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Old 30th September 2011, 11:24   #61
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Default Re: Petroleum Pricing in India ? Debate

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Originally Posted by ukderebail View Post
Eventually equate the taxation in the long run quoting price rationalisation.
I think this should be the way to go. Why special treatment for petrol and alcohol?

For eg, if you are asked to pay differential rates of Income tax, what would be the situation? ( in US I guess there is differential IT) As of now, a fixed percent goes to the state govt, and remaining to central govt. For petroleum and alcohol, cant a similar approach be followed? Anyways local govts doesnt do anything much in terms of road or infrastructure (reasons given for exhorbitant taxes). Whatever is done is coming under Toll collection or some other fees.
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Old 30th September 2011, 13:48   #62
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Default Re: Petroleum Pricing in India ? Debate

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As a cartel the oil companies can bulldoze and implement the uniform pricing keeping the current level of taxation as the base. Whichever state govt objects just stop petrol and diesel supplies for two days they will come to their knee and agree to uniform pricing policy. Eventually equate the taxation in the long run quoting price rationalisation
I fail to understand the logic behind the cry for Uniform Pricing of petrol or diesel across the country. Agreed that the FMCG majors are doing that, so what? What is the idea behind it?

Any replies to these questions might help...

* What is the advantage that the Oil Companies have if the price of Petrol or Diesel is normalised across the country?
* What is the advantage that the Govt. (State & Central) have if the price of Petrol or Diesel is normalised across the country?
* What is the advantage that the Common Man has if the price of Petrol or Diesel is normalised across the country?
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Old 30th September 2011, 14:21   #63
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Just a thought.. Petrol in TN is priced and taxed much lower than in KA. i think even the Road tax in TN is lower than in KA. Why this is not reflected in the quality of roads which we see in interior TN and interior KA? I mean, how does TN govt. still manage better roads than KA consistently all over the state? I purposely did not include Kerala in this comparison as the reason for Bad roads in Kerala is entirely different(High Rain + Western Ghats). But, considering the similar geographical features of TN and KA, what KA govt. is doing with its interior roads is inexcusable!!

P.S.: I am not commenting on Bangalore / Mangalore / Chennai roads. I am commenting on the lesser used State Highways which do not come under the GQ.
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Old 30th September 2011, 14:45   #64
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Default Re: Petroleum Pricing in India ? Debate

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Similarly one uniform life time tax across India is essential, if at all refunds has to be carried out let it be one inter-state level ( credit and debit their account ) Max. migration or change of address fees of Rs 200 to 500 should be charged depending on category of vehicle.
Project aadhar would help in getting this done. however this is still in implementation stage. which mind you still requires a substantial influx of funds.
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I think this should be the way to go. Why special treatment for petrol and alcohol?

For eg, if you are asked to pay differential rates of Income tax, what would be the situation? ( in US I guess there is differential IT) As of now, a fixed percent goes to the state govt, and remaining to central govt. For petroleum and alcohol, cant a similar approach be followed? Anyways local govts doesnt do anything much in terms of road or infrastructure (reasons given for exhorbitant taxes). Whatever is done is coming under Toll collection or some other fees.
in my opinion alcohol(for obvious reasons) and petrol is still considered as a luxuary item. Now before you all stand up and shout please hear me out. The main use of fuel AKA Petrol is in private vehicles where the reason given is that the purchasing power of the individuals is big enough to absorb the inflation. For people who do not have the same purchasing power, the government installs public transport system as an efficient and effective alternative.

I would like to speak about Himachal Pradesh as i am most aware about my state. Petrol is at about 66-odd Rs. right now. I live in a small hilly state where the two main sources of income for the state government is Tourism and Hydro-Power. Now there is a state entry tax ranging from Rs.20(three wheelers)-Rs30(four wheelers)-approx 500(heavy trucks) on state borders. an additional Green tax is charged by the town of Manali for Vehicles with non-HP registered vehicles. These are the only two taxes(that i know of) taken by the government (apart for the taxes from hotels etc.) from Tourism.

Revenue from Hydro power is very miniscule as we have a very small share since we did not have the funds to construct the dams in the first place. so the dams were constructed in partnership with neighboring states and/or centre or under loan from world bank/IMF. These are the two major sources of income for the state.

Now anyone who has come here or lives here can refute this but it is very expensive to conduct infrastructure projects in a hilly terrain. it needs more manpower/machinery (eventually money) to make and manage roads year on year. several Kms of roads get completely washed off every year and have to made from scratch. Not to mention the battering the roads suffer every year from monsoons/winters. And this is just the roads. In addition we have transport, schooling, healthcare, food/water and sanitation/waste disposal projects running year round.

