The new states of Telangana and Andhra Pradesh paid a hefty price as they suffered huge losses due to sudden decrease in the prices of petrol and diesel during the past four months. Since August 2014, the prices of petrol and diesel were dipped resulting in loss of income for the state governments of AP and Telangana.
The reduction in oil prices subsequently reduced VAT (Value Added Tax), thus AP has lost over Rs 700 Crore and Telangana lost over Rs 500 Crore. Going by the current prices, the total loss for Telangana for the financial year 2014-15 accounts at Rs 1500 crore, while for AP, it is pegged at whopping Rs 2000 crore. Since August 1, 2014, the price of petrol has dipped from Rs 80.41 per litre to the current Rs 67.02 and diesel from Rs 63.04 to Rs 55.02.
This might brought cheer to the commuters and common man, but the governments of both new states incurred losses to their annual incomes. Newly inducted Commercial Taxes minister Talasani Srinivas said, “VAT contributes 70 per cent of the total revenues.
The government will have to look at other resources to increase revenues.” Finance minister Etela Rajendar added, “The Union Government is now contemplating to replace VAT with GST (Goods and Services Tax) from 2015-16. We are seeking exemption for petrol, diesel and liquor from the ambit of GST.” It’s high-time, both the state governments of AP and Telangana to lookout for other options to increase revenues.
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