Tinkering with dual pricing

Oil Minister S Jaipal Reddy has proposed an additional excise duty of Rs 1.7 lakh on small diesel cars and Rs 2.55 lakh on bigger diesel cars. Diesel costs almost Rs 30 a litre less than petrol. Mr Reddy’s logic is to make buyers of diesel cars pay upfront the discounted value of what they would have saved on fuel over 10 years (Rs 3 lakh on small cars and Rs 4.5 lakh on bigger cars, assuming an annual run of 18,000 km and fuel efficiency of 18 km/litre for small cars and 12 km/litre for bigger cars).

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