Subsidies - Do we need them?

Rising prices of fuel has been a matter of serious concern for car users. In order to reduce the pain of high prices, a lot of car buyers are showing preference for diesel cars. The widening gap between petrol and diesel prices has been the main trigger for this. Along with being comparatively cheaper, diesel cars also have higher mileage. In the past few years, sales of diesel cars have grown at a much faster rate than those of petrol cars. Though currently diesel cars have a market share of about 30%, they are set to garner about 50% share in the next 3-4 years. As a result of this changing trend, companies are now concentrating on creating variants of this cheaper fuel. However, it remains to be seen whether this trend can continue for long as it depends a lot on whether the government takes a decision to free diesel from price control.

The above is from the newsletter I received from Equitymaster.

Montek Singh Ahluwalia, Man Mohan Singh and whoever sits of the Finance Ministers chair cry themselves horse to reduce the subsidy of petroleum products, mainly petrol, diesel, Kerosene oil and cooking gas.
They forget that they have first increased the price of the above by more than 50% by central and sales tax.
If they do not impose these tax whoe only purpose is to finance these corrupt governments, the need for subsidy would not be there.
If however, they have to reduce the subsidies, they can reduce those for petrol used in cars. For two wheelers, the subsidy should remain there.
Diesel used for mass transport like buses and taxis or transport of goods should continue to receive subsidies. Subsidy for cars using diesel should not be there.
All cooking gas should be subsidised when used in homes. Cooking gas used in homes and restaurants or for industrial purpose should not be subsidised.
Kerosend should be subsidised since it is usd mainly for the poor and vigilance should be kept to ensure that it is not used to adulterate diesel