Dual pricing for diesel under study

Faced with growing diesel consumption and rising under recoveries, the Union government on Thursday said it was working on “dual pricing of diesel” wherein luxury car owners could be asked to pay the market rate and subsidised diesel would be restricted to farmers and the transport sector.

“These proposals are being considered by the Finance Ministry,” Petroleum and Natural Gas Minister S. Jaipal Reddy told journalists here. Earlier, replying to a debate in the Lok Sabha, Finance Minister Pranab Mukherjee indicated that the government was contemplating de-control of diesel prices as was done for petrol last June.

Diesel, most consumed fuel in the country, is sold at a huge discount to various sections. This led to massive multiple growth of diesel vehicles in the recent years. Currently, diesel subsidy is Rs. 6.82 a litre, and annually it would amount to Rs. 52,365 crore out of the total fuel subsidy estimated at Rs. 1,14,336 crore this fiscal.

The subsidised diesel is preferred by the transport sector (both trucks and passenger buses). It is also used in irrigation pumpsets and other agriculture equipment. Majority of luxury cars and SUVs (sport utility vehicles) run on diesel and so do power generators at malls and telecom towers. In the recent times, there has been a demand that rich should be asked to pay full market price for the diesel they consume.

“The Finance Minister rightly expressed concern about misutilisation of subsidised diesel for many things like power generators. So these are all proposals and I cannot give a final shape. I made some proposals, however, it is up to the Finance Minister to consider and put them in action,” Mr. Reddy said.

The former Petroleum Minister, Murli Deora, had ruled out dual pricing of diesel saying it would be difficult to implement.

On June 25 last year, the government decontrolled petrol prices and had said diesel would also migrate to a free price regime. But diesel rates have not been freed till now.

“We think the subsidised diesel is not being properly utilised,” Mr. Reddy said. He said levying hefty duty on diesel cars was also one of the proposals under consideration.

LPG supply

Mr. Reddy was also in favour of ending subsidised domestic cooking gas (LPG) supply to people with income of more than Rs. 6 lakh per annum.

A 14.2-kg LPG cylinder in Delhi costs Rs. 395.35. This is Rs. 247 short of its market price. If implemented, people with more than Rs. 6 lakh per annum household income will have to pay Rs. 642.35 per cylinder.

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Printable version | Sep 17, 2021 1:32:13 PM |

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