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A senior Cabinet Minister was once approached by a relative to help him get a high-end diesel vehicle out of turn.
The Minister cited this as a fine example of the long waiting period diesel cars/SUVs enjoy because they get subsidised diesel for their fuel-guzzlers. This is clear indication of the popularity of the diesel variant vehicles because of low fuel cost.
The Finance Minister, Mr Pranab Mukherjee, on Thursday said in Parliament that the Government is looking at options to have a more targeted subsidy regime for fuel, including diesel.
The subsidised diesel is the preferred fuel for the transport sector. Strong case has been made time and again that rich should not get subsidised fuel.
Says Mr Shashank Srivastava, CMO, Maruti Suzuki India Ltd: “Diesel variants are for obvious reasons greater in demand. Our diesel car sales, as a percentage of total sales, have gone up in recent past. Maruti, for instance, has four models offering diesel variants and in these models for every 25 petrol cars sold, diesel cars sold are 75.”
At present, there is a difference of Rs 23 between diesel and petrol and anything that reduces this differential will re-balance the demand. “And any such move on the part of the Government to make diesel costly will have a negative impact on the total market demand as well,” he told Business Line.
Diesel consumption in June grew by 3 per cent year-on-year in comparison to just 0.5 per cent in petrol.
Reacting to the Finance Minister's statement in Parliament, the Society of Indian Automobile Manufacturers (SIAM) said removal of the subsidy on diesel fuel used by passenger cars is a step in the right direction. Mr Pawan Goenka, President, SIAM, said that the industry 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,” he added.
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