Chandigarh, Sep 5 (IANS): The cash-strapped AAP government in Punjab on Thursday increased the petrol price by 61 paise and diesel by 92 paise per litre and also scrapped subsidised electricity above loads of 7 KW.

A decision was taken at a Cabinet meeting chaired by Chief Minister Bhagwant Mann here.

In another major decision, the government revoked the scheme of the previous Congress government to give subsidised electricity to those having electricity loads up to 7 KW.

Justifying the decisions, Finance Minister Harpal Cheema told the media that this would help mobilise Rs 1,500-1700 crore.

The hike in fuel prices would help the state garner Rs 392 crore annually. However, the free electricity of 300 units per month to 90 per cent of domestic consumers would continue. This scheme has been in place since 2023. Also, the state provides free electricity to the agriculture sector.

Official sources said these decisions were efforts of the state government to generate additional revenue. But critics say the rise in the price of fuels will have a rippling effect on the cost of essential commodities.

Already, the price of certain essential items has been high and the surge in fuel prices is likely to aggravate the situation.

Saying the government is aiming at improving governance, AAP Punjab wrote on X, “CM @BhagwantMann chaired a crucial meeting with Cabinet Ministers today, addressing a range of key issues concerning Punjab's progress. AAP Govt is aimed at improving governance and ensuring steadfast development in Punjab.”

However, voices of concern have started emanating. "The government is killing the petroleum trade as this is the third hike in the past two years," Monty Sehgal, a spokesperson for the Petrol Pump Dealers Association Punjab, told IANS.

He said the government should reduce VAT on green fuels like CNG to make it cheaper than diesel and enhance its usage in Punjab.

The price before the Cabinet decision in Jalandhar was petrol Rs 96.17 and diesel Rs 86.32.