Government might not increase the duty on diesel vehicles. A sigh of relief for many indeed! After all the speculations and debates that took place in the last two months, indications are here that the entire proposal of levying additional duty on the diesel vehicles might be scrapped. In fact, the Government is looking at other options like increasing the prices of diesel fuel itself. Such a thought came after facing a strong opposition by various stakeholders on the proposal to increase duty.
During a period when there was a slump in the sales figures in the auto industry, the diesel vehicles segment managed to stay afloat, thanks to the cheaper fuel price. But any increase in the duty could have brought down the demand for the diesel segment too. Moreover, increasing the duty would not have helped the Government much. Even if the Government had imposed a duty of five percent on these vehicles, a mere Rs. 2000-2500 crore revenue could have been generated. However, the burden due to diesel subsidy is over Rs. 1,00,000 crore.
Keeping these factors in mind, now the plans are to increase the diesel price, at the same time decreasing the petrol price. Will the petrol prices be really reduced in the future? That still remains a question as petrol fuel prices are being hiked by Rs. 5 within the next couple of days. Currently, the price differential between petrol and diesel fuel is almost 75 percent and we only hope that the officials try to bring down this gap rather than hiking the already soaring petrol prices.