Diesel prices can meet petrol’s fate

There are tremors in government about a hike in tax on diesel cars diesel fuel enjoys a subsidy by the government. However car makers have shown their opposition to any such move and have discouraged such a drastic step. Pawan Goenka, the outgoing President of Society of Indian Automobile Manufacturers (SIAM) placed his disappointment by saying that a measure like this would ‘kill diesel automobiles’. This strongly argued that this is a wrong time to take this measure as the industry is facing a slowdown. However he kept his piece of pie by saying that SIAM has always supported price parity even after knowing that this is difficult to implement.

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All this drama got highlighted when Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, favoured decontrolling of the diesel by government, while Heavy Industries Minister Praful Patel countered by saying that subsidies should be continued to meet the government's social obligation. It is evident that diesel vehicles are more dearer than petrol due to their expensive technology. Diesel vehicle owners book their profits by buying fuel at subsidised price. Any such move is favoured by government, it will offset those profits. Goenka sarcastically said that this decontrolling of diesel price was a better way to make car owners pay more.

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Addressing the annual convention of Siam, Ahluwalia said India needed to adjust its policy to the energy reality, as the world was entering an era of high energy costs. The present distortion of diesel and petrol prices should be corrected first. Subsidized fuel is not sustainable in the long-term and India needs to have rationalized energy security. On the other hand Praful Patel said diesel and petrol price disparity will stay because of the country’s social responsibility. The minister also said that policy planners and the government need to review their definition of diesel as a dirty fuel. He was aware of the question over the environmental sustainability of diesel technology. But he suggested European or other developed world’s advanced technology that has proved to be even better than the petrol technology. Amid all this discussion Patel made it clear that while the government had in June last year freed petrol prices, diesel still continues to be sold at a subsidized rate.

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