MP: With Prices above Rs 100 even Petrol Pump Owners look to Uttar Pradesh for a Refill

Bhopal: Residents as well as pump owners of the border districts in Madhya Pradesh are feeling the pinch of skyrocketing petrol and diesel prices with the state selling petroleum products at the highest prices in India.

According to data released by Indian Oil on February 26, the average price of petrol in Madhya Pradesh was pegged at Rs 98.96, the costliest in India. Its neighbouring states like Uttar Pradesh (Rs 89.13), Chhattisgarh (Rs 89.39) and Gujarat (Rs 88.08) differ by nearly Rs 10 per litre. As a result transporters and heavy vehicles owners preferring shifting to these states. Motorists are also resorting to refilling from Maharashtra (Rs 97.37) and Rajasthan (Rs 97.47), states where the price is merely a rupee cheaper than that in MP.

As of today petrol prices are still skyrocketing in the state. It had crossed the Rs 100 mark in 26 districts (including over Rs 101 in five districts) out of a total 51; it was above Rs 99 in 23 districts and only two districts – Vidisha and Sagar – had petrol prices below Rs 99 per litre as on March 6, 2021.

“The bigger vehicles are not buying from us; they only leave smoke behind now that diesel prices have jumped up,” said Rajendra Singh Vasu of the MP State Petrol Pump Association, adding that the sale of diesel was likely drop by 40% on state highways in February.

“Sales of both petrol and diesel have drastically declined in districts neighbouring UP, Gujarat and Chhattisgarh as the price difference is nearly Rs ten per litre,” he added.

As compared to MP, Rajasthan, which at 36% has the highest levies on the petrol, is selling petrol above Rs 100 per litre in only four districts while the price is Rs 99+ in six districts, over Rs 98 in 14 districts and above Rs 97 in eight districts.

The unprecedented surge, especially in diesel prices, has pushed transport and goods and services companies to hike their rates by ten to fifteen per cent. As a result the prices of vegetables and daily use commodities have also risen.

According to the data provided by the Madhya Pradesh Commercial Tax Department, the state levy is Rs 32.42 on a litre of petrol and Rs 22.47 on diesel, if the rates are Rs 99.21 and Rs 89.76 respectively.

Petrol / Diesel rate break up with taxes in Bhopal on March 1, 2021 (Rs per litre)

Source- Commercial Tax Department

Madhya Pradesh levied a 33% VAT on petrol, the fourth highest in the countrym after Manipur (36%), Rajasthan (36%) and Telanagana (35.20 %). The state earned Rs 9581.23 cr as a result in 2018-19, a number which surged to Rs 10,608 cr in 2019-20 and then to Rs 9,258 cr in 2020-21 (upto Jan 2021) owing to the lockdown and the price hike.

VAT collection from Petrol, Diesel, ATF in MP

Amit Sethi, vice-president of the Madhya Pradesh Petrol Pump Association, claimed that the taxes should not be more than 20% on petrol and 18% on diesel. “MP will see nearly a 40% jump in sales if it reduces taxes given its geographical importance,” he opined.

Highest VAT charges in top five States (%)

Sales have been hit by about 30% in February, especially in more than the 20 border districts which are closer to Uttar Pradesh, Chhattisgarh and Gujarat, the association claimed.

Manjeet Singh, a petrol pump owner from Gwalior, said: “I refill my own vehicles from UP’s nearest petrol pump which is nearly 80 kms away from Gwalior. It saves me Rs ten a litre,” he said.

“In just one year – between February 2020 and February 2021 – the price of a litre of petrol surged by Rs 20 (from Rs 80 to Rs 100) and that of diesel by Rs 17 (Rs 72 to Rs 89), but the taxes are constant. The government should reduce it,” he demanded.

Ravi Lohia, president of the Ujjain Petrol pumps association, said that the surge in price is not only affecting pump owners but everyone. “In February petrol sales in Ujjain dropped by 10% and diesel by 25% but our expenses and commission are constant. We used to save Rs 1.90 a litre after paying all the taxes. We are now facing a loss of 30 paisa per litre,” he added, mentioning that some owners had resorted to laying off employees. He added that the state government should reduced taxes.

However, with a debt of Rs 2.5 lakh crore, the state is in no mood to trim down petroleum prices with taxes remaining untouched in the recently-passed state budget.

When contacted, Deepali Rastogi, principal secretary, Commercial Taxes Department said: “It is always assumed that the demand of fuel is inelastic. The government needs resources and funds to carry on with several welfare schemes.”

On whether taxes would be lowered, she said: “Lowering of tax has to be a well-calculated decision based on facts and projects. Hence, the Government is always conservative regarding the tax structure.”