New Delhi: The proposition of buying a diesel car may soon become a costly affair. Apart from the rising diesel prices, the government is mulling to impose additional excise duty on diesel cars. The Petroleum Minister Veerappa Moily wants that additional excise duty on diesel cars should be imposed in the coming budget to discourage the rising demand for diesel cars in the country.

Petroleum Ministry has already sent the budget related documents to the Finance Ministry. It has been recommended to increase the excise duty on diesel cars. Petroleum Ministry has given two reasons for the recommendations. First one is to discourage the demand for diesel cars as it is going to weaken the economy. It also said that diesel cars are also hazardous for the environment. Secondly, the increased revenue will be utilized to compensate the loss of oil companies.

According to the sources in Petroleum Ministry, the government partly deregulated the diesel prices. Now it will be interesting to see that for how long the oil companies will be able to raise diesel prices by 50 paise per month. Despite the increase in the diesel price, oil companies may still be accounting loss of Rs 90,000 crore.
Over half of the amount will be compensated by the government. The government will have to pay large subsidy amount in the next financial year as well. To an extent, the burden will be compensated by imposing additional excise duty on diesel cars. It is going to impact the sales of diesel cars.

The Finance Ministry has already formed a committee-headed by Finance Secretary to decide the excise duty hike on diesel cars.

In case of increase in the price of diesel cars

1.    Demand for petrol cars will be increased
2.    Losses of oil companies will be controlled
3.    Subsidy burden on the government will be decreased
4.    The prospect of Maruti, Hyundai and Honda diesel car plant will get dent
5.    Pollution levels will be in check  


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