AP government hikes fuel prices by Rs 1 per litre, levies road cess

Amaravati: With an aim to shore up the state’s finances hit by COVID-19, the Andhra Pradesh government on Friday announced the levy of a road cess, thus raising the prices of petrol and diesel by Rs. 1 per litre.

An ordinance seeking to amend the APVAT Act, 2005, was promulgated by state governor Biswabhushan Harichandan in the evening, providing for levy and collection of a road development cess of one rupee per litre on petrol and diesel.

According to sources, the additional burden on consumers on account of cess would be around 600 crores per annum.

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According to the official statement from the state revenue department, the economic activity has come to a halt in the state ever since lockdown was imposed due to the Covid-19 pandemic, affecting the revenues of the State during the months of April, May, June and July. In April, the revenue realized in the state was only Rs 1,323 crore as against Rs 4,480 crore in April 2019 which accounts for only 29.5% of the total expected revenue. Similar trends were observed for the months of May, June, July and August.

Besides the fall in revenues, the Government of India has also not released the GST compensation for the year 2020-21 so far. While the stress on revenues from all sources continued, there is a steep increase in the expenditure relating to the health services for combating Covid-19 pandemic. Furthermore, the government is also implementing several schemes for the welfare of people from downtrodden sections.

“The twin impact of fall in revenues and enhanced expenditure on health services and welfare schemes has impacted the capital expenditure on infrastructure development,” Rajat Bhargava, special chief secretary (revenue), said.

Taking all the factors into consideration and keeping in view the necessity of allocating dedicated funds to the road development in the state, the state government has decided to levy “Road Development Cess” of Re 1 per litre on petrol and diesel in addition to the existing levies on the two products in the public interest, the official said in the statement.

“The proceeds of the Road Development Cess which will be around Rs 500 crore per annum shall be transferred to the Andhra Pradesh Road Development Corporation for exclusive use in developing road infrastructure,” he added.

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