The Government should move towards rationalisation of pricing and taxation of petroleum products, particularly diesel and LPG, the Confederation of Indian Industry (CII), said in a statement.
Mr Chandrajit Banerjee, Director-General, CII, said, “Fuel subsidies were introduced in India at a time when disposable incomes were low, to buffer the incomes of the middle and lower middle class population which could not afford to pay for fuels that were pegged to international prices.”
However, in the India of 2012, fuel subsidies may perhaps do more harm than good and distort the country's energy economics. The CII statement said today, for every litre of diesel that is imported, the Government pays a subsidy of Rs 15, subject to changes in international prices.
A complex system of duties and cess, which vary from State to State, distorts the entire diesel pricing mechanism, it said.
Further, the industry feels that subsidy could be equalised on petrol and diesel.
Looking at India's import dependence on oil imports, Mr Banerjee said that “CII is in favour of a programme to cut consumption of oil by 5 per cent in the course of the 12{+t}{+h} Plan period.”
heena.k@thehindu.co.in