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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.
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