Two of India’s ministries push for one-time diesel tax for some sectors

India’s Minister of State for Petroleum, R. P. N. Singh told Parliament that around 22 out of every 100 liters of subsidized diesel fuel sold in the domestic market is consumed by private cars, SUVs, generator sets and mobile towers.
The Minister’s disclosure showed that the bulk of the government subsidy on diesel fuel is benefitting consumers belonging to the upper class and not the ordinary Indian citizen. Singh’s disclosure came on the same day that India’s Finance Minister P. Chidambaram ruled out the possibility of raising the prices of diesel fuel and kerosene, which observers believe strengthens the oil ministry’s case for the imposition of a diesel tax on private vehicles, generator sets and mobile towers.
According to Singh, out of the 64.7 million tons of diesel fuel sold in the country from 2011-12, about 16% were consumed in passenger vehicles, 5% to run generator and 2% by cellphone towers.
In June, Oil Minister S. Jaipal Reddy suggested to the Finance Ministry that the government should impose a one-time special excise duty on passenger cars, which would be graded according to vehicle size. Reddy is now pushing for a similar tax on generator sets and mobile towers. (August 25, 2012)