Data from the union petroleum ministry shows that almost 65.3 percent of the total diesel consumed in India is for transportation with road transport itself accounting for 60.4 percent.
Around 8.2 percent of the total diesel consumed goes to power generation, while agriculture uses up 12.2 percent.
Diesel constitutes almost 38 percent of all petroleum products consumption in India, says Mukesh Anand of the National Institute of Public Finance & Policy.
Given the profile of uses and users of the fuel, its substitution possibilities appear to be severely circumscribed, he said.
In economic terms, diesel demand in India is regarded as inelastic with respect to price in the short term. This means that its demand does not necessarily decrease with an increase in price.
Anand says that’s because more than 90 percent of the diesel in the country is used for intermediate purposes like transport which results in the production of further goods and services.
Only about 5 percent is being used for meeting the ultimate demand of consumers in power generation etc.
It is here that its substitution is possible which can lead to a little less dependence on the fuel. Many small businesses have already switched to inverters but for those who don’t have an option like mobile towers, industrial units, malls etc – the reliance on diesel continues.
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