Diesel fuel in India has been awaiting a price hike trigger, constantly for the past few months. But it seems, that the trigger has now been pulled and surprisingly, even SIAM (Society for Indian Automobile Manufacturers), too has welcomed the diesel price hike.
According to a new proposal from Petroleum ministry, Government of India will increase price of diesel by Re 1 every month for the next 10 months. So by October 2013, price of diesel will be a little below Rs 60 per liter. According to Prime Minister Manmohan Singh, “We are left with no choices. Energy is underpriced in our country. Immediate adjustment of prices to close the gap is not feasible. I realize this, but some phased price adjustment is necessary.”
According to officials, diesel is sold in India after heavy subsidies, due to which the losses have reached unsustainable levels. Recommendations from the Kelkar panel too were in the favor of hike.
Commenting on the development SIAM says “Though the proposed price hike of diesel is quite steep but SIAM would really support the rationalizing of prize hike and also insists that the rationalizing has to be done in a manner which shouldn’t affect the consumers adversely. It may affect the sales of vehicles for a short term but the elimination of prize distortion will help the industry and economy in the long run”.