Govt should reduce subsidy on diesel over time: Kirit Parikh

The government need not interfere in the fixing of diesel prices and should continue with the policy of reducing subsidy on the fuel, IRADe Chairman Kirit Parikh said today.

"I do favour increase in diesel price by 50 paise... Over time, government can reduce subsidy from Rs 8 to Rs 7 to Rs 6.

 "No need for government interference for fixing the prices because we really don't know one month later what will be government's ability to raise prices even by 50 paise and that uncertainty should be removed," said Parikh, Chairman, Integrated Research and Action for Development (IRADe).

He was speaking on the sidelines of an event on climate change, organised by industry body CII and the Ministry of Environment and Forests.

Petrol price was hiked by a Rs 2.35 per litre and diesel by 50 paise last week on account of the rupee weakening against foreign currencies, especially the US dollar, making imports of the fuel making costlier.

On a proposal of shutting down petrol pumps in the night to curb demand, Parekh said it will only have a marginal impact as people will fill up their tanks early.

"Personally, I believe that it will have small impact. Yes of course, it will prevent some marginal reduction but most of people will be little more proactive, will fill tanks earlier than 8'O clock.

"Not likely to have much impact. Raising prices of diesel significantly will have greater impact. Certainly there is a need to cut down consumption of diesel," he added.

The Oil Ministry is planning to launch a massive fuel conservation drive from September 16 to cut fuel demand by 3 per cent and save an estimated Rs 16,000 crore or USD 2.5 billion in forex outgo.

Earlier, during the event, Parikh said it is important for India to reduce the use of energy, adopt appropriate market based pricing and maximise domestic production of coal.

He said there is a need to allow private sector to make a foray into coal production and enforce Renewable Purchase obligation (RPOs) by putting in place a uniform and well calibrated RPO standards.

"India will need to adopt a multi-pronged approach spanning sectors to combat climate change and the role of policy direction in adopting these approaches is critical," he said.