Diesel consumption in passenger cars aids overtaking petrol consumption in India

Recent diesel price hikes have caused a major upheaval in the Indian Government however; in spite of this Prime Minister Manmohan Singh has not wavered in his resolution. Though pressure was put on him from various quarters to roll back diesel prices, the current price hike still stands and there are no signs of the Government succumbing to pressure tactics.

This price hike was seen for the first time in 15 years and was brought in at a time when consumption in automobiles outpaced other modes. Estimates suggest that the new price hike was meant at offering more benefits to the poor and were aimed at preventing SUV owners from enjoying diesel subsidies. SUVs are increasing by leaps and bounds in a country like India. This category now constitutes 34% of diesel car sales while 61% diesel car models in India are in the 2000cc category and above.

Seeing this increased demand for diesel has prompted the government to raise prices and is specially targeting diesel run vehicles which have increased from 4% in the year 2000 to 60% today. Diesel may be used by rich SUV owners but it is also used by poor farmers for agriculture, irrigation and by people in rural areas where this hike in price will have a devastating effect.