess.

Besides octroi, it is the sales tax which contributes to the prices of petrol being increased. Prices of fuel at a particular place depend upon sales tax and octroi and fret. Maharashtra has the second highest sales tax in the country. State charges 26 % of sales tax on petrol and also levies Rs 1 for using state highways and flyovers. The overall taxes in Maharashtra on petrol come third in the country after Andhra Pradesh (33%) and Tamil Nadu (31%).

According to Baba Dhumal, Vice President, Federation of All India Petrol Dealer’s Association, the functionaries of the organization have met union petroleum ministers in connection with this matter at least four times. He was requested to keep price of petrol uniform all over the country. High amount of sales tax takes petrol prices to higher level. But there is no action. Two years ago, then chief minister of Maharashtra Vilasrao Deshmukh had admitted in the presence of Murali Deora, that sales tax on petrol is high. He had promised to lower it but nothing has happened.

The Side Effects
The second hike in the petroleum prices was introduced since April 1 on account of implementation of Euro IV norms in 13 cities. Pune is one of the cities to have these norms but not Pimpri Chinchwad. However, the petrol prices in neighbouring municipal limits were also shot up. The voices opposing this hike are also heard. One among them is that of Gajanan Babar, member of parliament from Chinchwad.

According to Babar, “Pune and Pimpri Chinchwad are two separate cities. The new norms for cleaner fuel as recommended by Kirti Parekh committee are meant to be implemented only in Pune. Therefore, the Rs 0.55 per litre hike should be only for PMC limits. However, the petrol dealers in PCMC also hiked their prices which is wrong.” Babar has registered his objection with the municipal commissioner Ashish Sharma. A morcha was taken out by the activists of Shiv Sena.

However, the oil companies have made it clear that Pune and Pimpri Chinchwad fall under a loop. The Euro IV norms are applicable collectively in PMC as well as PCMC. Hence, the prices went up in both cities.

Comparison of Prices In Various Cities

City Unleaded Petrol (Rs/litre) Diesel (Rs/litre)
Pune 52.08 39.80
Bangalore 54.21 41.67
Chennai 52.00 38.08
Hyderabad 53.63 39.17
New Delhi 47.93 38.10
Mumbai 51.68 39.60
Kolkata 51.65 37.99

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