Dieselisation in the Indian automotive industry is a fact and not just a figure of speech, with a report saying that the small cars and Sports Utility Vehicles (SUVs) consume around 16 per cent of the government's total subsidised fuel. The alarming statistics has baffled the Ministry of Petroleum and Natural Gas so much that it has announced to charge an additional excise tax on diesel vehicles; the move was brought in the limelight by Lok Sabha.
The Indian government has offered diesel as a subsidised fuel as it was meant to serve only the industries, railways, power plants and heavy vehicles. In contrast, the fuel has now entered the unanticipated pockets of economy like passenger vehicles and private homes, disturbing the government a little on its unfair usage.
In a written answer to a query, R P N Singh, state minister in Ministry of Petroleum and Natural Gas, pointed out that 64.74 million tons of diesel was consumed during 2011-2012 and out of which the passenger vehicles (including diesel cars and SUVs) consumed about 15.88 per cent of the total amount. He also revealed that the power generators and cell phone towers consumed around 4.60 per cent and 1.93 per cent of the total diesel consumption, respectively.
Singh further continued, “The Ministry of Petroleum and Natural Gas in its budget proposal to the Ministry of Finance had proposed to levy additional excise duty on diesel cars.” The minister also revealed that the Oil Ministry has asked the Finance Ministry for approving its proposal of charging additional excise duty on power generators and cell phone towers.
The state minister affirmed that the diesel sales increased by 7.8 per cent during the fiscal 2012 with consolidated oil consumption rising by 4.9 per cent during the period.
Reportedly, the concerned ministry is seeking more tax by Rs. 1.70 lacs and Rs. 2.55 lacs on small and big-sized diesel vehicles, respectively. Presently, the petrol prices in Delhi is Rs. 68.46 per litre, whereas diesel is charged Rs. 41.32 per litre. The considerable asymmetry, between the diesel and petrol prices with the latter priced more by Rs. 27.14 per litre, is being cited as the main reason behind the rampant growth in volumes of diesel vehicles.
The current subsidy provided by the government on diesel fuel's actual price amounts to Rs. 15.55 per litre. Consumption of diesel in fiscal 2012 stretched to 147.99 million tons, making it the most consumed hydrocarbon fuel of the country with around 44 per cent of the total fuel consumption.
Currently, cars exceeding four metre length or featuring an engine displacement of more than 1500 cc fall in the 27 per cent tax policy imposed by the government. The duty trims to about 24 per cent for the cars exceeding the four metre length limit, but having a smaller engine and 12 per cent duty fixed for small cars.
Reportedly, three Indian oil selling companies saw revenue losses amounting to Rs. 138,581 crore during the period 2011-2012. The companies sold diesel, LPG (Liquefied Petroleum Gas) and kerosene with the government providing subsidy on all the fuels. In an effort towards recouping revenues loss for the three companies, the Government provided a monetary assistance of Rs. 83,500 crore to the company with the Public Sector Undertaking (PSU), Oil and Natural Gas Corporation (ONGC) also extending a helping hand by pitching in Rs. 55,000 crore.
