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With Prime Minister Narendra Modi asking Chief Ministersto lower excise duties on the fuels, petroleum dealers in Punjab, especially in border areas, on Wednesday said it became difficult to operate as diesel is at least cheaper by Rs 6 and petrol by Re 1 compared to Himachal Pradesh and Jammu and Kashmir.

"Successive governments in Punjab -- the Akalis and the Congress had been regularly increasing VAT on petrol and diesel, resulting in vast difference in petroleum prices in Punjab as compared to neighboring states," Monty Sehgal, spokesman for the Petrol Pump Dealers Association, Punjab, told IANS.

He said the rate difference of petroleum products with neighboring states is robbing the state government of its revenue, encouraging unscrupulous trade practices and of late, the emergence of oil mafia in the state.

Punjab is predominantly an agricultural state with majority of population living in rural areas. Forty-five per cent of total diesel consumed in Punjab is used in agriculture, 25 per cent in transportation, 20 per cent in industry and 10 per cent by retail consumer.

The consumption in terms of litres of petrol and diesel is showing a continuous downward trend in Punjab. "Sales of diesel in terms of litres have dropped by about 30 per cent in the last couple of years," he said.

The Punjab government, he said, is losing an estimated revenue of Rs 400 to 500 crore annually to its neighboring states due to business shift and the emergence of oil mafia due to massive rate difference with other states.

The worst affected districts include Pathankot, Ropar, Hoshiarpur, and Mohali.