New Delhi: The government is mulling dual pricing of diesel wherein the luxury car owners may have to pay market rate and the sale of subsidized fuel would be restricted only to farmers and transport trucks.
“These are all proposals which are being considered by the finance ministry,” oil minister S. Jaipal Reddy told reporters when asked if the government was considering dual pricing of diesel.
Diesel is the most consumed fuel in the country but is sold at a discount to the cost of production. Diesel subsidy currently is Rs6.82 per litre and on an annualized basis it would amount to Rs52,365 crore out of the total fuel subsidy estimated at Rs114,336 crore in the current fiscal.
The subsidized diesel is the preferred fuel for the transport sector (both trucks and passenger buses) and is also used in irrigation pumps and other agriculture equipments.
Luxury cars and SUVs too run on diesel and so do power generators at malls and telecom towers.
It has long been argued that rich should not get subsidized fuel and that subsidized diesel being used to light malls or power telecom towers is a wasteful expenditure.
The issue figured in Lok Sabha during the debate on price rise on Thrusday.
“The finance minister rightly expressed concern about mis-utilization of subsidized diesel for many things like power generators,” Reddy said.
“So these are all proposals and I cannot give a final shape. I made some proposals, however, it is up to the finance minister to consider,” he said.
But Reddy’s predecessor, Murli Deora had ruled out dual pricing of diesel late last year, saying that it would be difficult to implement.
“There is no way you can have dual prices for diesel. On a petrol pump, you cannot have one price for cars and another price for tractors brought by farmers,” he had said. However, Deora was against subsidy to the people who ride in Mercedes.
On 25 June last year, the government had decontrolled petrol prices and had said that diesel would also migrate to a free price regime shortly. But diesel rates have not been freed till now.
“We think the subsidized diesel is not being properly utilized,” Reddy said on Thursday adding that levying hefty duty on diesel cars is also one of the proposals under consideration.
Reddy was also in favour of ending subsidized domestic cooking gas (LPG) supply to people with income of more than Rs6 lakh per annum.
A 14.2-kg LPG cylinder in Delhi currently costs Rs395.35. This is Rs247 short of its market price. If implemented, people with more than Rs6 lakh per annum household income will have to pay Rs642.35 per bottle.