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Home arrow News arrow Automotive arrow Market linked Diesel Fuel Pricing for a step in Right Direction : SIAM
Market linked Diesel Fuel Pricing for a step in Right Direction : SIAM Print E-mail
Written by Ganesh   
Friday, 05 August 2011
New Delhi: Finance Minister, Pranab Mukherjee, indicated that dual pricing of diesel may be introduced. "We can accept your suggestion and work out a mechanism so that the (privileged) sections are not subsidised," he said, responding to the opposition.

He was asked if the government would withdraw subsidy benefits on diesel used by premium cars and commercial users such as telecom tower companies, malls and restaurants. While petrol rates have recently been linked to market prices, the government gives a subsidy of Rs 6.08 per litre on diesel.

Of the total diesel sold, 15 per cent is consumed by passenger cars, 8 per cent by power plants, 12 per cent by agriculture and 37 per cent by trucks.

Diesel cars account for about 35% of all passenger vehicles sold in India. Sales have risen sharply over the last few years primarily because diesel is 40% cheaper than petrol and about 30% more efficient. Diesel is the main transport fuel used by trucks and buses.

The Society of Indian Automobile Manufacturers (SIAM) has said that the statement made by the Finance Minister in Parliament today for removal of the subsidy on diesel fuel used by passenger cars is a step in the right direction.

Dr. Pawan Goenka, President SIAM said that SIAM has always been advocating market linked pricing of automotive fuels including diesel. Petrol pricing is already market based and this move by Government may be the first step in moving towards full market pricing of diesel. However, the proposed scheme should include only personal use diesel passenger cars. The commercial applications of diesel passenger vehicles should be exempted from dual pricing of diesel fuel as it would impact mobility for the masses, especially in the rural areas said Dr. Goenka.

Dr. Goenka also added a note of caution that Government would need to work out the implementing mechanism carefully for the proposed scheme so that it is not misused.

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