Will diesel, petrol prices jump now that Nagaland has levied a Covid tax?

Nagaland has become the first state in India to levy a Covid cess on diesel and petrolm making the fuel dearer. The state has imposed a Covid cess of Rs 5 on diesel and Rs 6 on petrol in the wake of coronavirus lockdown which has caused revenue loss to the state exchequer. Zee Business' Kushal Gupta has a detailed report on this.

The steps have been taken because of the revenue losses of the state in the event of a lockdown because of Coronavirus pandemic. Taxes from diesel and petrol account for a significant part of the state revenue, and the recent step has been taken to compensate for losses.

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Nagaland, has levied a Covid-19 cess despite no cases being reported there as of date. However, the state had been hit by lockdown restrictions. This development could have implications on other states too. In fact, they may now announce a similar cess to raise their badly-hit revenues with those that have reported corona cases perhaps, taking the lead on this issue.

Result may be that the Oil Marketing Companies (OMCs) may be impacted. They are already under some stress because of the lockdown and a further increase in fuel prices may likely hit demand further.

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Sectors like IT, which are now focusing on work from home, may further reduce the demand keeping away traffic from the roads. In the first 15 days of the April Month, demand has been much below par with diesel demand going down by as much as 61 per cent, petrol by 64 per cent and ATF (Aviation Turbine Fuel) by a staggering 94 per cent.

Diesel Price in Delhi is Rs 62.29 per litre while that of petrol is Rs 69.63 per litre.