India’s diesel subsidies have long bled government finances. They drained about USD 9 billion from the national exchequer in 2011-12. Though governments have mustered the courage to alter petrol prices in the past, they have not dared to touch diesel. The rationale so far has been that of how heavily subsidised diesel has become the poor man’s fuel and raising it would trigger widespread angst amongst the common man. However, as a latest article on firstpost.com investigates, the repercussions of such a move would be much deeper. The article contends that the government should worry more about the response of large business houses and the expanding middle class vote bank than that of the poor. Over the years, more so in the recent past, its low price coupled with unreliable power supply in the country has made these classes addicted to diesel. The recent spate of economic and political setbacks has made it all the more difficult for the government to de-fuel this addiction.

The article takes note of some debilitating signs of this addiction backed up with some hard hitting data points to highlight how the D-fuel is proving to be a major thorn for the government’s throat. The article cites how diesel powered lights stayed on at large hotels, company offices and posh residential areas at the capital when north India recently plunged into darkness for two consecutive days. Diesel consumption by cars, generators and mobile towers has galloped to 40% from 30% in just three years. Diesel cars now account for 40% of India’s new car sales, up from 20% not so long ago.

The most ironic reflection of the trend can perhaps, be traced to agriculture, which forms the biggest source of livelihood for India’s poor farmers. The government has been forced to halve the price of diesel to help farmers weather the impact of poor monsoon and irrigate their farms. But as the article notes, the biggest beneficiary of this move will actually be the rich farmers with huge farms in states like Punjab. Citing the 2010 report by India Human Development Survey, a joint US-India research body, the article indicates that it is only these ultra-rich farmers who own diesel pumps and tractors. On the contrary, only a small fraction of India’s predominantly tiny farms own and use the diesel driven ammunition.

With diesel accounting for 44% of fuel consumption compared to 35% under a decade ago, the trend is no longer a mere sign but a dark reality staring the government in the eye.