In an interesting study that has been published today, the Indian Government has been handed over a report that raises questions on the subsidy on offer for diesel vehicles. The study has found out that more than 40% of top segment cars and SUVs in India run on Government sponsored diesel subsidies. While the small car segment only sees a 13% share of the diesel vehicles, the biggest and costlier cars seem to be the gas guzzlers that is hurting the industry.
As per a study, a large part of the subsidized diesel is used by the rich and sundry to save petrol costs. In India, Diesel pricing is nearly 60% of the petrol prices. As per a UK based company fuel cards specialist, this is actually the reverse of what you would experience in the UK. Since India is an agricultural-intensive country, the subsidized fuel is offered as a way to boost farming. However, in the absence of any procedures to limit the abuse of the fuel, it finds an easy use in commercial and bigger vehicles at a subsidy that is largely footed by the taxpayer’s money.
Industry analysts are of the view that there may be a diesel cess on the diesel vehicles to recover large amounts of losses that are written off every year by the Government.