Chairman of the Indian National Low-Carbon Growth Strategy Group Dr. Kirit Parikh said that there is “no economic argument” against increasing diesel prices. Speaking at the Diesel Emissions Conference India 2012, ahead of an Indian Government cabinet meeting addressing fuel subsidies, Dr. Parikh said he is hopeful of policy change after successive delays in addressing the issue.
Dr. Parikh argued fuel price controls will cause inflation to be 3% higher over the next three years if left unaddressed and are holding back economic growth considerably. Inflation could be 6-8% lower within four quarters if price controls were removed, he said.
Historically, changes to India’s policy have been held back due to the political fears of the government and concerns that resulting price rises would have a large negative impact on India’s poorest communities.
Addressing over 200 leaders of India’s transportation and vehicle manufacturing industry, Dr. Parikh reported that the impact of such changes would be limited to 2-2.5 rupees per month per person for poorer communities. In contrast, the richer 10% of the population would pay 15 rupees per person per month more. In addition, reform would lift the weight of 200,000 crore Rupees of losses made per year by the Indian oil industry and could make it more competitive by allowing foreign competitors to enter the market.
Dr. Parikh also suggested a broad approach to tackling India’s urban air quality problem: “Pricing is only part of the problem,” he said. “You cannot address this problem piecemeal.” He called for measures such as congestion charging, parking charges and reserved bus lanes in Indian cities, saying that these measures would go a long way to improving living standards in urban areas.
Dr. Kirit Parikh was speaking at Integer Research’s 3rd Diesel Emissions Conference India, taking place at the Hilton New Delhi from 12th – 14th September. The conference has attracted over 200 delegates from across the automotive industry, including OEMs, policy makers, manufacturers and suppliers to discuss developments in diesel emissions.