Budget 2012-13 is likely to make diesel cars more expensive. Unable to move to a market-linked pricing regime for diesel due to political compulsions,the government is considering the simpler way of levying additional excise duty on diesel cars.
The petroleum ministry has sent a proposal to the finance ministry to raise excise duty on diesel cars to part fund the losses of state-owned oil companies on selling diesel at below-market price. This will also prevent the dieselisation of the economy,it has argued.
Oil companies suffer under-recoveries of Rs 11.51 per litre of diesel an estimated Rs 74,317 crore in 2011-12.
Citing the recommendation of a committee headed by former Plan panel member Kirit S Parikh,it said a higher excise duty on petrol encourages use of diesel cars. The Parikh committee recommended an additional excise duty of Rs 80,000 on diesel cars.
Over the last 15 years,barring 1996-97 and 2004-05,the consumption of petrol has been more than that of diesel. But in April-November 2011,the growth in consumption of diesel has been 7.4 per cent against 4.3 per cent for petrol.