In a relief to consumers, the price of petrol in Tamil Nadu has been slashed by Rs 3, Finance Minister PT Palanivel Thiagarajan (PTR) announced during his maiden budget speech on Friday, August 3. This, he said, was on the direction of Tamil Nadu Chief Minister MK Stalin, and is expected to cause a revenue loss of Rs 1,160 cr to the state exchequer.
Petrol and diesel prices have been at record highs for weeks, and while they have remained unchanged, they have not reduced. On Friday, petrol was priced at Rs 102.49 per litre and diesel at Rs 94.39 per litre. Apart from the base price of petrol, the Union and state governments both add their respective taxes. A large portion of this is levied by the Union government. In this case, the Rs 3 cut will be from what is levied by the state government, and will be borne by it as well.
Last month, PTR told reporters it was not possible to reduce VAT in the current situation, and said that the Union government’s taxes made up a large portion of the cost, and called the tax structure unjust. “You might wonder why we (state) cannot reduce the tax (on petrol/diesel). Of the Rs 32.90 tax imposed, Rs 31.50 is not being shared with states. The Union government is taking it fully,” he earlier said. The announcement is surprising as in June 2021, PTR had also said that VAT on petrol and diesel will be cut only when the state’s finances improve.
As part of its manifesto for the state election earlier this year, the DMK had promised that the price of petrol will be reduced by Rs 5 per litre and diesel by Rs 4 per litre. PTR has however maintained that some promises cannot be met fully on an immediate basis, but it will be done over a course of time.
Petrol prices have increased for 41 days in the current financial year, and are over Rs 100 in all metros.