Additional Cess on fuel, cars in offing for building infrastructure

With all the talk about cuts in duties on cars to promote India as an automobile manufacturing hubs heres a proposal which may negate all the benefits of the cut in duties proposed earlier

The urban development ministry is proposing a fresh cess on automobile fuels to fund urban transport systems on the lines of the cess on petrol and diesel to finance highway construction.

The latest proposal seeks to raise petrol prices by Re 1 per litre. And unlike the highway cess, the move will deliver a twin blow to vehicle owners. A note being finalised by the ministry also seeks to levy 8% cess on the cost of a car and 4% on two-wheelers.

The resources generated through the cess will be transferred to the proposed Dedicated Urban Transport Fund and used to exclusively support transport projects like Metro networks in cities. The idea is to meet two long-term objectives: reducing the use of private vehicles to control congestion and popularising public transport, said sources.

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Interest rate hikes have had a telling effect on the automobile industry almost leading to a slowdown and car manufacturers had to resort to discounts to tide over the crisis,while two-wheeler sales dipped,but I doubt the automobile industry can sustain this hike as well and we may very well see a slowdown in the automobile industyr in India atleast that seems to be the government of India's wish particulary after initially wanting to develop India as an automobile hub just when it matters the goverment does not seem to be supporting the Industry.

Why is the government collecting so many funds when even 50% of it is not utilised,corruption is the single most bane for indian infrastructure development,the land acquisition schemes by the government of india needs review as well.We pay one of the highest taxes for petrol and diesel yet the Government of India is not able to ensure good quality fuel,with rampant adulteration of fuel being an accepted practice.First let the government sort these things maybe then they can talk about collecting additional cess.