The auto biggies in the country have shown concern over government’s move of dual pricing for diesel for the passenger cars, implying an increase in the price of diesel. The car makers believe that a rise in the diesel price will further worsen the condition of the market which is already witnessing a slowdown.
Recently, Finance Minister Mr. Pranab Mukherjee said in the Lok Sabha that the government would not extend the subsidy on diesel to passenger cars. At present, passenger cars contribute 15 percent of the total consumption of diesel in the country.
The indication of the rise in the diesel price for passenger cars has annoyed the car makers as the industry is moving through a massive slowdown. In the month of July, car sales in the Indian auto market dipped 10 percent, leaving behind the previous worst dip of 7 percent in year 2009.
At present, the government offers a subsidy of Rs.6.08 per liter on diesel. A roll-back of diesel subsidy will directly convert into diesel price rise by Rs 6. However, the proposal of removing subsidy on diesel for passenger car is yet to be finally approved by the Finance Minister.
