New Delhi, August 4
The government is mulling dual pricing of diesel wherein the luxury car owners may have to pay market rate and the sale of subsidised fuel would be restricted only to farmers and transport trucks.

“These are all proposals which are being considered by the Finance Ministry,” Oil Minister S Jaipal Reddy told reporters when asked if the government was considering dual pricing of diesel. Diesel is the most consumed fuel in the country but is sold at a discount to the cost of production. Diesel subsidy currently is Rs 6.82 per litre and on an annualised basis it would amount to Rs 52,365 crore out of the total fuel subsidy estimated at Rs 114,336 crore in the current fiscal.

The subsidised diesel is the preferred fuel for the transport sector (both trucks and passenger buses) and is also used in irrigation pumps and other agriculture equipments.

Luxury cars and SUVs too run on diesel and so do power generators at malls and telecom towers.

It has long been argued that rich should not get subsidised fuel and that subsidised diesel being used to light malls or power telecom towers is a wasteful expenditure.

The issue figured in the Lok Sabha during the debate on price rise today.

“The Finance Minister rightly expressed concern about mis-utilisation of subsidised diesel for many things like power generators," Reddy said.

“So these are all proposals and I cannot give a final shape. I made some proposals, however, it is up to the Finance Minister to consider,” he said.

But Reddy's predecessor, Murli Deora had ruled out dual pricing of diesel late last year, saying that it would be difficult to implement.

“There is no way you can have dual prices for diesel. On a petrol pump, you can not have one price for cars and another price for tractors brought by farmers,” he had said. However, Deora was against subsidy to the people who ride in Mercedes.

On 25 June last year, the government had decontrolled petrol prices and had said that diesel would also migrate to a free price regime shortly. But diesel rates have not been freed till now. — PTI