Diesel price and food inflation in parliamentary debate

NEW DELHI: To prevent the misuse, the government may introduce dual rates for diesel — with the price of the fuel higher in cars and commercial power compared with the price for truckers and farmers.

In parliament during the debate on the price rise, opposition leaders asked finance minister Pranab Mukherjee if the government would withdraw subsidy benefits on diesel used by premium cars and commercial users such as telecom tower companies, malls and restaurants.

Pranab said, “We can accept your suggestion and work out a mechanism so that the (privileged) sections are not subsidized.”

Of the total diesel sold, 15 per cent were used by passenger cars, 8 per cent by power plants, 12 per cent by agriculture and 37 per cent by trucks .

However, outside Parliament, Mukherjee clarified to reporters that “there is no question of removing (diesel) subsidy”.

On Sunday, Mukherjee said the government was keen to free the prices of diesel and cooking gas (LPG) to keep its finances under control.

Diesel is the main transport fuel used by trucks and buses. While petrol rates have recently been linked to market prices, the government gives a subsidy of Rs 6.08 per litre on diesel. Subsidised diesel is also used in irrigation pumps, agriculture equipment and power generators at malls and telecom towers.

Maruti Suzuki and General Motors and even premium car makers such as Audi and BMW have recently introduced diesel variants to meet growing demand from consumers.

Also food inflation during the week ended June 23 jumped to 8.04 per cent from a year earlier compared with 7.33 per cent the week before.

The finance minister said on food inflation, “It should be around 5 per cent, which will be comfortable… 6-7 per cent can be tolerated”.