Abolish Diesel Subsidy & Give Relief Of Rs 1,00,000 Crore In Tax Burden

The total diesel consumption in India during  2011-12 was 64.74 million tons. The total fuel consumed in India during this period was 147.99 million tons. Thus diesel accounted for nearly 44% of the total fuel consumed in the country.The rate of growth for diesel sales was around 7.4% during 2011-12 as per the figures provided to the lok Sabha by the concerned Minister.

The diesel run cars and SUV's consume about 15.88% of the total diesel consumption. Power generators use 4.6% and mobile phone towers use nearly 1.93%. Thus nearly 77.59% is used in other forms of transportation like trucks, tractors,

buses etc.

The difference of nearly Rs 27 per litre in price of petrol and diesel has resulted in the demand for diesel cars going up considerably and this cis ausing worry to the government. Diesel is presently being sold at nearly Rs 15.55 per litre cheaper than its cost price.

In 2011-12 this resulted in loss to the  oil companies to the tune of Rs 1,00,000 crore  on diesel sales alone.Together with losses on LPG and kerosene the total loss suffered by the oil companies is around Rs1,38,540 crore. The government is reported to have shelled out Rs 83,500 crore and companies like ONGC gave Rs 55,000


The government finds itself trapped in the subsidy maze. It is not able to come out of it but is ready to take more subsidy load. Why can't it abolish diesel subsidy altogether and let the economy gain its competitve level. The economy of this country is today much large and perfectly capable of absorbing the one time blow of actual diesel prices being restored. The condition is that simultaneously the govt should give corresponding relief of Rs 1,00,000 crore in tax burden, which it will now no  longer require to subsidise diesel producers.

The proposal for raising of additional excise duties on diesel cars between Rs 1.7 lakhs and Rs 2.55 lakhs for small and  medium and large cars to offset some of the subsidy burden, is not a viable solution. Buyers will gladly pay this one time fixed cost and still find the cheaper variable cost of diesel, beneficial in the long run.

Why can't the government stop treating Indian economy like a permanent poor man's economy.The planners need to change their mind sets. The public has changed it's long ago. when will it stop robbing Sharma to pay Verma.

Article Written By vks1000

Am a retired professional who is now into education of International Business and management topics. I enjoy writing and like reading on politics,economics,management and films. I take life as it comes and try to keep myself busy with a variety of activities.

Last updated on 18-06-2016 72 0

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