Punjab Budget
Move to hike power duty shocks industry
Ruchika M. Khanna/Manav Mander
Tribune News Service

Chandigarh/Ludhiana, March 16
The proposal of increasing the electricity duty by 3 per cent, as announced in the Punjab Budget today, has the industry up in arms. Reeling under a severe power shortage and trying to sustain itself in this period of slowdown, the industry has demanded that the government should immediately roll back this electricity duty.

Furthermore the reduction of entertainment tax from 125 per cent to 25 per cent has worried the industry.

In his efforts for additional resource mobilisation, the Finance Minister has announced that electricity duty be enhanced by 3 per cent. The duty is being enhanced from 10 per cent to 13 per cent on power supplied by Punjab State Electricity Board (PSEB), and from 5 per cent to 8 per cent on power purchased by individual consumers from outside the state (under Open Access Policy). With this, the per unit cost of power in Punjab would go up by 12 paise, and the state hopes to raise Rs 270 crore through this measure.

It may be noted that per unit cost of power to industrial consumers in Punjab is Rs 4.33. With an electricity duty of 10 per cent, the consumers pay an additional 45 paise per unit as electricity duty.

For the past couple of years, Punjab charges duty on electricity at ad valorem basis. Though initially the electricity duty charged on consumers was 5 per cent, it was increased to 10 per cent in year 2004. Because of the economic slowdown over the past two years, the industry in Punjab had been demanding that the duty be rolled back by 5 per cent.

“But the government has failed to come to our aid, and has instead raised the duty by 3 per cent. The worst affected in this case would be the power intensive industry, especially the steel industry. This has come as a big blow to the industry, especially when profit margins are shrinking and industry in the small and medium enterprises (SME) sector is making efforts to stay afloat,” said R S Sachdeva, co chairman of Punjab committee of PHD Chamber.

Supporting his views, P D Sharma, president of Apex Chamber of Commerce and Industry, Ludhiana, said the power tariff rate had increased because of the additional duty. “Now that a revision in the power tariff is expected around April, the cost of power will go up again,” he rued.

Power has been made costly by 13 paise. “During the last two years of the present government’s tenure there is a 50 per cent increase of electricity duty from 36 paise in 2007 to 55 paise in 2010. With the revision of rate by the regulatory commission the effect of this increase will be much more,” said SC Ralhan, regional chairman of Engineering Export Promotion Council.