Cost of petrol, diesel up by Re 1 per litre as Andhra imposes road development cess

The Andhra Pradesh state government, on Friday, announced a road development cess of Re 1 will be levied on a litre of petrol and diesel in the state. The YS Jagan-led government promulgated an Ordinance amending the APVAT Act, 2005 to levy the additional tax on automobile fuel. Aimed at replenishing the state’s economic reserves, which reportedly took a severe hit during the coronavirus-forced lockdown, the hike in the cost of petrol and diesel is expected to generate annual revenue of Rs 500 crore to Andhra Pradesh.

As per Special Chief Secretary Rajat Bhargava, the state’s revenue dipped in the months of April, May, June, and July owing to the restrictions on economic activities during the lockdown. He added that the revenue realised in Andhra Pradesh in April this year was Rs 1,323 crore as against Rs 4,480 crore in April 2019, marking only 29.5% of the expected revenue. Mr Bhargava also said that the Central Government has not yet realised the GST compensation for the year 2020-21. The dip in revenues and the increased expenditure on healthcare in the state amid the COVID-19 crisis have together impacted the capital expenditure on infrastructure development, he said.

The official informed that the revenue generated via the newly levied road development cess will be entirely transferred to the Andhra Pradesh Road Development Corporation (APRDC) and utilised for the development of road infrastructure in the state.

It may be noted that the latest decision marks the second hike in tax on fuel in Andhra Pradesh in a space of two months. In July this year, citing resource crunch, the Andhra Pradesh state government reworked the tax structure to hike the cost of petrol and diesel by Rs 1.24 and Rs 0.93 respectively. The move was brought in to generate additional annual revenue of Rs 600 crore.