With passenger cars consuming about 15% of the diesel, the Government today indicated that it might do away with the subsidy enjoyed by such vehicle owners.
"We can accept your (Opposition) suggestion and try to work out what mechanism could be found out so that this section (diesel car owners) are not subsidised," Finance Minister Pranab Mukherjee said replying to a debate on price rise in the Lok Sabha.
The Government gives a subsidy of Rs 6.08 per litre on diesel.
While the prices of petrol are linked to market rates, the government directly and indirectly compensates the oil marketing companies for losses on account of sale of diesel, kerosene and LPG through subsidies and oil bonds.
Under pressure to keep its finances under control the government has already indicated that it was keen on freeing prices of diesel and cooking gas (LPG) but retaining subsidy on kerosene which was used by poor.
In June, while increasing prices of kerosene, diesel and LPG, the government had slashed customs and excise duties on petroleum products to mitigate the impact of price hike on common man. It took a revenue hit of Rs 49,000 core per annum.
India imports about 75% of its total crude oil requirement.
Mukherjee said out of total consumption of diesel, 10% is used by industry, 6% by railways, 12% by the agriculture sector and 15% by car owners.
As much as 8% is used for power generation, he said, adding buses and trucks consume 12% and 37% respectively.
Mukherjee said that despite price increase of petroleum products in the recent past, the under recoveries of state owned oil companies was still around Rs 1.22 lakh crore.
JD-U leader and NDA convenor Sharad Yadav had questioned the government's policy of providing subsidised diesel for consumption by luxury car owners, telecom tower companies, malls and restaurants.
