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Diesel hike impact: How it will hit your life


Sonal Joshi,CNN-IBN
Jan 19, 2013 at 08:55am IST

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New Delhi: The government has finally taken the first step towards de-regulation of diesel prices. A 45 paise increase per month would mean Rs 10 hike every year. A 45 paise hike in diesel prices might seem small but even this small quantum is expected to make life costlier for the common man.

Since oil companies now have a free hand on increasing diesel prices, it is set to go up by Rs 10 a litre every year. The result - higher prices in the short and a sobering impact on public finances in the medium term.

The ailing power sector is set to suffer. Sources say Coal India is gearing up for a price hike to offset the impact of rising input costs, including that of diesel - which is expected to work out to Rs 550 crore extra. This will make the cost of power more expensive.

In real state, costs may rise at least 20 per cent as the industry requires diesel in bulk. And for housing societies which run on generator sets due to shortage of power, maintenance costs will escalate immediately.

Senior Vice President, Raheja Developers Harinder Dhillon said, "The costs will go up absolutely with increase in diesel prices and that will be more impacted in places which are relying more on captive DG-sets specially in the states like Haryana and in Gurgaon where electricity is such a big problem. There would definitely be a huge jump as far as maintenance cost is concern and minimum jump would be around 25 per cent increase in the diesel price itself."

A Rs 1 increase for a litre of diesel would result in at least a 1.5 per cent increase in freight charges. A Delhi-Mumbai-Delhi round trip would push up truck rentals by Rs 700. This will eventually lead to increase in food inflation as well as more expensive public transport making life for the common man miserable.

Another bulk buyer is the telecom sector - companies using diesel to power their cell signal sites will have to pay 25 per cent more per litre. In a nut shell, between populism and politics, the common man will need to brace for tighter budgets.

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