The expert panel comprised representatives of the Department of Heavy Industries, the Auto Component Manufacturers Association, the Planning Commission, the National Manufacturing Competitiveness Council and the Society of Indian Automobile Manufacturers (SIAM).
According to a government official, an increase in the diesel price by Rs. 0.75 will enable the government to recover about Rs. 6,000-Rs. 7,000 crore an amount similar to the amount that could be generated by levying additional excise on diesel cars.
Since the diesel fuel is subsidized, the government has to forgo potential tax on diesel car sales. However, raising the price of diesel may create a widespread dissatisfaction among the farmers who use the cheaper fuel to power their pumps and tractors. Moreover, a differential pricing system for the diesel fuel may to lead to misuse of the fuel.
Thus, the expert panel was called together to find the balancing line between the various options and their respective outcomes in terms of an agreement and acceptance between the auto industry and the requirements of the government.
Meanwhile, the members of the panel agreed that the earlier report by the Kirit Parikh committee that the diesel consumption by passenger cars accounts for 15 percent of the total diesel consumption may not be correct and that the percentage figure is much lower than such estimates. The same has been confirmed by Mr. Kirit Parekh and that diesel consumption by passenger vehicles may lie around 3-4 percent.