Decision on tax on diesel cars should be based on authentic data: Pawan Goenka

With the Budget just a fortnight away, the auto industry is getting anxious, especially with regard to the proposed Rs 80,000 tax on diesel vehicles. Pawan Goenka, SIAM’s past president and president, automotive and farm equipment sectors of Mahindra & Mahindra, feels the argument for additional tax is “misguided”. “Two percent of diesel is consumed is by personal passenger vehicles. So if you do something just for two percent, will you make a difference in terms of the recovery in revenues?” Goenka doubts.

“Theoretically, if all diesel vehicles are converted to petrol, our energy bills will go as high as Rs 5,000 crore a year. There is also a separate calculation which says a Rs 80,000 tax on a diesel vehicle is equal to putting 75 paisa more on pricing of diesel fuel,” says Goenka. The government doesn’t want to tinker with diesel prices as it can have an effect on inflation. Goenka agrees that the high subsidy on diesel should not be misused. If need be, diesel prices should be hiked, but losing revenue because diesel is being used for passenger vehicles is “misguided”, according to Goenka.

It will be a big negative for Mahindra & Mahindra and Tata Motors if an additional tax is levied on diesel vehicles. Currently, most of the models which have both fuel versions see 70 to 80 percent of their sales from the diesel variant.