Diesel Deregulation Will Increase The Petrol Car Sale

By Religare

Published: Wednesday, June 30, 2010, 17:48 [IST]

Indian Goverment's decision to partially deregulate the diesel prices will pave way for the people's preference to more petrol cars in future. According to Indian Oil's Deputy General Manager, GK Acharya, the pricing of diesel always gave it an advantage over petrol but now the difference is narrowing and also he said that Earlier diesel consumption was five times that of petrol, but now it is down to four. In Europe, it is 2-2.5 times that of gasoline.

Many reasons back up the increasing demand for diesel variants in India, for instance cars like Maruti Swift and Tata Indica give a mileage of more than 17 kmpl on an average which costs less fuel bills than running the same cars in petrol fuel. This is further evident from the fact that, almost all the cars that have diesel and petrol variants sell more diesel units.

A slight insight on the prices of these two fuels in the past will throw light on the narrowing gap between the two. In 2002, petrol cost Rs. 29 per liter and diesel was at Rs. 18 which means a difference of 38 percent. As of now, petrol costs Rs. 51.4 per litre and diesel costs Rs. 40.10 which means a mere 22 percent difference.

When the Govt deregulates the diesel prices, we may expect the price to increase (say Rs. 45 after deregulation) thereby lessening the gap between the petrol and diesel prices further( difference can be as minimum as 12.5 percent or just Rs. 6). So, as of now, petrol has a slight edge and hence people may prefer more petrol cars than diesel cars.

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Article Published On: Wednesday, June 30, 2010, 17:39 [IST]

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