There is so much talk of the difficulties in raising prices of diesel without jeopardising the “poor farmer” and his energy needs supplied via this fuel for gensets.
One achievable solution that no one within the industry, bureaucracy or the political class can quarrel with would be to have two levels of excise — one for the diesel that is shipped to the four large cities, its adjacent satellite towns and perhaps the next 10 medium-level cities and one for supplies to rural areas so that a lot of the “under recovery” of the present pricing policy gets whittled down.
Also, not a lot of the diesel gets used by the “poor farmer”. If that is so, this proposal should find eminent favour.
The suppliers of diesel are very large firms and most of them are government-owned. Their delivery of diesel to petrol pumps across India are payable to excise and the documentation requirements that exist today require mentioning the destination of the goods, so higher excise on such supplies should not be difficult to apply. All diesel coming into cities also clear octroi tolls, which would be another filter through which supplies can be monitored and finally there are the pumps. The suppliers must already have a sufficient database of the volume of diesel that goes to the main cities, so only the will to act is required.
The law allows for different levels of levy for different classes of customers, so there can effectively be no bar to a notification bringing diesel for cars, SUVs and trucks to the same price levels that are prevalent worldwide. The cost of manufacture of diesel and petrol isn’t such as to warrant the present final price differential. It may wipe out the gains for those selling cars and SUVs that run on diesel but it would mean that those consuming the fuel will pay an equitable price for a commodity that is not exactly in abundant supply worldwide. Since taxis, rickshaws and buses already use CNG they won’t get hit by a price rise and the number of so-called poor farmers who fill their tractor tanks in a large city will certainly be minimal.
Asit Desai, Mumbai
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