Subsidised diesel Vs Pertol

The crude oil prices are touching new highs every day, and with each passing day the indian oil PSU's (HP, BP..) are making huge losses. The government does help them by providing oil bonds to reduce the loss. But a price hike for fuels is inevitable just round the corner.
As always, we get to hear that the prices of petrol will be hiked much more than what it will be for Diesel. The reasoning being that diesel is the fuel that farmers depend on to run their tractors and other equipment including water pumps etc., diesel is also the fuel of choice for trains (where electrification is not done yet) and for the majority of public transport infrastructure. Fair enough I think.
However, what is not so fair is the huge number of mid-end to high-end cars which have come into the market that run on diesel. Now, diesel is the subsidised fuel and it is being used to run high-end cars (read mercs, bmw's, audi's.... ), SUV's and also many other cars. So is any purpose being fulfilled by subsidizing diesel. Rather a problem scenario is created and people rush to buy diesel cars because they would be more economical in the long run as a result major portion of the subsidized fuel ends up getting used where it should not be and due to the high demand a price hike for diesel also becomes inevitable.

So, a cycle of things start which starts going completely wrong and it would soon become difficult to correct. Because at some point of time I would guess the number of diesel cars would exceed the number of petrol cars and then even price hikes in petrol would not benefit the oil companies, because the consumption of diesel will be more than petrol.

In my opinion subsidized fuel should not be allowed to be used for any other purpose apart from what it is intended to. Like in the case of cooking gas (I agree black marketeers still misuse cooking gas, but it is not very wide spread) which is strictly controlled and cannot be misused easily at least not at a mass scale.

My suggestions:

1. If possible, stop the production of any more diesel cars (atleast the highend ones, costing more than 4 lac rupees). If people can buy such expensive cars, they sure should be able to buy the slightly more expensive petrol and not depend on the govt subsidy to drive their vehicles.
2. If (1) is not quite feasible, at least tax diesel cars much more (3-4 times more) than the petrol ones, to discourage people from buying the diesel cars.
3. By implementing the above two, the number of diesel vehicles can be controlled and demand for diesel will be lower than that of petrol. Hike prices of petrol to get more revenue, keep the prices of diesel low and make sure it is only used for the purpose it is supposed to be. This will enable to keep public transport cheap and will encourage people to use the public transport. Traffic woes will also be reduced as more people would use the cheaper public transport and not the expensive private cars unless absolutely necessary.
4. Reduce the taxes on hybrid and battery based cars, which will encourage people to use alternative and greener fuels.