Under pressure from the petrol pump lobby and legislators, Delhi government on Thursday decided not to implement its budgetary proposal to hike the sales tax on diesel from 12 to 20 per cent.

"Keeping in view the problems likely to be faced by farmers because of the hike, it has been decided that the proposal to hike sales tax will not be implemented at present," Finance Minister A K Walia said, replying to the debate on the Budget, which was passed by voice vote in the Assembly after amendments.

He said legislators had also asked that diesel be spared from the hike.

The state finance minister also withdrew the proposal to impose four per cent sales tax on oil and de-oiled cake in view of drought-like conditions.

Petrol pump owners in Delhi had given a strike call on Wednesday to protest against the proposal to hike sales tax, but withdrew it at the last minute, saying they had received "positive feedback" from the government.

BJP legislators staged a dharna in front of the Assembly building on Thursday to protest against the proposed hike.

As a result of its decision not to go through with the hike proposed in the Budget presented on July 22, the government is expected to lose Rs 150 crore (Rs 1.5 billion) as revenue.