Rev dept to move note on hiking diesel car excise: Sources

Subsidies are mounting and there is considerable strain on the fiscal deficit and hence there is an urgent requirement for the government to move on subsidies. However sources in the finance ministry say that despite this, it will be difficult for the government to go ahead with the diesel price hike considering the current economic environment as well as the political environment with a drought now imminent due to the monsoon failure.

Sources in the finance ministry say that food inflation is an area of concern. They add that a hike in diesel prices will not only impact the plight of farmers but will also lead to inflation across the board. Hence that decision looks difficult at this point in time.

However, the tax department is going to put up a note on a hike in excise duty on diesel run cars. The oil ministry had written to the finance ministry asking for a Rs 1.7 lakh hike on excise duty on small cars and Rs 2.55 lakh excise duty hike on big cars.

The finance ministry and the department of heavy industries have not been in favour of this because they say that at a time when the economy is slowing down it is not fair to hike taxes on diesel run cars one of the sectors that is comparatively doing better.

So, the finance ministry is not too keen on it, but it is going to go through inter-ministerial discussions and then a final decision will be taken.