K Chandrasekhar Rao also likely to cut tax on petrol, diesel

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Hyderabad: Caretaker Chief Minister K. Chandrasekhar Rao is likely to tread the path of his AP and Rajasthan counterparts and reduce the tax imposed on diesel and petrol to lower their prices.  Official sources say the lack of Constitutional clarity on the powers of caretaker governments give such administratons considerable power to take decisions. They cited the case of caretaker prime minister Charan Singh who announced several populist measures during his tenure between 1979 and 1980 like reducing the price of diesel and kerosene, increasing MSP for paddy to record higher level etc.

In such cases, the Governor can examine whether the caretaker government has crossed the ‘Laxman rekha’ and stop implementation of such decisions. Following the Bharat Bandh on Monday against the fuel price hike and the Centre and the state  government receiving a backlash from the people, Mr Rao is learnt to have held a meeting with finance officials and sought their views on the impact on the exchequer if the state government cut VAT on fuel.

The meeting came in the backdrop of the AP government announcing a Rs 2 per litre cut on the prices of petrol and diesel to extend some relief to motorists. Officials informed Mr Rao that in August this year, of the Rs 3,676 crore earned by the state government, Rs 1,683.17 crore came from VAT on fuel and liquor. In August 2017, it was just Rs 1,248.29 crore. The state’s earnings had improved because to the steep increase in fuel prices.

Officials brought to the notice of Mr Rao that if Rs 2 per litre was cut on fuel, as was done in AP, it may result in the loss of nearly Rs 300 crore per month.  The CM said he would soon take a decision on how to go about this on tax cut. With the Assembly elections expected to be held in November, Mr Rao fears public anger if no relief measures are announced by the TRS government to bring down fuel prices when neighbouring AP government has done so.

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