Indian government on Thursday increased diesel prices by Rs. 5 per litre. This is the first time the government has hiked diesel prices in the last two years.
While the decision faced flak from political opponents, the automobile industry welcomed the decision. They, however, felt that the decision might adversely affect the overall economy.
Commenting on the decision, Society of Indian Automobile Manufacturers (SIAM) Senior Director Sugato Sen said, "It is a good decision but the Rs 5 per litre hike will hurt the consumer and market. We have been saying that diesel prices should be corrected in a staggered manner."
Further reacting to the decision, Sen said that the hike in diesel price could encourage buyers to return to the market and that the demand for petrol vehicles could soar.
Mahindra & Mahindra Chief Executive (Automotive Division) Pravin Shah reacted, "This is a much-debated and much-awaited decision. For the auto industry, it is a welcoming one as diesel needs to be priced at market value. However, for the overall economy it has come at a wrong time. The overall sentiment is weak and this will further add to inflation."
General Motors India Vice-President P Balendran said, "In the long term when the price difference between petrol and diesel fuels reduces, obviously sales of petrol vehicles will increase. However, in the short-term, the diesel price hike will not have any impact on boosting sales as the market continues to be subdued."