Government looking to hike duty on diesel cars: reports

With the finance ministry considering higher excise duty levies on diesel vehicles, diesel car owners may have to bear higher fuel costs, post the budget which is to be presented sometime in March, reports PTI.

The move is meant to discourage consumption of subsidised diesel by personal vehicle owners, hoped to be achieved by higher duty on the diesel cars according to the finance ministry.

Citing an unnamed senior finance ministry official, the news agency said the ministry was working on the proposal.

However, the move has run into resistance from the heavy industries ministry, it added.

According to the oil ministry, the additional amount raised could be used to make good a part of the loss that oil companies incurred on the sale of diesel at government-controlled rates. The resultant loss to them is expected to be around Rs82,000 crore in 2011-12. Another reason behind the move is said to be prevention of 'dieselisation' of the economy.

The Kirit Parikh Committee on Energy had also come out with the suggestion of an additional excise duty of Rs80,000 on diesel cars, arguing that it would offset the higher excise duty on petrol.