The recent petrol and diesel price hike has fuelled a new standoff between the ruling Congress and Bharatiya Janata Party (BJP) in Karnataka. The state government has increased petrol prices by Rs 3 and diesel by Rs 3.50 per litre. The BJP has launched a statewide protest against this hike, vowing to continue until the Congress government rolls back its decision.
The Congress government called it a necessary move to fund five people-centric guarantees and development of the state. However, the BJP accused the Congress of cheating the public to win the elections and then taking money from the people once in power.
In Bengaluru, petrol is now priced at Rs 102.84, up from Rs 99.84, and diesel has risen to Rs 88.95 from Rs 85.93. This increase is expected to contribute Rs 2,500-3,000 crore annually to the state exchequer.
GOVT’S DEFENCE
“Our tax on fuel remains lower than most South Indian States and states with similar economy-size like Maharashtra,” said CM Siddaramaiah. He added that Karnataka, during the double engine government of the BJP in the state and Centre, was forced to reduce the tax, while the Union government continued to collect higher Central excise duty from the state. He alleged that the economic resources were diverted to other states, which affected Karnataka’s tax collection.
The Karnataka government increased the VAT on petrol to 29.84% and diesel to 18.44%. Siddaramaiah defended the move, stating that the state’s taxes on fuel remain lower than most South Indian states or similar economy states such as Madhya Pradesh and Maharashtra.
Karnataka Industries Minister MB Patil also defended the hike, saying the money was necessary to fund the state’s guarantee schemes. However, critics argued that the timing of the decision, soon after the elections, was suspect.
The last time Karnataka revised petrol and diesel prices was in November 2021, when fuel prices were cut by about Rs 7 during the COVID pandemic.
OPPOSITION ATTACK
Calling Siddaramaiah a “desperate CM taking desperate measures”, BJP’s Karnataka president BY Vijayendra alleged, “The Congress regime is unable to sustain the schemes they promised to win the elections, and now they are looting people to continue these guarantees. The government did not have money, so it hiked petrol and diesel prices. We will not stop until the rates are revised.”
Leader of the Opposition R Ashoka played a recorded clip of Siddaramaiah condemning similar hikes in the past and referencing his pre-election promise to reduce petrol and diesel prices if the Congress came to power. “Those who criticised fuel prices in the past are doing the same thing now,” Ashoka said. “He criticised the BJP government for injustice against the people of Karnataka, and now he takes the same step.”
“The government has realised that they are unable to provide for the guarantees, and if they stopped the direct bank transfers (DBT), it would result in public outrage against the Congress. Siddaramaiah is only out to cheat people,” said BJP leader CT Ravi.
THE GUARANTEES
The Congress built its election campaign on five guarantee schemes — 200 units of free power to all households (Gruha Jyoti), free public bus rides for women (Shakti), Rs 2,000 per month for women heads of households (Gruha Lakshmi), 10 kg of free rice (Anna Bhagya), and Rs 1,500-3,000 for unemployed graduates (Yuva Nidhi). These schemes helped the party win 135 of the 224 seats in the 2023 assembly polls, costing the government Rs 50,000-60,000 crore in the current fiscal year.
According to the latest records, the government spent Rs 5,754.6 crore on the Anna Bhagya scheme to provide an additional 5 kg of rice per family at Rs 34 per kg. Siddaramaiah stated that the Gruha Jyoti scheme benefited 1.67 crore people, with an allocation of Rs 7,436 crore. The Shakti scheme facilitated over 2.01 billion bus rides, costing Rs 4,857.95 crore. The Gruha Lakshmi scheme has provided a total of Rs 20,293.49 crore to 1.2 crore women so far. Under the Yuva Nidhi scheme, over 1.53 lakh youngsters registered, and 29,587 beneficiaries received Rs 1,500-3,000 through DBT.
In July 2023, the Congress government also raised liquor prices, including beer, as part of the 2023-24 budget. This measure aimed to help the Excise Department achieve a revenue collection target of Rs 36,000 crore for the fiscal year. Siddaramaiah proposed a 20% increase in the duty on Indian Made Foreign Liquor (IMFL) across all categories, with the duty on beer rising from 175% to 185%. This was said to be the first move toward funding the guarantee schemes.
In February, the state government implemented a substantial increase of 200-500 per cent in stamp duty charges for documents that do not require registration, such as partition deeds, addition deeds, affidavits, cancellation deeds, and the reconstruction and demerger of companies.
In June, the chief minister chaired a review meeting with the departments of commercial taxes, stamps and registration, excise, transport, mines and geology to assess tax collection for the first two months of the 2024-25 fiscal year.
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