Petrol, diesel, liquor and cigarettes will cost more in Maharashtra as the State government, in an effort to tackle the poor monsoon, has decided to impose 'drought tax'. The cash-strapped government aims to generate an additional Rs 1,600 crore by the new measure.

The drought tax will be imposed also on gold and diamond jewellery.

According to Indian Express, the Maharashtra government has decided to levy a surcharge of Rs 2 on petrol and diesel while VAT on liquor, cigarettes and beverages have also been raised by 5%. The surcharge on Value Added Tax (VAT) for gold and diamond jewellery will be increased by 1.20%, Money Control reported.

The measure will be effective from midnight and will be reviewed after five months, Finance Minister Sudhir Mungantiwar said. He told the press that the State was facing a deficit of Rs 300 crore per month due to the reduction in prices of petrol and diesel.

"The government has also decided to waive off LBT (Local Body Tax) on petrol and diesel. This will result in total loss of Rs 1,800 crore to the State treasury," he added. Since the government has granted so much concession to the common man, it is seeking additional Rs 2 on petrol and diesel to provide relief to the farmers, the minister added.

Meanwhile, the Congress party alleged that the BJP-led Maharashtra government plans to spend the additional revenue generate from the 'drought tax' on celebrating its first anniversary of coming to power, PTI reported.

The BJP government in Maharashtra, led by Chief Minister Devendra Fadnavis, will complete a year in the office on 31 October.

"I wonder why the government, which has steadfastly refused to waive crop loans of farmers who are reeling under drought, readily gives tax concessions to rich businesses," Leader of Opposition in Assembly Radhakrishna Vikhe Patil (Congress) said.

Though the government rejected Congress's demand for farm loan waiver, it revoked the Local Body Tax on petrol and diesel, he alleged. "The government will have to bear a burden of Rs 350 crore, but the common man will not benefit by this decision. It plans to use the funds from additional taxes to celebrate its first year in the office," he added.