Subsidies on diesel should not be offered to luxury cars, telecom towers and other industries and must be restricted only to agriculture and transport sectors, according to industry chamber Assocham's newly-elected president Rajkumar Dhoot.
The government should levy additional duties to luxury players, who are currently using subsidised diesel.
"Diesel subsidies should be given only to agriculture community and transport sector, but not to luxury cars, telecom towers, five-star hotels and other industries that are using the fuel to run huge generator sets," Dhoot told PTI.
The government should find out ways to control rising fiscal deficit, he added.
"We should give targeted subsidies. The government should ask the luxury players to pay for the subsidies to control fiscal deficit. An expert committee should be set up to look at how subsidies can be offered to poor people," Dhoot said.
Diesel should be sold at market-driven prices, which the Indian automobile industry is demanding for long, only for the luxury players, he added.
For 2011-12 fiscal, the government had estimated a deficit of Rs 4.12 lakh crore, or 4.6 per cent of GDP. However, the fiscal deficit is expected to exceed the target due to rise in subsidies and lower revenue growth.
According to the Controller General of Accounts (CGA) data, the government's fiscal deficit went up to Rs 3.53 lakh crore or 85.6 per cent of the Budget estimates at the end of November 2011 as the growth of non-tax revenue slowed down.
Finance Minister Pranab Mukherjee had said that India's subsidy bill is likely to increase by about Rs 1 lakh crore, over and above the outlay of Rs 1.34 lakh crore estimated in the Budget for 2010-11, mainly on account higher outlays for oil, food and fertilisers.
The automobile makers under the aegis of Society of Indian Automobile Manufacturers (SIAM), however, have opposed any move to hike in duties of diesel vehicles.
SIAM had said that out of a total of 61.68 million tones of diesel consumed in India across various sectors during 2010-11, diesel personal cars consumed only 1.03 per cent, while for diesel taxi segment it was at 1.82 per cent.
Jeeps used for personal purpose accounted for 0.53 per cent and the same category of vehicle used for commercial purpose consumed 3.44 per cent, it had said.
However, countering this, the Centre for Science and Environment had demanded an additional duty of up to Rs 162,000 on big diesel cars to prevent the misuse of subsidized fuel for luxury.
As the government gets ready with the Budget for 2012-13, there has been speculation that higher taxes could be imposed on diesel passenger vehicles as the subsidised fuel has been diverted for personal use by the affluent.
