Wednesday, May 20, 2009

Unintended subsidy on diesel

1. What is total HSD consumption in India? What is the past trend? What are projections for coming future?
2. What are the main consumer segments of HSD? What is share of automotive HSD and that of unintentionally subsidized other HSD? What is the share of commercial, household and industrial HSD consumptions?
2.1 Do these segments such as household diesel generator, etc deserve subsidy?
3.The HSD is sold at artificillay lower prices, at least as compared to MS. In this case, in what terms is the unintended subsidy? Is it in the form of lower taxes or price less than cost? How much tax collection government is forgoing on this account? How much "less profitable" or loss making HSD sale is per unit? Would the subsidy impact nullify if taxation on HSD is made at par with MS?
4. What is the volume of such HSD? What is the current (subsidized) price? What should be the unsubsidized price? What is annual subsidy volume? What is total subsidy value for unintended use?
4.1 Can there be a mechanism to direct the subsidy to only automotive users? How can such mechanism be made foolproof from diversion?
5. Who is bearing this subsidy? Oil companies? The government? The users of MS or other products? Upstream companies?

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