On Tuesday, Oil Minister S Jaipal Reddy had written to Finance Minister demanding a hike in excise duty on diesel cars. This hike is to make up for subsidised fuel being used in vehicles.
According to Oil Ministry estimates, 15% of diesel consumption is accounted for by personal cars and SUVs, reports PTI.
Increasing demand for diesel is a growing concern for the country, dealing with high current account deficit and high inflation worries.
According to the reports, there is a sharp increase in diesel consumption when compared to petrol due to the large subsidy on diesel in the last one year. He said adding the subsidy on diesel alone is expected to increase from Rs 81,192 crore in 2011-12 to over Rs 100,000 crore in 2012-13 at current prices.
Diesel is the most consumed fuel in the country but is sold at a discount to its imported cost. However, car sales in the country rose only 3% in the month of May, the slowest in seven months due to the interest rates and petrol price rise.