Car owners may soon have to pay more for diesel

With passenger cars consuming about 15 per cent of thediesel, the government on Thursday indicated that it might do away with thesubsidy enjoyed by such vehicle owners.

"...we can accept your (Opposition) suggestion and tryto work out what mechanism could be found out so that this section (diesel carowners) are not subsidised," Finance Minister Pranab Mukherjee saidreplying to a debate on price rise in the Lok Sabha.

The government gives a subsidy of Rs 6.08 per litre ondiesel.

While the prices of petrol are linked to market rates, thegovernment directly and indirectly compensates the oil marketing companies forlosses on account of sale of diesel, kerosene and LPG through subsidies and oilbonds.

Under pressure to keep its finances under control thegovernment has already indicated that it was keen on freeing prices of dieseland cooking gas (LPG) but retaining subsidy on kerosene which was used by poor.

In June, while increasing prices of kerosene, diesel andLPG, the government had slashed customs and excise duties on petroleum productsto mitigate the impact of price hike on common man. It took a revenue hit of Rs49,000 core per annum.

Indiaimports about 75 per cent of its total crude oil requirement.

Mukherjee said out of total consumption of diesel, 10 percent is used by industry, 6 per cent by railways, 12 per cent by theagriculture sector and 15 per cent by car owners.

As much as 8 per cent is used for power generation, he said,adding buses and trucks consume 12 per cent and 37 per cent respectively.

Mukherjee said that despite price increase of petroleumproducts in the recent past, the under recoveries of state owned oil companieswas still around Rs 1.22 lakh crore.

JD-U leader and NDA convenor Sharad Yadav had questioned thegovernment's policy of providing subsidised diesel for consumption by luxurycar owners, telecom tower companies, malls and restaurants.

-- With inputs from PTI