The Bhagwant Mann-led Punjab government has delivered a significant jolt to the common people by withdrawing the electricity subsidy that was previously provided to households. During a cabinet meeting held on Thursday, the government also announced an increase in the prices of petrol and diesel, raising them by 61 paise per liter and 92 paise per liter respectively.
In addition to the fuel price hike, the electricity subsidy for domestic consumers using up to 7 kilowatts has been revoked. This decision was taken during a cabinet meeting chaired by Chief Minister Bhagwant Mann.
Key Decisions from the Cabinet Meeting:
- Fuel Price Increase: The cabinet has decided to increase VAT on fuel. Petrol will see a hike of 61 paise per liter, while diesel will be increased by 92 paise per liter.
- Revenue from VAT: The VAT increase on fuel is expected to generate ₹395 crore from diesel and ₹150 crore from petrol.
Government’s Financial Strategy
Punjab’s financial condition has been under strain, and these decisions are part of the government’s broader strategy to address its fiscal challenges. Finance Minister Harpal Singh Cheema stated that the move to increase VAT and withdraw the electricity subsidy is aimed at improving the state’s financial situation.
In August, state government employees received their salaries and pensions four days late, highlighting the state’s cash crunch. In the 2024-25 budget, Cheema projected that Punjab’s debt would reach ₹3.74 lakh crore, which is over 46% of the state’s GDP (more than ₹8 lakh crore).
Due to its financial distress, the Punjab government had approached the 16th Finance Commission for a relief package in July. The state requested ₹1.32 lakh crore to drive development initiatives.
Public Reaction and Criticism
The Aam Aadmi Party (AAP) government has been facing criticism for its financial policies, particularly the free schemes that are seen as depleting the state’s treasury. The withdrawal of the electricity subsidy and the increase in fuel prices are expected to impact the general public, especially in light of the already high inflation rates.
