Automakers seek hike in diesel prices
Auto companies have approached the government to consider hiking diesel prices to bring parity with petrol to offset the huge imbalance that has set in the car demand pattern. However, they have taken strong objection to further excise duty hike in diesel cars.
Citing the recent biggest petrol hike, the auto industry body SIAM, in a statement, said due to a huge difference in price of petrol and diesel, demand for petrol-driven cars has fallen while demand for diesel cars has increased.
“Reducing taxes on petrol can help bring down the petrol prices and on the other hand, a moderate hike in the administered prices of diesel by Rs2 to 4 can significantly narrow down the gap between the prices of petrol and diesel without stoking long-term inflation,” said S. Sandilya, president of SIAM.
Pointing out at the recent budget duty hike which has put a dent on total excise burden on mid-sized and large cars to 27 per cent, he said, diesel cars were already more expensive by up to Rs1 lakh, contributing to much higher revenue to the government.
“Therefore, a further hike in excise duty on diesel cars, as being suggested once again by certain quarters, is ruled out,” he said.
“Countering the effect of one distortion (in fuel pricing) by creating another (higher excise duties on diesel cars) is neither good economics nor good politics. Such a move will only kill the golden goose which would contribute more than Rs20,000 crores of excise revenue to the exchequer every year,” SIAM said.
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