This means LPG cylinders will cost 40 rupees more. Diesel will also get costlier as Value Added Tax (VAT) has been hiked from 12.5 to 20 per cent.
And this caused chaos in the Delhi Assembly. The Opposition walked out in the middle of the Finance Minister's Budget speech.
People will have to pay more for using autorickshaw and bus rides as the government has decided to levy five per cent VAT on CNG that was till now exempt from it. The government says it's trying to generate more revenue for the Commonwealth Games.
"This year we got only Rs 50 crore from the Central government earlier. This has set us back and we need to generate more revenue for the Games," Delhi Finance Minister A K Walia said.
Chief Minister Sheila Dikshit also defended the move. "We felt the need to subsidise LPG earlier, that need has gone," she said. (Watch)
The Opposition claims the government is taking the people for a ride.
"The government announced the subsidy just before election, now that they are already in power so they are removing it," said BJP leader Dr Harsh Vardhan.
The government says that by withdrawing subsidy and enhancing VAT, they will generate revenue to the tune of Rs 850 crore, but the Opposition says this will add a burden of Rs 200 crore on the citizens.