On November 8, the newspapers in Punjab published a full-page advertorial of the Punjab Government announcing reduced fuel price and comparing the price with the neighbouring states. Interestingly, the four states that the ad listed had Rajasthan in it, ruled by none other than Congress.
Notably, on November 7, days after centre and BJP-NDA-ruled states slashed fuel prices, the Congress-ruled poll-bound Punjab government announced a drop in Value Added Tax (VAT). The fuel price in the state came drastically down compared to the old price and now stands at Rs. 95 per litre for petrol and Rs. 83.75 per litre for diesel. Notably, CM Charanjit Singh Channi had already reduced electricity prices for domestic users by Rs. 3 in the state.
The ad compared the price with Delhi, where the AAP-led government did not reduce VAT, and the price of petrol still stands at Rs.104.01, and diesel, it is 86.71 per litre. The price difference from BJP-ruled Haryana is merely 29 paisa for petrol and Rs. 2.78 for diesel.
However, what came as a shock in the ad was the price comparison with the neighbour state of Rajasthan. The Congress-rules Rajasthan has categorically refused to reduce VAT to provide additional relief to the people of Rajasthan after the centre reduced the excise duty. Because of the stubbornness of the Gehlot-led government, the price difference of fuel between two Congress-ruled states is astonishing.
Petrol stands at Rs.116.27 in Rajasthan after the reduction of excise duty that means Punjab is now selling petrol at Rs.21.27 cheaper than Rajasthan. The case is similar to diesel. The price of diesel in Rajasthan is Rs. 100.26, which means it is now Rs. 16.51 cheaper in Punjab.
Price difference leading to large-scale fuel smuggling
Furthermore, the price of fuel has always been lower in Punjab compared to Rajasthan. But the recent drop in excise duty by centre and VAT by the state government has increased the price gap exponentially. There have been reports of petrol and diesel being smuggled in Rajasthan from Punjab in the past, but from the last couple of days, it has become headlines across state media.
According to a report in Hindi Daily Dainik Jagran, farmers from Ganganagar, Rajasthan, have been visiting the neighbouring city Abohar in Punjab with drums to get cheap petrol and diesel. Due to the sowing season, the consumption of fuel increases in both Punjab and Rajasthan. Amidst the drop in fuel prices in Punjab, the farmers prefer to stand in long queues to get cheaper fuel.
Jagran published photos of farmers with 100-litre drums in their vehicles. Assuming one farmer is taking 300-litre diesel for his tractor from Punjab instead of Rajasthan, he is quickly saving around Rs. 4,000 during sowing season just by spending a couple of hours in the queue at the petrol pump. The situation is the same across Punjab and Rajasthan borders.
OpIndia reached out to a few petrol pump owners in Punjab that are located close to the Rajasthan border. Sanjeev Verma, Verma Sons (HP Petrol Pump), Gaushala Road, Abohar, said as his outlet is in the heart of the city, there is not much difference in the footfall of the customers. However, “the outlets that are on the Ganganagar road are experiencing a major jump in the number of customers,” he added.
Verma further added that the fuel price difference in Punjab and Rajasthan is behind major loss of tax revenue for Rajasthan as people often travel a few KMs and get their tanks filled from Petrol Pumps in Punjab.
We also had a conversation with Vikas Bishnoi, Secretary, Sri Ganganagar Petroleum Dealers Association, about the price difference between the two states. Bishnoi said, “There is nothing to talk about the price difference. It is more than Rs. 20 per litre. The petrol pumps in Rajasthan cannot survive with such price differences across states. It is a matter of just two months. We are already losing business. We won’t even have to close down the pumps as they will close down on their own due to lack of business.”