Subsidized Diesel - Way out of Misuse ?

As Implementation of dual or differential pricing of Diesel may prove to be cumbersome, the Expert Group of Planning Commission on a Viable &Sustainable System of Pricing of Petroleum Products, recommended taxing of Diesel Cars, SUVs etc. used for personal transportation based on the use of life cycle of the vehicle.  

 Based on the above, the following is suggested to minimize, as prevention may not be possible in our corrupt system, the misuse of subsidized Diesel by private cars, which is estimated to be around 15% of current Diesel Consumption.

a)Life of Vehicle ;                                                                   Say 150,000 K Ms

 b)Fuel Consumption:                                                            Say 10 Kms per Liter 

c) Estimated Qty of Diesel Consumption in life cycle        Say 15,000 Ltrs

d) Subsidy Amount per Ltr:                                                   Say Rs 20 per Ltr

e) Benefit of subsidy amount to Vehicle Owner:                Say Rs 300,000

 

Accordingly Ex-Factory Sale Prices of Diesel  Cars/SUVs may have to be increased by way of Diesel Tax/Cess or any other name to compensate for the subsidy amount benefit.

To minimize misuse of Subsidized Diesel by bulk users like Industry, Commercial and Domestic sectors, Cell Towers of Mobile Telephone Service providers etc using Diesel Generator Sets for captive or standby purposes, they should get their bulk supply of Diesel from the main outlets of Oil Companies at the market price and should be barred from taking supplies from the retail outlets.

If there is a political will, it will not be difficult to minimize the misuse of Subsidized Diesel and to ensure that genuine requirements of Agriculture and Transport Sectors are met and to reduce the burden of subsidy.

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