Feb 3: The Committee used the data for average consumption of petrol per vehicle to arrive at its recommendation that the price of petrol should be market driven. The committee made the following arguments to arrive at its recommendation:
8A two-wheeler consumes, on an average, 86 litres of petrol per year, for which the owner spends Rs. 320 per month (Rs. 510 in Delhi). The fuel expenditure of car owners is much larger at Rs. 2210 per month (Rs. 4140 in Delhi). Motorized vehicle owners are largely well-off persons belonging to the upper two/three deciles of the population. There is no reason to subsidize this class of consumers.
- Full price pass-through at US $ 80/bbl will increase the retail price of petrol by around Rs.7/litre. The additional expenditure of a two-wheeler owner would be only Rs. 50 per month (all-India average). Even for two-wheeler owners in Metro Cities who drive more (around 10000 KM per year), the increase on fuel expenditure will be around Rs. 80 per month.
- Even if the crude price increases to $120 compared to the present price of around $70/barrel, the retail outlet price of petrol, assuming the current tax regime, will increase by Rs. 23/litre (i.e., Rs.20/litre on the basis of rise in indicative selling price of petrol from $70/bbl to $120/bbl of crude price + Rs.3/litre on account of the current price being below the estimated indicative selling price) and the additional expenditure, assuming no reduction in use, will be around Rs. 160/month on a two-wheeler user and less than Rs. 000/month on a private automobile user (at all-India level).
- If higher petrol prices lead to less driving, more fuel efficient vehicles and an efficiency increase by 20%, the additional cost would be that much less.
Source: www.indianpetro.com
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