Delhi may tax CNG, hike duty on diesel

With the elections behind it, the Sheila Diskhit government is gearing up to take some tough decisions.

A tax on compressed natural gas (CNG) along with a hike in duty on diesel are on the cards, which would translate into higher public transport fares for commuters.

Since privatisation of the power distribution is being perceived as a success, the administration's new focus area will be the water sector.

The state government was looking at privatising the Delhi Jal Board (DJB) and an overhaul of the transport scenario over the next five years, senior government officials said.

A lasting solution for both sectors was expected, with a hike in water tariffs also round the corner, officials said.

"A decision on the tax on CNG has been pending for some time, with the sales tax department suffering about Rs 400 crore losses because of the exemption on CNG. The budget for the next financial year could see a change in CNG's tax exempt status," a senior government official said.

A tax on CNG will mean an increase in public transport fares, with public transport buses and a majority of autos and taxis running on the "green fuel". The tax on diesel, 8 per cent at present, is below the sales tax floor rate of 12 per cent. The budget could also see a 4 per cent hike in the sales tax on diesel, officials said.

The DJB revamp is long overdue. Some action on the Pricewaterhouse Coopers report on the restructuring of the water board and its privatisation could be on the cards over the next five years, said an officials.

Meanwhile, a hike in the water prices is being contemplated, such that the DJB recovers the cost of supply from the tariffs. This could coincide with the commissioning of the Sonia Vihar plant in July this year, officials said.

The state government's renewed focus on the transport sector is obvious with the transfer of two key officers to the transport department in the recent bureaucratic reshuffle.

Delhi Tourism and Transport Development Corporation chief Rajeev Talwar has been re-instated as transport secretary and principal secretary (Health) SP Aggarwal has been given additional charge of transport.

"That the two key officers are in the transport department speaks of the renewed thrust of the government on the sector," an official said. With the metro ranking high on the priority list, Talwar has also been appointed as officer on special duty (OSD) for the metro project.