Disparity within the Govt. over diesel prices makes car makers anxious

Friday 16 September 2011, 18:26 PM by

The government seems to adhere to different point of views over the issue of pricing of diesel in the country. Huge differences have been cropping up, lately, within the government, as there is absence of a common demand within the sections.

While the Planning Commission Deputy Chairman Montek Singh Ahluwalia has expressed the need to check the distortion between diesel and petrol prices, Heavy Industries Minister Praful Patel came out with a completely different version, to say the least. Patel lent his full support to the present diesel subsidies and favoured lower diesel prices as part of the government's "social obligation".

“India needs to adjust its policy to the energy reality as the world is entering an era of high energy costs,” Ahluwalia said at the annual convention of the Society of Indian Automobile Manufacturers (SIAM).

Disparity within the Govt. over diesel prices makes car makers anxious  | CarTrade.com
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Ahluwalia said that subsidised fuel the right choice in the long-term, given the need to ensure energy security. However, responding to Ahluwalia's comments, Praful Patel said, "Diesel and petrol price disparity will stay. It will not go away as we have a social obligation."

The government, in its move to deregulate the fuels, freed petrol prices from its control in June last year. However, diesel till date continues to be sold at a subsidised price as it is argued to be used in the farm sector, which is a soft corner for politics in India and for powering public transport.

Patel also offered strong support to diesel-run cars and SUVs. The minister said that the policy planners and the government must rephrase their definition of diesel being termed as a 'dirty fuel'.

He was quoted as saying, "There has been question over the environmental sustainability of diesel technology. But if we look in Europe or other developed countries, the technology has developed so much and proved to be even better than the petrol technology." The Heavy Industries minister also confirmed that at the moment there is no move as such, within the government, to bring any change in the pricing of diesel.

Ahluwalia however cautioned the government by saying, “Nine per cent growth target for the 12th Plan is not going to be easy. What will be easy is somewhere around 7-7.5 per cent.”

As petrol prices were taken out from the purview of government control in June last year, there has been a staggering rise of 21 percent in the price of petrol. It has swelled up to Rs. 63.70 per litre from Rs. 51.43 a litre. However, the extreme hike in the price of petrol has given rise to a diesel based economy where buyers tend to opt for diesel run cars. This fact is quite disturbing as the high class people are running their cars and SUVs on subsidised diesel meant for the farm and public transport sector.

The alarming issue had been raised in Parliament as well, where Finance Minister Pranab Mukherjee conveyed that the government is ready to discuss the matter of fuel subsidies. Amidst all the rifts that have been surfaced, automobile companies are bearing the brunt of uncertainties within the government.

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