In flood-hit Himachal, diesel to cost ₹3/litre more as govt increases VAT

The Himachal Pradesh government has increased the value-added tax (VAT) on diesel, resulting in a price increase of ?3 per litre. The opposition has criticized the timing of the hike, as the state is currently dealing with the aftermath of a flood. Chief Minister Sukhvinder Singh Sukhu justified the increase, stating that it was necessary to mobilize resources for the state's recovery efforts. Despite the increase, diesel in Himachal Pradesh is still cheaper than in neighboring states.

Shimla

After the hike, the VAT on diesel, which was ₹7.40, has now gone up to ₹10.40 (File Photo)

At a time when Himachal Pradesh is grappling with the aftermath of last weekend’s flood, people got another shock as diesel got dearer by ₹3 a litre after the state government hiked the value-added tax (VAT) on it. The state government increased the VAT on diesel from the existing 9.96% to 13.9%.

A notification to this effect was issued on Friday night.

After the hike, the VAT on diesel, which was ₹7.40, has now gone up to ₹10.40. With this, the per litre diesel price in the hill state has shot up to ₹88 as against ₹90.36 in Haryana, ₹89.04 in Punjab, ₹84.26 in Chandigarh and ₹90.56 in Uttarakhand.

This is the second time when the Sukhvinder Singh Sukhu government has increased VAT. Earlier, it had hiked the VAT by ₹3 in January, a month after taking charge in the state.

Opposition parties criticised the timing of the hike, saying it had been carried out when the state was coping with a natural calamity.

Leader of opposition and former chief minister Jairam Thakur said many had lost their lives and houses and businesses had been destroyed in the recent floods. “Higher diesel prices would only increase the inflation and prices of essential commodities will go up. The government should reconsider its decision,” he said.

The Communist Party of India (Marxist) also criticised the government for its “insensitive decision”. CPI(M)’s Shimla district secretary and former Shimla mayor Sanjay Chauhan said that the increase in VAT on diesel can’t be justified as it would add to the misery of the flood-hit people. “The government should immediately roll back the decision,” he said.

Justifying the increase, chief minister Sukhvinder Singh Sukhu said the previous BJP government had reduced the VAT by 7% on the eve of the last assembly polls held in November 2022 and the increase was imperative for mobilising resources along with other measures.

He said the state has suffered huge losses due to heavy rains and resources have to be mobilised in this hour. The roads, water supply schemes and electricity have been restored temporarily and it would take almost a year to restore the damaged infrastructure.

In spite of an increase in VAT, diesel is cheaper in the state as compared to the neighbouring Uttarakhand, Punjab and Haryana, he said.