Diesel: no longer poor man's fuel?
In case the government decides to bite the bullet by raising diesel prices to rein in fiscal deficit, outrage against this move is expected to be more from well-to-do users than the poor millions, who actually need it and are cited whenever a hike is delayed or diluted.business Updated: Aug 16, 2012 20:36 IST
In case the government decides to bite the bullet by raising diesel prices to rein in fiscal deficit, outrage against this move is expected to be more from well-to-do users than the poor millions, who actually need it and are cited whenever a hike is delayed or diluted.
Taking the lead, big businesses and upper middle-class voters have emerged as large consumers of diesel, as it is cheap and can be used for sustained and quality power supplies that have become unreliable in the wake of ongoing power shortages in the country.
Interestingly, despite a massive power cut following collapse of the grids on two consecutive days earlier this month, power supply in most five star hotels and swanky residential areas was unaffected, due to diesel generators that maintained uninterrupted power supplies.
Government data shows that while trucks and buses still consume the bulk of diesel, consumption by cars, generator sets, industry and mobile telecom towers has spiralled. As petrol costs around 40% more than diesel, there has been a jump in diesel's share.
As per a Reuters report, diesel cars comprise about 40% of new sales in India, from less than 20% a few years ago, and almost all large, expensive SUVs and jeeps have diesel engines, as do many luxury cars sold by Audi or BMW.
The finance ministry and the Planning Commission have often expressed their worry over the so called "dieselisation of the Indian economy," but in the face of allies and opposition citing diesel as a "poor man's fuel", the use of diesel for private generators, telecom towers, cars etc was never highlighted.
Clearly, given its massive usage by those who can afford it, diesel is no longer the poor man's fuel.