Now anyone with a basic knowledge of economics would wonder how the state will repay all the loans and debts incurred for these projects. The biggest and continuous source of income(liquid capital) for any state day-on-day, month-on-month, year-on-year is through taxes on petroleum products. i agree a part of it goes to repaying the oil co.s for the imbalances in their balance sheets. but a big part of it goes into the welfare of the people of the state. We cannot deny this, there may be leakages in the system but that has more to do with the administrators than the government policy.

I agree Tolls are charged on many roads these days but in my experience it is restricted to national higways in most cases. the burden to maintain the state roads falls on the state government and who better to charge for this than the ones who buy and run vehicles on these roads. The bigger concern is the parity between petrol and diesel and it is negatively impacting the buying and usage of vehicles in the country. Diesel is quickly becoming the fuel of choice rather than an essential fuel to transport goods & services for the welfare of the common man. and by common i mean the guy who can barely make ends meet earning a few thousand a month rather than the one who can spend lakhs on a vehicle but cribs about taxes on the vehicle and the fuel.
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Old 30th September 2011, 15:02   #65
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Default Re: Petroleum Pricing in India ? Debate

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in my opinion alcohol(for obvious reasons) and petrol is still considered as a luxuary item. Now before you all stand up and shout please hear me out. The main use of fuel AKA Petrol is in private vehicles where the reason given is that the purchasing power of the individuals is big enough to absorb the inflation.

....
....

Now anyone with a basic knowledge of economics would wonder how the state will repay all the loans and debts incurred for these projects. The biggest and continuous source of income(liquid capital) for any state day-on-day, month-on-month, year-on-year is through taxes on petroleum products. i agree a part of it goes to repaying the oil co.s for the imbalances in their balance sheets. but a big part of it goes into the welfare of the people of the state. We cannot deny this, there may be leakages in the system but that has more to do with the administrators than the government policy.
I agree with your points @R.I.P! These kinda topics come up for discussion when the normal life gets impacted after paying through your nose. KA has been paying very high taxes in various names, but you will have to see it to believe the state of affairs. Despite high rates, such SOS doesnt come from MH or Mumbai area much, right? If there is reasonable standard of living, I guess no one will mind such tax rates.
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Old 30th September 2011, 15:12   #66
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Default Re: Petroleum Pricing in India ? Debate

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Originally Posted by samm View Post
I agree with your points @R.I.P! These kinda topics come up for discussion when the normal life gets impacted after paying through your nose. KA has been paying very high taxes in various names, but you will have to see it to believe the state of affairs. Despite high rates, such SOS doesnt come from MH or Mumbai area much, right? If there is reasonable standard of living, I guess no one will mind such tax rates.
True man. I had driven down to bangalore in January and found some very high figures, sometimes a lot higher than actually needed. I mean the proposal to have a toll on the Ring Road, the near unbelievable Toll on NICE ring road. Not to mention high rates on new and transferred vehicles.

if this money is not being utilized for the well being of the people of Karnataka, then there is some serious leakage in the system and it needs to be exposed.
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Old 30th September 2011, 15:20   #67
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Default Re: Petroleum Pricing in India ? Debate

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Originally Posted by antz.bin View Post
Just a thought.. Petrol in TN is priced and taxed much lower than in KA. i think even the Road tax in TN is lower than in KA. Why this is not reflected in the quality of roads which we see in interior TN and interior KA? I mean, how does TN govt. still manage better roads than KA consistently all over the state? I purposely did not include Kerala in this comparison as the reason for Bad roads in Kerala is entirely different(High Rain + Western Ghats). But, considering the similar geographical features of TN and KA, what KA govt. is doing with its interior roads is inexcusable!!

P.S.: I am not commenting on Bangalore / Mangalore / Chennai roads. I am commenting on the lesser used State Highways which do not come under the GQ.
Only a handful of State highways (Mysore-Hassan, etc.) are good. Others are in pathetic condition. The fuel pricing is mostly due to politics and in-efficiency of the state government (which is not questioned by the passive local people).

Each successive governments are by different parties and they just don't care about oil prices. Thus a government X which follows government Y will never consider reducing what the prior government did. It's either status quo or increase, since there is no-one to protest (unlike neighbouring states where the opposition/people are very active when it comes to putting their objections across). And unfortunately at any point of time it's always opposite parties which are in power (if X in state then Y in center). So if center reduces the price, state will not. If center increases the price and ask state to reduce tax, again state will not


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Originally Posted by R.I.P View Post
in my opinion alcohol(for obvious reasons) and petrol is still considered as a luxuary item. Now before you all stand up and shout please hear me out. The main use of fuel AKA Petrol is in private vehicles where the reason given is that the purchasing power of the individuals is big enough to absorb the inflation. For people who do not have the same purchasing power, the government installs public transport system as an efficient and effective alternative.

