The new road development cess will bring in an additional Rs 500 crore annually to the state.

Jagan Mohan Reddy with his hand outstretched
news Finance Saturday, September 19, 2020 - 09:12

Hoping to raise funds for developing the state’s road infrastructure, the Andhra Pradesh government introduced a Road Development cess of Re 1 per litre of petrol and diesel. The state road infrastructure is in a bad shape after heavy rains lashed the state.

The Andhra Pradesh government on Friday promulgated an ordinance providing for levying the Road Development Cess, and this will net around Rs 500 crore annually.

The ordinance, cleared by Governor Biswabhusan Harichandan, amended the AP Value Added Tax Act, 2005.

"Taking all the factors into consideration and keeping in view the necessity of allocating dedicated funds to road development in the state, the government has decided to levy 'Road Development Cess' of Re 1 per litre on petrol and diesel," said Special Chief Secretary Rajat Bhargava.

According to Bhargava, the lockdown had resulted in the cessation of all economic activities in the southern state, affecting its revenues in the months of April, May, June, July and August.

"In April 2020, the revenue realised in the state was only Rs 1,323 crore as against Rs 4,480 crore realised in April 2019, which accounts for only 29.5% of the total expected revenue," he said.

The tax revenue trend was similar in May, June, July and August.

Compounding the problem, the Central government is yet to release the GST compensation for the year 2020-21.

"While the stress on revenues from all sources continued, there is a steep increase in the expenditure relating to the health services for combating the COVID-19 pandemic," said Bhargava.

Additionally, the state is also implementing several schemes for the welfare of the downtrodden sections, incurring costs.

"The twin impact of fall in revenues and enhanced expenditure on health services and welfare schemes has impacted the capital expenditure on infrastructure development," he observed.

The state Cabinet, at its meeting on September 3, had approved the decision to impose the Road Development Cess.

This is the second time in two months that the YS Jagan Mohan Reddy government has increased the tax on the automobile fuel.

On July 20, the government revised the tax structure on petrol and diesel, thereby increasing their price by Rs 1.24 and Rs 0.93 per litre respectively, to mop up additional revenue of about Rs 600 crore per annum.

The new cess will be entirely used for carrying out road works, including the much-needed repairs through the APRDC.

(With PTI and IANS inputs)

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