Petroleum fuel, or crude oil, is naturally found in the

Earth.

When crude oil is refined at refineries, it can be
separated into several different kinds of fuels,
including gasoline, jet fuel, kerosene and, of course,
diesel.

Diesel fuel is used to power a wide variety of vehicles
and operations.

It of course fuels the diesel trucks you see lumbering
down the highway, but it also helps move boats, school
buses, city buses, trains, cranes, farming equipment
and various emergency response vehicles and power
generators.

The Road sector diesel fuel consumption (kt of oil equivalent) in
India was 31378 in 2009, according to a World Bank report,
published in 2010.

Diesel is heavy oils used as a fuel for internal combustion in diesel
engines.

Services are the major source of economic growth, accounting for
more than half of India's output with less than one third of its
labor force.

Subsidies are one of the most powerful policy tools in the hands of
the government.

In India, as elsewhere, they have been used for decades to achieve a
range of economic, social and environmental objectives.

Indeed, one of the most important and challenging responsibilities of
a government is allocating financial resources to achieve public good.

A BRIEF OVERVIEW OF INDIAS ENERGY
SUBSIDIES
India has historically subsidized energy with the objective of
protecting its consumers from international price volatility and
providing energy access for its citizens, especially the poor.

Energy subsidies place a heavy burden on government
budgets, while often failing to reach their targeted beneficiaries.

ENERGY SUBSIDIES IN INDIA
In India, subsidies are provided for petroleum products and
electricity.

These products are retailed at prices that are often kept
artificially low compared to market rates5.

While subsidies on both electricity and petroleum products are
provided in the form of lower prices for the final product, the
methods of subsidy delivery and the amount of the subsidy
itself varies widely across the different products.

Petroleum Products
Three petroleum products, namely PDS kerosene,
domestic LPG and diesel are sold for less than
international market prices6, with the government
providing a fiscal subsidy on LPG and kerosene.

The metro cities in India and have created a graph for
each city - Delhi Diesel price hike chart, kolkata Diesel
price hike chart, Mumbai Diesel price hike chart and
Chennai Diesel price hike chart. We hope that the
graphs privide an insight on the Diesel price increase.

Delhi Diesel Price
Hike Chart

Mumbai Diesel Price
Hike Chart

Kolkata Diesel
Price Hike Chart

Petrol was previously 66 per cent costlier than diesel and this was
making an increasing number of consumers opt for diesel vehicles,
despite an initial premium of Rs 100,000-150,000 on such models.

In the first five months of this financial year, sales of diesel vehicles
soared to account for 64 per cent of the passenger vehicle industry in
India while off take of most petrol-driven variants dropped 20 per
cent.

OIL DECONTROL
The government has finally hiked the prices of diesel,
kerosene and LPG, though by less than recommended
by the Kirit Parikh Committee.

It has decontrolled petrol , and hopes to decontrol
diesel in due course. But its timidity suggests that price
controls will return if global oil prices shoot up again.

DIESEL CAR SALES: MARUTI HOPEFUL
Despite the diesel price hike in the country, key industry player in
the automobile industry, Maruti Suzuki is confident of surge in
the sales of diesel cars. The hike of 5 rupees or 12 percent in diesel
price, announced by the government late on Thursday, comes
after months of fierce lobbying by carmakers. Maruti Suzuki
Chairman, R C Bhargava, said that diesel cars would be more in
demand than petrol cars. Bhargava also said that it's time for the
government to announce a policy about the relative pricing of
petrol and diesel.

CAR BUYERS STILL STRONGLY SKEWED
IN FAVOUR OF DIESEL
Will the Rs 5 hike in diesel prices reduce the charm
of diesel cars for buyers? Not really, because the
running cost of a diesel car vis-a-vis a petrol one is
significantly lower even at the new price levels.

SPECIAL TAX ON DIESEL CARS MAY INCREASE
PRICES BY RS 2.55 LAKH
Diesel cars may get expensive by Rs 2.55 lakh, with the oil
ministry planning to impose a special tax on such vehicles. The
government plans to impose additional levies of Rs 1,70,000 on
small diesel cars and Rs 2,55,000 on medium and large diesel
vehicles like sedans and SUVs to check dieselisation of the
economy, triggered by the widening gap between petrol and
diesel prices.

The demand for diesel cars is on the rise for the past few
months, and to set the house in order, the industry body
Society of Indian Automobile Manufacturers (SIAM) has asked
the government to remove the fuel price distortion.
Indian carmakers who were betting diesel would stay
much cheaper than gasoline have been thrown a curve ball
by Indias decision to raise diesel prices by 14%.

Many Indian and foreign automakers have been ramping
up production of diesel vehicles and setting up diesel
engine production plants for the Indian market.

The Society of Indian Automobile Manufacturers argued such a
tax on diesel vehicles would complicate the business environment.

They argued instead for the government to stop subsidizing
diesel, making it easier for auto producers to plan production
schedules without worrying about different fuel costs.

DIESEL PRICE HIKE TO IMPACT COAL INDIA BY RS 600 CRORE A YEAR
GOVT CLEARS OVER 10L APPLICATIONS FOR DIESEL SUBSIDY
DIESEL PRICE HIKE SIGNIFICANT PART OF REFORM MEASURES
ESSENTIAL FOR INDIAN ECONOMY: TATA MOTORS
DIESEL PRICE HIKE LIKELY TO PUSH INFLATION UP
HIKE IN DIESEL PRICE TO REIN IN FISCAL DEFICIT: ADI GODREJ
DIESEL HIKE DAMPENS SURAT TEXTILE INDUSTRY'S FESTIVE HOPES

Welcoming the fuel price hike decision by the government, PMEAC
and economists commented that the decision provides room for
Reserve Bank to ease monetary policy to give thrust on growth.

The hike in diesel price will bring down burden on fiscal deficit
even as it will put pressure on inflation. Inflation is expected to go
up at least 0.4 percent as diesel price hike will have cascading effect.


The hike in diesel price will bring down burden on fiscal deficit
even as it will put pressure on inflation.

Inflation is expected to go up at least 0.4 percent as diesel price hike
will have cascading effect.

Diesel has larger weight than petrol, it (hike in petrol price) will
have inflationary effect but it is a good decision. It will put pressure
on inflation in short but in long run will have good impact on
economy.