"It is inequity when users of luxury vehicles get diesel fuel at the same subsidized rate as those who drive small and medium sized cars," says ASSOCHAM.
The ASSOCHAM, on Monday, suggested a variable pricing of diesel, in a model linked to end consumers, and also pushed for the early creation of a fuel-pipeline-grid.
The chamber has recommended graduated steps towards market-determined prices for diesel, rather than a de-regulation of the pricing system in one go.
Chamber Secretary General D S Rawat said that as for the pricing, the full market price should be charged for diesel used for moving large cars and luxury buses, while the increase should be "very moderate" for others, to begin with. Smaller farmers should be exempt for some time, and should be increased in phases.
"It is inequity when the users of luxury vehicles get diesel fuel at the same subsidized rate as those who drive small and medium sized cars," ASSOCHAM said.
ASSOCHAM also suggested that the government encourage replacing old vehicles, especially trucks, with modern trailers with high-efficiency engines.
ASSOCHAM said that an alternative option of reducing duties on oil products, especially fuel, will be a move from the frying pan to the fire.
"If the government gives up a major source of revenue like this, it can only do so at the expense of either cutting sharply its development expenditure or raising the level of deficit financing. Either way, it would be counter-productive for a government committed to raising the growth rate and also making this growth inclusive," the industry body said.
An ASSOCHAM study on diesel use points out that the use of high-capacity trucks, the paving of all major roads with cement, and the removal of administrative impediments to smooth highway movement of trucks alone can ensure large-scale saving on the use of diesel in goods transportation and buses. This can also mitigate the higher costs that transport bodies would have to incur when diesel prices are aligned with the market price, the report says.
The major user of diesel is the transport sector, but among other users, diesel finds another massive use in the rising number of telecom towers, the report notes.
"Although the government has promoted the shared use of telecom towers by linking advances for them from the USO fund to sharing of the facility, some operators are determined to set up their own towers. With some 4 lakh towers planned to carry telecom services to rural areas in the coming expansion phase, the use of diesel as fuel for the back-up for the structure would make telecom towers the 2nd most largest guzzler of this fuel," the report says.
ASSOCHAM suggests that no telecom operator be allowed to go solo in this venture, and says that licences to set up towers must be subject to sharing with other users to reduce the use of diesel as backup power.
Also, incentives can be given for the usage of solar panels for back-up, instead of diesel generator sets, according to its recommendations.
"We plead that the issue of market pricing of fuel should not be seen as a linear imposition to overcome rising international prices of oil, but be presented as a holistic response to the challenge the country faces on the energy front," ASSOCHAM secretary general said. (INN)