Petrol is pretty much ONLY for private vehicles (2 & 4 wheelers). Unfortunately these are used by people who can't/don't want to take the public transport system. With the number of private diesel cars increasing and petrol consumption coming down (hopefully !), this will disturb the current subsidy balance to force the government in bringing some sanity.
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Old 30th September 2011, 15:32   #68
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Default Re: Petroleum Pricing in India ? Debate

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Petrol is pretty much ONLY for private vehicles (2 & 4 wheelers). Unfortunately these are used by people who can't/don't want to take the public transport system. With the number of private diesel cars increasing and petrol consumption coming down (hopefully !), this will disturb the current subsidy balance to force the government in bringing some sanity.
Yes and if they have the luxury to travel by their own vehicles, then they should not crib about paying more taxes. I mean i paid whatever was asked for(in terms of fuel costs and tolls) when i travel by car, but at the same time when i cannot afford to take my car, i use a bus/train/plane. it is that simple.

The only way i guess government can bring balance to the diesel mad-race is by increasing taxes on diesel cars. diesel prices cannot be increased and differentiated pricing will only lead to black-marketing of the fuel. Sad but True.
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Old 30th September 2011, 16:20   #69
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Default Re: Petroleum Pricing in India ? Debate

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Only a handful of State highways (Mysore-Hassan, etc.) are good. Others are in pathetic condition. The fuel pricing is mostly due to politics and in-efficiency of the state government (which is not questioned by the passive local people).

Each successive governments are by different parties and they just don't care about oil prices.
Both X & Y are in a mad race to win the trophy of being the most corrupt. To whom do you vote is the dilemma!!

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The only way i guess government can bring balance to the diesel mad-race is by increasing taxes on diesel cars. diesel prices cannot be increased and differentiated pricing will only lead to black-marketing of the fuel. Sad but True.
I dont think anyone (except the truck fleet) will mind paying a non-subsidized price for diesel. It will increase the price by about 5-6 bucks. I dont think any car owner is going to crib about this b'cos the fuel efficiency of modern engines more than make up for it. So, depending on the impact on inflation, possibly the subsidy could be reduced (sorry for making inflationary statements, just my opinion), instead of imposing unreasonable taxes, and feeding it back into subsidies. The poor and needy has to be taken care of better (easier said than done!).
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Old 30th September 2011, 17:18   #70
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Default Re: Petroleum Pricing in India ? Debate

So, in effect, KA govt. is charging KA people more for petrol to run on roads which will make your cars / bikes return less km to the liter since they are horrendous compared to neighboring states like TN and MH. I have never been to AP so cannot comment on interior roads there vis a vis KA/TN/KL/MH.

But not all is bad in KA though the above statement may make you think so.
I was on a Bike trip through Pune - Goa - KA - KL - TN - KA - Pune in September 2010 (1 year back) with my motorcycle club buddies. An average non vegetarian meal in Maharashtra would cost us 120-150/head at a decent Highway restaurant. When we entered Goa, it increased to 400-500/head. As soon as we entered Karnataka, since we couldn't find anything Non Veg due to our location, our first meal costed us 35/head. Thats right! Rs.35!! We couldn't believe our eyes looking at a bill of Rs.175/- for 5 people! We were so absolutely shocked to see the bill that we in fact tipped the guy 125 bucks for good service and the delicious food (since I would rate that meal as the most complete meal of my 10 day road trip)!! That set the precedent for the rest of the week when we would get billed in the vicinity of 60-75/head for a sumptuous NON-Veg meal all over Karnataka (minus the days we were at Mangalore, Mysore and Bangalore) even though we would end up wasting food since we would order too much.

The food got expensive again as soon as we entered Kerala from KA and then stayed that way in TN.

The crux of the above story was, it is not that the government is ONLY looting the people. In fact, even though we were consistently using up >10 liters of Petrol everyday on the bikes and paying a higher price per liter compared to neighboring states, still considering food and lodging expenses, the Karnataka leg of the journey was the easiest on the wallet. Since a common man would rarely spend that kind of money on fuel consistently, the cost of living in interior KA is much lower than in Interior KL/TN/MH.

This is something I wish to share with people. Comments welcome.

P.S.: The Dinner in Bangalore was the most expensive of the trip (some Non Veg + Kabab place @Brigade road, don't remember the name).

