Kolkata, Jul 26 (IANS): Bowing to opposition parties' pressure, the West Bengal government Monday announced a subsidy of Re.1 per litre on diesel used for public transport and exemption of sales tax on kerosene.

Finance Minister Asim Dasgupta told the assembly that the government would provide Rs.110 crore subsidy for diesel and Rs.50 crore for kerosene.

He said the government would deposit the subsidy on diesel in the bank accounts of the taxi, bus and minibus operators every month. The subsidy to the public transport operators would be provided from Aug 1.

"We will deposit the subsidy amount in the bank accounts of bus, minibus and taxi owners and we expect that they pass on the benefit to the passengers and it should be reflected on the fares. The retail price of diesel, however, will remain unchanged," Dasgupta said.

At present, diesel price in the state is Rs.39.94 per litre.

The exemption of sales tax on kerosene would cost the state government Rs.50 crore annually, he said.

Asked whether the state government would consider a similar kind of relief to farmers, who use diesel for their pump sets for irrigation, the finance minister said: "The Left Front chairman has asked me to consider it. We are examining the proposal with utmost importance."

The public transport operators in the state have been demanding a fare hike ever since the central government announced a fuel price hike last month.

The opposition parties have also been pressing the government to offset the effects of the hike by lowering taxes on petro-products.

The opposition campaign gained momentum after the Congress-led Delhi government July 16 slashed the value added tax (VAT) on diesel to 12.5 percent from the existing 20 percent, bringing down the fuel price by Rs.2.70 per litre to Rs.37.50 per litre in the national capital.

On Monday, West Bengal Congress legislature party chief Manas Bhuniya expressed dissatisfaction with the concessions announced by the government. "It is just a fraud being committed by the government on the people."

Trinamool Congress lawmaker and Bengal Bus Syndicate president Swarna Kamal Saha demanded the state government offset the entire hike by reducing taxes.