Stop subsidy on diesel: Suddenly petrol prices have sky rocketed leaving a clear lead over diesel prices. It’s obvious that demand for diesel cars are going to increase further in the coming months. This will further lead to long waiting periods for the delivery of diesel cars. Someone may ask, “Why not increase the production of diesel cars?” As simple as that! The waiting periods would vanish and everyone would get his favourite diesel car, whether it is the Ford Fiesta, the Hyundai Verna, the VW Vento, the Maruti Swift, etc. So why are the car manufacturers not increasing the production of diesel engines for their cars? The answer is not so simple. No car manufacturer is sure of the government’s fuel policy. First and foremost, it does not make sense to subsidise anything in this country, especially the fuel. It only makes things worse for all of us. For decades, the government has been subsidising fuels, be it petrol, diesel, LPG, kerosene... what purpose has it served? So have the poor become the new middle class? No way, the poor remain poor and the middle class have become a bit richer and the rich have, of course, become very rich.
There is no sense subsidising diesel fuel for cars. Why should diesel be subsidised for someone driving a high-end SUV that would have cost him more than Rs 50 lakh? Why should diesel be subsidised for someone who is driving any car? The honourable members of our great Parliament have maintained that diesel is being subsidised for the poor. Now tell me one poor man owning a car? The poor man’s car, the Nano does not have a diesel engine!! So why do they not correct this anomaly? Even if the government has to subsidise diesel for the poor, then do it for their tractors and pump sets in the villages. But again, in the rural landscape, the poor do not own tractors. The ones who own a tractor are rich in every sense. So why subsidise diesel for their tractors? If at all anything has to be subsidised for the poor, it could be maybe kerosene for the very poor or the fodder for their cattle.
No, diesel cars are not bad or polluting. Diesel engines manufactured and fitted in SUVs from Mercedes, BMW and Audi are perfect on the environment front. But the fuel for them need not be subsidised at all. Neither should diesel be subsidised for those buying cars like the Swift, Vento, Fiesta and the Verna. Car manufacturers know that world-wide petrol cars are much more in demand than diesel cars. Petrol cars cost less in terms of maintenance too. In India, car manufacturers are shy to increase the production of diesel engines, primarily because it would cost them a huge amount of money to increase capacities and the government may one fine day stop the subsidy of diesel. If that happens, automatically diesel cars will not be much in demand and all the investment of car makers will go for a toss.
But again, an average Indian customer needs to calculate whether he actually needs a diesel car. First of all there is a price difference between a diesel car and a petrol car. Buying a diesel car makes sense if a person travels more than a couple of thousand kilometres every month. If he does not then he can invest the price difference between the two cars and drive off with a petrol car. He can then retrofit a good CNG kit and get this gas for less than half the price of petrol. That makes more sense that a diesel car.
What is the logic of subsidising diesel fuel? One, the target audience does not deserve this subsidy. They are rich enough and can afford more expensive things than a diesel car. They can also do without subsidised fuel. Two, subsidies are a strain on the government exchequer. Money that can be utilised for developmental work is now used for this silly subsidy. So the country’s progress suffers. This has a direct bearing on the poor. Three, subsidies on diesel do not touch upon the lives of the poor. For them, the situation simply worsens as the government deficit worsens and inflation sets in. Government borrowings increase and this further spoils the macro-economic picture. So do away with diesel subsidy at the earliest. Make do with petrol cars and cars run on CNG. Let there be a level playing field among cars and their technologies. Maybe subsidise electric vehicles so as to promote the cause of the environment. But again, it’s the diesel vehicle manufacturers who are lobbying with the government. They want subsidies for their diesel cars, vans and SUVs. How can these people be allowed to lobby in the first place? Is the government for the poor and for their progress? I do not think so. I wonder how an extremely educated economic expert who also happens to be our Prime Minister not take this issue seriously. Are his hands tied?
Punnoose Tharyan, Editor, Motown India and Car N Style
