Atma Ram Kejariwal
INCREASING GDP and purchasing power in the country has resulted in increasing sales of passenger cars. Passenger car sales growth in the country has outperformed almost all developed countries. Market share of diesel cars is increasing steadily since last couple of years and that of petrol cars is steadily declining. Share of petrol cars has declined from 67 per cent in the year 2005-2006 to 58 per cent in the year 2010-2011 and projected to further decline to 46 per cent by the year 2015-2016. Contrary to this share of diesel cars has increased from 33 per cent in the year 2005-2006 to 36 per cent in the year 2010-2011 and projected to further increase to 45 per cent by the year 2015-2016. The balance is cars driven by CNG. This is a strange even after considering the fact that initial investment in diesel cars is more than that for petrol cars of same features and specifications by Rs 1.0 to Rs 1.5 lakh, maintenance cost is more and other such disadvantages.
Price of diesel in the country is still regulated and that of petrol is partial deregulated. (I am saying that petrol price is partially deregulated considering the fact that oil marketing companies do not have full freedom all the time to declare price of petrol keeping in line with International prices and their cost of production. We know that at many occasions, say impending elections to some State Assemblies etc. political bosses have not allowed free hand to oil marketing companies.) Because of above stated fact the price difference between petrol and diesel is increasing continuously. Following table gives the picture:
This price difference explains the logic behind preference for diesel cars than petrol cars. The reasons of price differentials may be many like international prices of crude oil, rupee exchange rate, Central and State govt. taxes. etc. The net result is that cost of operation of diesel cars is much less than that of petrol cars.
We know that petrol comes in the category light distillates, where as diesel comes under the category of middle distillates. Pollution caused by diesel vehicles, not only cars, is more than pollution caused by petrol vehicles. This is one of the reasons that all developed economies have more of petrol driven vehicle than diesel driven vehicles. Moreover there does not exist the price differential between the two fuels as it exists in our country. Apart from various taxes, are there more reasons as accounting practices or loading of common cost to two fuels etc, by oil marketing companies/refineries, it is for CAG to audit the oil refineries, since there was some reports in section of press recently. Pollution caused by any type of vehicle is detrimental to human health as passive smoking. The types of pollutants are different in passive smoking and that of vehicle exhaust, but both results in harming health of human beings. Since diesel driven cars are mostly used in big cities, towns etc. and they pollute more than petrol cars, health problems like respiratory problems in towns and big cities are on the increase. The advantage Delhi got from making it mandatory to use CNG for public transport, thanks to verdict of this effect by Honb’le Supreme Court, has been lost now by ever increasing diesel Cars.
As discussed above, diesel cars are expensive to purchase and maintain but its operation cost is less than petrol cars, diesel is heavily subsidised by Central Government. This advantage of subsidised diesel goes to diesel car owners and results in under recoveries for oil marketing companies. The Central Government compensates oil marketing companies for this under recoveries from sale of diesel which in turn results in budgetary deficit. To keep budgetary deficit within limits, it increases various taxes and present liking of the Central Government is to increase Service Tax on various services and to bring more services under this category. This service tax is equally born by all the citizens irrespective of his/her financial status or goods buying pattern. Even a common man with meager financial resources has to pay for one or other services he has to avail for his living. In other words a subsidy for diesel used by diesel cars is also born by common poor man.
The environmental, health, under recoveries and other subjects were debated in the country at number of times by various authorities, experts. Many times suggestions were discussed and submitted to Government for considerations and implementations. Since making diesel costly only for cars is not practical to implement, this was not rightly agreed by the Government. It was also suggested to make cost of purchase of diesel cars more by increasing Excise Duty and other taxes very steeply; it has not been agreed so far by the Government. If this proposal is accepted, additional revenue earned by increased taxes can be utilised for providing more health facilities to poor masses and for protection of environment. Any such proposal will find favour with Ministry of Finance, Ministry of Health, Ministry of Environment etc. but may not find favour with Ministry of Labour and Ministry of Industry etc. Our ministers are working as a true (?) professionals. Their stand changes on any issue with change in their Portfolio. Nobody takes a firm stand considering over all interest of society at large.
The biggest opposition to increase cost of purchase of diesel cars by increasing Excise Duty and other taxes comes from automobile industry itself. The industry has a simple argument that by doing so sale of diesel cars will go down which will impact their profitability negatively, it will reduce employment, their capacity to manufacture diesel cars will go waste, etc.
(The author is a Mechanical Engineer and Gold Medalist from University of Rajasthan).
Date City Petrol Price Diesel Price Price Differential
Rs/Lit Rs/Lit Rs/Lit
1.4.2008 Mumbai 50.51 36.08 14.43
Delhi 42.85 30.25 12.6
1.4.2009 Mumbai 44.55 34.4 10.15
Delhi 40.62 30.86 9.76
1.4.2010 Mumbai 52.20 39.88 12.32
Delhi 47.93 38.10 9.83
1.4.2011 Mumbai 63.08 42.06 19.02
Delhi 58.37 37.75 20.62