[n.devdath]

+1 to that. It will only be the netas and the blackmarketeers who will benefit from such a correction, if any.
Goes without saying that such a thing will not happen in the near future.

[shankar.balan]

While there is no doubt that many of us private users take advantage here in India of the less expensive Diesel Fuel to power their personal vehicles, it is also a fact that Diesel is a cleaner burning fuel than Petrol.

If Diesel prices rise, there will be a real-world chain reaction effect on common people in terms of inflation

It is already a fact that several basic staples prices have risen steeply these last three-four months - just imagine the compound effect on these prices/ inflation if Diesel were also to become more expensive!

It is true that about 50-60% of the cost of a litre of Diesel or Petrol is accounted for by government levies, excise, taxes, entry taxes, cess etc.

[msharma_79]

In a way all diesel car owners should be happy. why?? for one reason that the diesel cars are much better at FE than petrol actually overall are better and finally it might just happen...that Taxiwallah start prefering the petrol with CNG option.Hence tata no longer the favorite and regular guys like me get a better customer service( because of concentration of business and lack of so many cars for service)hehehe

[jaganm]

I doubt that they can effect an across the board hike. However, we could see a special levy on certain segments who should not be getting the subsidy, i.e. most car owners. I don't think there would be too much of an outcry over that, after all, why should my milkman driving a petrol TVS 50 subsidize the fuel for my 10L diesel car?

[volkman10]

See the recent update on diesel subsidy in the attached.(page 12)

Also interesting coverage on diesel cars to take 50% of india's New- Car- Market( page 14)

Cheers!

[motorworks]

Firstly I dont think that higher petrol prices compensate for lower diesel prices. If you look at petrol rates at Shell, they are being retailes for about Rs.72 or so which is very similar to Govt bunks like HP, IOC etc. Diesel prices are relatively higher with Shell as they follow global crude oil trends and do not have any subsidy.
Secondly, selling diesel at different rates is just not possible in India. You will see that people will find 'ways' to do what they want. Rather, subsidize diesel to a certaiin extent,as it does effect essential commodity pricing whether its milk or vegetables, which again the common man has to pay for. Rather place a one time tax on diesel passenger cars { Again I recommend this only for cars priced 10lakh upwards} that will probably turn more of these customers to Petrol variants. If you place a standard tax on all cars, then not only will diesel cars be totally killed, but also that the total sales numbers will start falling too.

[selfdrive]

Originally Posted by motorworks

Rather place a one time tax on diesel passenger cars { Again I recommend this only for cars priced 10lakh upwards} that will probably turn more of these customers to Petrol variants. If you place a standard tax on all cars, then not only will diesel cars be totally killed, but also that the total sales numbers will start falling too.

Two things here:
- One time tax will only charge new/ future owners. Why allow existing diesel car owners such a huge subsidy? Instead, start levying an annual tax for diesel cars
- Why only 10L +; why should diesel cars below that price tag be allowed a subsidy? Petrol cars below 10L do not get any subsidy either

[nipunkul]

Implementing a yearly tax system with out corrupt RTOs might be difficult. A one time tax may create a rush of diesel bookings before the deadline, but it will all even out in 10 years or so.

However, what about people who register yellow plate cars in their business' name and then put them in personal service.

So in the end the solution is putting it on all cars/SUVs/taxicabs vehicles etc regardless of registration type. Only load carrying tempos/trucks and 10+ carrier vans/buses can be exempt. This might increase cost of taxis etc, but the people regularly using taxis to move about can surely pay 50% more.

[BuRnT RuBbEr]

the focus needs to be on promoting more efficient fuel technologies and bringing in stiff conformance to emission laws. this price debate between petrol and diesel is short-sighted. people need to understand that the diesel variant of any modern indian car delivers more kilometers per liter than the petrol one, hence being the better fuel. as for emissions, the flaw is in compliance to the norms, not anywhere else.

If i were to handle this mess, i would compensate the subsidy by levying heavy penalty on non-confirming vehicles and getting at it with a sense of purpose akin to CBDT wrt salaried gentry.

[throttleking]

Originally Posted by zaphod

With fuel prices set to rise again and petrol being affected the most isn't it time that the government tried implementing a 2 tier structure for diesel prices such as in the UK ?

