India Insight

Diesel strategy: merely old wine in new bottle?

Planning to buy a car? Seeing petrol prices head northwards, chances are high you would have changed your mind and now intend to buy a diesel-powered vehicle. That might be a smart move given the government’s reluctance to tinker with diesel prices in the face of stiff opposition. But there are plans afoot to deter you.

After considering raising diesel prices at one point, the government is now mulling a proposal of higher duty on diesel vehicles and even thinking of increasing diesel prices only for cars and sports utility vehicles (SUVs) — something that has been debated earlier.

The aim of these alternate proposals is simple — to reduce the consumption of diesel in India which would ease the strain on the government’s finances, and stop wealthy SUV owners from reaping the benefits of state subsidies.

But even if implemented, it is not easy to solve the core issues using these solutions.

Automobile manufacturers had successfully lobbied against an 80,000-rupee duty hike on diesel vehicles in 2010. Finance Minister Pranab Mukherjee is currently studying the new proposal of higher duty on diesel vehicles.

Jury still out on Indo-U.S. “unclear” deal

US President Bush raises his glass for a toast with Indian Prime Minister Singh at an official dinner …US President Bush raises his glass for a toast with Indian Prime Minister Singh at an official dinner …You could be forgiven for thinking that the civilian nuclear deal with the United States is all about whether India holds early elections or not.

Every newspaper is speculating if Prime Minister Manmohan Singh, who has staked his personal reputation on the deal, will resign to disassociate himself from an administration that failed to save a pact keenly watched by the world.

But are these the arguments India should be debating in the short-term or should we be discussing the real benefits and drawbacks of the deal?

Has India got it right on fuel prices?

So it’s official. India has finally raised fuel prices, by more than most people expected. A hike in diesel prices in particular is sure to feed through into overall inflation. At the same the government removed the import duty on crude oil.

A petrol station attendant counts currency notes in Jammu.We’d be keen on your opinion. Has the government got it right?

Despite the price rises, oil companies are still going to be losing huge amounts of money and gas-guzzling cars are still going to be heavily subsidized by ordinary taxpayers. The oil ministry had even argued for steeper price hikes.

Are subsidies really the right way to go in the modern world? Is the government sacrificing good economics on the altar of political populism?

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