P.P.S.: Restaurant Food in Madhya Pradesh Interiors is priced similar to Karnataka Interiors. Fuel in MP is priced higher than MH but less than KA though. Do we see a pattern here W.R.T. Road conditions?

Last edited by antz.bin : 30th September 2011 at 17:19.
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Old 30th September 2011, 17:36   #71
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Default Re: Petroleum Pricing in India ? Debate

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I dont think anyone (except the truck fleet) will mind paying a non-subsidized price for diesel. It will increase the price by about 5-6 bucks. I dont think any car owner is going to crib about this b'cos the fuel efficiency of modern engines more than make up for it. So, depending on the impact on inflation, possibly the subsidy could be reduced (sorry for making inflationary statements, just my opinion), instead of imposing unreasonable taxes, and feeding it back into subsidies. The poor and needy has to be taken care of better (easier said than done!).
agreed that car owners will not mind paying 5-6 bucks extra per litre. Hell i don't mind paying extra for Petrol but then thats just me. the reason is also correct that diesel engines are very efficient these days and will balance it out. However the difference is not just 5-6 bucks. in most countries Diesel is sold at the same rate as petrol if not more(even though diesel is cheaper to produce) due to higher pollutants emitted in burning Diesel. The places where diesel is sold cheaper, it is done either because the environmental impact is not factored into the cost or the country wants to absorb the impact of higher cost of living(for the common man) due to high Diesel prices.

Now for the average Joe running a Diesel vehicle would still not be that expensive as pointed out earlier(provided the extra taxes on diesel engines is withdrawn). but remember that Trucks have to travel a lot more with a lot more load for a lot lot more time. This results in low fuel economy factored with higher distance travelled and heavy usage of Diesel. So to avoid an increase in rates charged by transport operators, diesel has to be kept cheap. Not to mention the benefits state transport vehicles get and eventually pass on to the people.

and this is just the trucks, if you factor in the diesel rail engines and the generators and tubewells, etc. the cost of everything goes up and mind you it has a ripple effect just like a tsunami. So ask yourself before giving a simple solution like increase diesel prices. Would you pay extra for electricity, backup generators, food(rice, wheat, pulses), water, drinks, milk, bus travel, rail travel, mobile phone, apparel, housing/construction, tolls, etc or just pay for subsidies? and mind you this is the case in a scenario where our economy is already overheating and we are finding it hard to tackle inflation as it is.
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Old 30th September 2011, 18:04   #72
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Liquor is no more cheaper like earlier in Karnataka. It is now getting closer to other states only thing it is freely available and well distributed. I wish the prices are to the level of Goa prices.
The "cheaper" price of the "brown liquid" here in Goa has been attributed as a key (not sole) indicator for...

1. A growing and alarming number of road and other mishaps.
2. Breakdown in marriages and families.
3. An alarming growth in anti-social and criminal activities.
4. Distorted notion of Goa as a land of Fish/Feni/Fun or Beaches/Booze/Babes.

Last edited by misquitas : 30th September 2011 at 18:12.
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Old 30th September 2011, 18:37   #73
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Default Re: Petroleum Pricing in India ? Debate

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The "cheaper" price of the "brown liquid" here in Goa has been attributed as a key (not sole) indicator for...

1. A growing and alarming number of road and other mishaps.
2. Breakdown in marriages and families.
3. An alarming growth in anti-social and criminal activities.
4. Distorted notion of Goa as a land of Fish/Feni/Fun or Beaches/Booze/Babes.
We were mugged right in front of the Margoa police station in 2002 Jan, our case is still pending. I feel goa has lost its charms because of booze, narcotics and criminal elements settling in Goa. I hope the law and order improves.
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Old 1st October 2011, 06:56   #74
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Default Re: Petroleum Pricing in India ? Debate

Hi BHPians,

Apologies if this is off topic! Just came out of the fuel station here in Caracas, Venezuela, 61.8 liters of gasoline costs just 6 bolivers, around 65 rupees :O we cant even buy 1 liter with this money in most states :(
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Old 1st October 2011, 21:18   #75
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Hi BHPians,

Apologies if this is off topic! Just came out of the fuel station here in Caracas, Venezuela, 61.8 liters of gasoline costs just 6 bolivers, around 65 rupees :O we cant even buy 1 liter with this money in most states :(
Wow , over here in Goa, I would have paid Rs 4123 for those 61.8 litres (@ Rs 66.72 per litre) of petrol. How on earth do they manage with such low prices?

Heck, I think I need to relocate to Caracas as our government over here has gone CARACAS!

Last edited by misquitas : 1st October 2011 at 21:20.
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