CSE slams petrol price hikes, calls for similar hikes on diesel prices

CSE slams hike in petrol prices. Says it should not be done without narrowing the price gap with diesel. Calls it “mindless”

It is leading to gross misuse of the poor persons’ fuel by rich car owners, massive revenue losses for the government, and serious damage to public health

Government should ban use of diesel in cars, increase price of diesel and tax on diesel cars

New Delhi, September 15, 2011: Petrol costs are all set to go up again -- the government is raising petrol prices, thereby widening the gap between petrol and diesel. This mindless move, says Centre for Science and Environment (CSE), will incite and fan the lure for diesel cars, which offer a cheaper run for the money.

“The government has been hiking petrol prices at regular intervals. But in doing this,” says Anumita Roychowdhury, executive director-research and head of CSE’s air pollution control team, “it is ignoring the severe public health impacts of dieselisation in Indian cities, which are reeling under rising levels of killer particles, NOx and ozone.”

Diesel cars are already 36 per cent of new car sales in India; the figure is expected to touch 50 per cent very soon. It is even more worrying that in the compact car segment – that are more numerous and popular -- diesel cars are already half of all car sales. Cheap diesel is not only worsening the public health risk, but also encouraging more motorisation and congestion.

It is ironic that while the fuel tax differential has been officially justified in the name of agriculture and freight, rich car owners have benefited more from it. Cars have already become the second biggest user of diesel and beneficiaries of the official fuel tax policy. Cars use up 15 per cent of the total diesel in the country – compared to 12 per cent by buses and agriculture each, 10 per cent by industry, and 6 per cent by the railways.

Various expert reports of the Government of India have already recommended additional taxes on diesel cars to neutralise the effect of low-tax diesel. But the government has yet to muster the courage to impose the tax.

CSE researchers point out that the government incurs huge revenue losses, as it earns much less from excise on a litre of diesel used by cars (Rs 4.60), as opposed to petrol (Rs 14.35). These losses will increase with the growing numbers of diesel cars. At the same time, there is under-recovery of costs. Diesel prices account for around 60 per cent of the under-recovery or losses of the oil sector. Says Roychowdhury: “How can the government justify hidden subsidies to car owners? This is completely unacceptable.”

Other countries have taken fiscal measures to discourage diesel in cars. In Brazil, diesel cars are actively discouraged because of the policy to keep taxes lower on diesel. In Denmark, diesel cars are taxed higher to offset the lower prices of diesel fuel. In China, taxes do not differentiate between petrol and diesel. Sri Lanka has imposed very high duties for diesel cars. Even in India, several official committees have asked for special and additional taxes on diesel cars to neutralise the incentive of cheaper diesel fuel.

Diesel has serious health concerns, say CSE researchers. Even with the introduction of Bharat Stage III and IV fuels in April 2010, the debate over its toxicity continues to rage. According to the World Health Organisation (WHO) and other international regulatory and scientific agencies, diesel particulates are toxic air contaminants and human carcinogens. These are even blamed for killing unborn foetuses. The cancer causing potential of diesel particulates and emissions is several times higher than some of the worst known air toxics.

The current emissions standards in India legally allow diesel cars to emit more particulate matter and nitrogen oxides – the most serious pollutants of concern in our city’s air. This will worsen pollution levels that are already fast deteriorating not only in big cities, but also in the smaller cities and towns of India. India is dieselising without clean diesel (diesel with 10 ppm sulphur diesel and advanced emissions control systems).

Demands Roychowdhury: “The government should either effect a ban on use of diesel in cars or free up the diesel prices. It should also increase the tax on diesel cars to fully neutralise the incentives that these cars get from the low-taxed diesel fuel and the price difference with petrol.”

For more details, please contact Souparno Banerjee (99108 64339, souparno@cseindia.org) or Vivek Chattopadhyay (99117 91243, vivek@cseindia.org).