Saturday, June 30, 2012
By Manoj Kumawat
Diesel price hike imminent to contain rising fiscal deficit
The car industry is highly banking on diesel cars, Honda is bringing diesel Honda Brio, Honda City and Honda Jazz in India and Maruti is focusing on diesel cars production while Tata and Toyota have cut down the production of petrol cars. Amidst such as bright prospect for diesel cars in purview, the bulging fiscal deficit could play a spoilsport for the car industry in India and following it, the government could think of cutting the subsidy on diesel. Resultantly, the diesel price will increase directly impacting diesel car sales. However, the impact on diesel cars in India sales will be less as people have paid as high as Rs 76 for petrol and they can easily pay some Rs 5 extra per litre on diesel. Still there will be a big gap between the petrol and diesel prices.
Now that there are diesel cars lined up for India and every car maker is stressing on diesel cars, the government foresees that the consumption of the subsidized diesel by cars in India will also increase subsequently. Thus sensing this, it is thinking of decreasing the subsidy on diesel that will increase the price of diesel initially by Rs 3 to Rs 5. Besides diesel, the government could also think of reducing subsidies on LPG and fertilizers. Till recently, there was an uproar regarding the special tax on diesel cars being contemplated by the government. But that has received severe censure by the car makers specially Mahindra that is a prominent diesel car maker in India.
In the meantime, car companies are preparing for diesel car launches and the latest launch will be that of Renault Duster SUV. With a mileage of over 20 kmpl on diesel, the Duster SUV by Renault is expected to take away all the worries even if there is an increase in the price of diesel in the near future. Expected to have a price tag of around Rs 7 lakh to Rs 8 lakh, the SUV Duster will be available in diesel and petrol models. The Duster launch is scheduled on July 4.