In my opinion while diesel should continue to be subsidised for mass transport and carriage of goods , the price of diesel for personal vehicles should be on par with petrol - with the advantage of higher efficiency diesel will still be a viable fuel for those who drive a lot.

I think it's not fair that the advantage of subsidised diesel should be extended to personal vehicles .

So I think the government should implement 2 kinds of diesel - different in colour for checking and try (try being the important word in the Indian context) to ensure that only commercial vehicles have access to diesel at lower prices.

But would public opinion let this happen ? People buy diesel cars just because of the savings in fuel cost ... and the outcry would be huge ...but it needs to be done

Originally Posted by GTO

I agree Zaphod. Its an irony that a person on a Rs. 40,000 scooter pays more for a litre of petrol than someone in a Mercedes CDI next to him. Diesel subsidies must be waived off to everyone but the mass transport segment. I havent been to Delhi in a long time, but dont they have CNG buses plying already?

Dont you think this has crossed the mind of our authorities? The problem really lies with large-scale implementation and effectiveness.

GTO

This will only give rise to corruption. People buying a diesel under the name of transport business and selling it in black market for personal use will be a common sight. There is a huge difference in India and UK. Even the merc guy wouldnt mind buying it 10-20rs cheaper from black market.

[vinya_jag]

Deregulating diesel altogether will probably bring a catastropic effect on inflation.
We have all seen this: A mere 4 rupee diesel hike leading to Lorry strikes, milk prices rised, vegetable prices shooting up etc etc.
Now, can you imagine a 18 rupee diesel price rise? That would mean 33% increase. This would lead to dramatic increase in all other prices.

The agri and the transport problem is not the one that is to be solved here. (The growth in these areas is very less)
The problem the govt needs to solve is to curb the growing buyers of diesel cars. (This has exploded over the last few years and mostly after petrol deregulation)

So, how do we solve this?
A yearly tax on existing diesel cars for existing vehicles.
A one time tax for new diesel cars or an option of yearly tax which run on normal diesel.
Bringing in Desulphurised diesel to India and making this available at deregulated prices.
All car manufacturers to bring in Delsulphurised diesel technology into India, and these cars will not pay the one time or yearly diesel tax.

[mmxylorider]

Originally Posted by vinya_jag

A yearly tax on existing diesel cars for existing vehicles.
A one time tax for new diesel cars or an option of yearly tax which run on normal diesel.

This is actually doable. Introduce yearly registration (and other fitness checks) for all vehicles and charge a diesel fee while doing this renewal. It can be based on vehicle age and percentage of buying price.

Of course, enforcement is the key to any law and you pretty much have a good percentage of rural population not doing this.

[Fordmanchau]

I think the best way for rationalising the diesel and petrol prices would be to remove the entire subsidy and then lower the tax to that extent, such that government doesn't have loss of revenue owing to the lowering of taxes.
This is for sure that Government earns way more in taxes then what they pay as subsidies to the OMCs.
This will benefit in two ways
1) All the subsidy would be removed, therefore we can hope to get better fuel quantity at competitive prices owing to increased interest of private fuel retailers
2) Lowering of taxes would help cushion the spike in prices as a result of subsidy removal.
Plus government can earn more in taxes when the fuel prices increase later, but by that time everyone would get used to the market priced fuel.
This would help to keep the inflation and strikes at bay to a large extent.

[Nash24]

I think Government must reduce taxes on petrol and diesel. They must de-regulate both at the same time reduce taxes on them, thus petrol prices should fall down by rs10 and diesel prices will climb up slightly by rs3-4. End of the day the price difference between petrol and diesel will be rs15. The positive side is both fuels will be de-regulated from Government control.

On the other hand Government should find other ways of generating revenue from the loss of fuel taxes, they can increase income tax etc.

[bharatbs]

There is a potential solution mentioned on Page 12 of the above report

"India’s Petroleum Ministry is launching a study of the growing use of diesel fuel in sport utility vehicles (SUVs)"

"An unidentified "senior Indian Oil Corp." official was quoted as saying that "if the study throws up that most of the retail filling stations in South Delhi sell diesel mainly to cars and SUVs and for power generating sets, as there are no farms in the area, then the fuel could be priced higher at such pumps."

But this will definetly increase black marketeers and this also does not adress the trucks/autos/goods carriers which supply so many commodities within the city. The only way is to increase diesel prices gradually and control inflation with other measures.