*****Fuel a long-term strategy for oil now – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-editorial/fuel-a-long-term-strategy-for-oil-now/articleshow/91728651.cms

Synopsis

70% of diesel and 99.6% of petrol are used in transportation. Aggregating energy demand, introducing efficiencies and encouraging alternatives must be the plan.

GoI’s excise cut on fuels and increased cooking gas subsidy will help counter rising inflation. The factors driving inflation — supply chain disruptions caused by the war in Ukraine and pandemic lockdowns in China, as well as extreme weather events —remain unresolved. However, GoI’s move provides short-term relief while impacting government expenditure. A longer-term strategy is needed to reduce India’s dependence on oil.

States must follow the Centre’s lead and reduce value-added tax (VAT). Both the prime minister and finance minister have appealed states, especially those that have not cut taxes yet, to step up to the plate. The excise reduction has a revenue implication of Rs 1 lakh crore annually. Increasing subsidy for the 9 crore beneficiaries of the Pradhan Mantri Ujjwala Yojana will give relief to the poorest. Longer-term measures to reduce dependence on oil must be considered. The transport sector, which consumes more than 50% of crude, is the starting point.

70% of diesel and 99.6% of petrol are used in transportation. Aggregating energy demand, introducing efficiencies and encouraging alternatives must be the plan. Improving integrated mass public transport that is accessible, affordable and reliable is central to this transition. As is exploring and reviving mass transit options, such as trams in urban areas, building electric vehicle (EV) infrastructure, and increasing the share of freight moved by trains, especially as the railways moves to decarbonise by 2030. More stringent fuel consumption norms are needed to push alternatives so as to decarbonise transport.

May 24, 2022

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