Household budgets across Rajasthan are facing severe strain following another round of fuel price hikes on Saturday, which pushed retail rates in Jaipur to Rs 109.87 per litre for petrol and Rs 95.05 for diesel. Driven by global crude volatility, this relentless streak follows steep revisions on May 15 and May 19. For the average citizen, the immediate impact is a painful blow, as the costs of daily commuting and essential commodities inevitably climb.
Unequal Distribution of Pain
However, an analysis of the pricing structure reveals an unequal distribution of this pain. While the common man is forced to tighten their belt, the state government is earning an automatic revenue windfall. Unlike fixed rupee-per-litre duties, Rajasthan levies VAT of 29.04% on petrol and 17.30% on diesel. Consequently, whenever oil companies raise prices, the state's absolute tax collection per litre automatically swells without needing a formal tax increase.
Revenue Surge Highlighted by Data
Data from the Rajasthan Petroleum Dealers Association (RPDA) highlights this rapid escalation. The tax revenue flowing into state coffers per litre (including VAT and Road Cess) surged from Rs 39.51 on April 1 to Rs 41.04 following the first two hikes, and will go up further when the gains from the current hike are factored in.
Call for VAT Reduction
RPDA officials have urged Chief Minister Bhajan Lal Sharma to urgently cut VAT percentages, stating that the current system acts as an inflation multiplier, allowing the state to profit directly from consumer distress. They argue that reducing VAT would provide much-needed relief to citizens and curb the inflationary impact of rising fuel prices.
