Government may withdraw subsidy on diesel for cars

Government of India has reportedly made an unexpected announcement that it might withdraw subsidy on diesel for cars. The decision perhaps has been mulled over in view of the fact that passenger cars in India consume 15 percent of diesel fuel. The Government at present gives a subsidy of Rs 6.08 per litre on diesel. At present petrol prices are directly related to the market rates and the government compensates the losses incurred by the oil companies.

Pranab Mukherjee, Finance Minister reportedly said in a debate in Lok Sabha that he will look forward to find out a way so that a proper fuel pricing mechanism could be arrived at and that the diesel for car owners is not subsidized. The government earlier also took step by removing subsidy from LPG and diesel so to maintain a proper balance in its finances.

In the month of June when prices of petrol, diesel and LPG reached heights, the government in order to provide some relief to the people withdrew custom and excise duties on the petroleum products. By this step the government got a revenue of Rs 49,000 crore per annum.

The country at present imports about 75% of its total crude oil requirement. Mukherjee also revealed the stats for diesel consumption in the country, 10% is used by the industry, 6% by railways, 12% by agriculture, 15% by car owners, 8% for power generation, 12% by buses and 37% by trucks. He also added that in spite of the increase in the petrol prices in the country, the under recoveries of the state owned oil companies was just 1.22 crore.

As per reports, Mr. Sharad Yadav had questioned the government on providing subsidized diesel oil for use by luxury car owners, telecom tower companies, malls and restaurants. With this it is expected that diesel price in India will shoot. It is also hoped that there will be increase in demand for diesel cars which return good mileage. Tata Nano Diesel will be in anticipation then as is expected to deliver impressive mileage in diesel.