The Union Budget 2010 has brought in a slew of price rises in the Indian car industry, which is deemed beneficial by the industry experts. Even the government claims that the post-budget price hike is going to bring long term benefits for the industry. All things considered, the budget has done nothing to bring a smile on current or future car owners.

Post-budget, fuel prices shot up and the other thing that has shot up along with it is the pressure on the Union Government to reduce the fuel prices. But Finance Minister, Pranab Mukherjee, is not someone who gives in to the pressure of Opposition or his own allies, for that matter.

Prime Minister Manmohan Singh has said that the general price hike has been brought about keeping in view the long-term benefits of the country. He also said that populist policies, if persisted with for a long time, will lead to erosion of the investment climate, our capacity to create new jobs, and of our ability to invest in flagship programmes for the poor people. Manmohan Singh also said that the hike in fuel prices would not add-up to the already-high inflation.

So much for the effects of increased prices on the country’s economy. Now let’s take a look at the effects of increased prices on present and future car owners.

There has been a hike in excise tax on prices of large cars, sports cars and MUV’s. However, the Indian government has taken into consideration the people who want to own smaller cars and spared them by sticking to the old excise duty. But, that has been balanced by hiking the fuel prices.

The fuel price hike may be conducive to the growth of Indian economy but it will definitely bring down the morale of vehicle owners. The general instinct of consumers may be to shift towards fuel efficient diesel vehicles, since diesel prices are relatively lower than petrol and even mileage-wise, diesel wins over petrol. But, the diesel prices have gone up too.

Excise duty on electric cars has been waived off by 4 per cent and they also get exemption from custom duty & other special duties on the components used. Now, that does bring a sigh of relief, considering that the hybrid car segment is going to touch a new high in India.