In a recent statement given by Rajkumar Dhoot, the newly-elected President of ASSOCHAM, diesel subsidies should not be given to luxury cars, telecom towers and other firms. He added that subsidies on diesel should be offered to limited sectors, such as agriculture and transport. The Government of India should charge extra duties on luxury car owners who, at present, are using diesel at subsidised rates.
Rajkumar Dhoot commented, "Diesel subsidies should be given only to agriculture community and transport sector, but not to luxury cars, telecom towers, five-star hotels and other industries that are using the fuel to run huge generator sets."
He added that Indian government can control the fiscal deficit by putting halt to diesel subsidies. According to him, "We should give targeted subsidies. The government should ask the luxury players to pay for the subsidies to control fiscal deficit. An expert committee should be set up to look at how subsidies can be offered to poor people." Dhoot also stated that Indian automobile industry has been asking that diesel should be available at market-driven prices for luxury car owners for quite some time.
As per the 2011-12 fiscal figures, Indian Government had recorded deficit of 4.6% of Gross Domestic Product (GDP) or Rs. 4.12 lacs crores. However, due to lower revenue growth and rise in subsidies, the fiscal deficit is expected to increase. The Controller General of Accounts (CGA) released data in which the fiscal deficit of government rose to Rs. 3.53 lac crores. This figure is 85.6 per cent of the Budget projections at the conclusion of November 2011 since there was a slump in non-tax revenue.
According to Pranab Mukherjee, Finance Minister of India, the country’s subsidy bill will probably rise by around Rs. 1 lac crore. This will be above the total cost of Rs 1.34 lac crores projected in the Budget for the 2010-11 financial year, primarily due to higher expense on oil, food and fertilisers.
The automobile manufacturers that fall under the ambit of Society of Indian Automobile Manufacturers (SIAM) have protested the decision to increase taxes on diesel automobiles. SIAM had earlier stated that during 2010-11, a total of 61.68 million tonnes of diesel was used by different sectors in India. Out of these, merely 1.03% was used by diesel personal cars, while 1.82% was consumed by diesel taxi segment. As for the rest, commercial vehicles used 3.44% and personal automobiles accounted for only 0.53%.
On the other hand, Centre for Science and Environment wants to prevent the misuse of subsidised diesel is favouring increasing taxes up to Rs. 1.62 lacs on big diesel cars. Budget 2012-13 is expected to bring in bad news for diesel car manufacturers as higher taxes can be imposed on diesel variants.
