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Old 2nd October 2011, 09:35   #76
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Default Re: Petroleum Pricing in India ? Debate

This is a great thread. I am still ok to pay the current petrol owing to the differential tax structure at the state level. However, what hurts the most is that we dont receive the benefits of the tax we pay in the form of facilities.
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Old 3rd October 2011, 00:38   #77
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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 :(
that is because Venezuela has vast oil reserves and can produce enough oil on its own to cater to local demand. also because Hugo Chavez(vilified in the US and by pro-US press) nationalized the oil companies and brought them under state control. India is not that Lucky unfortunately. In fact Venezuela makes enough money by exporting excess oil to fund (in part) its pro-poor programs.

PS: Petrol is 69 odd now in himachal.
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Old 3rd October 2011, 03:50   #78
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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!
Relocation to Caracas would save your Fuel Bills definitely, but its expensive on the living side! Not sure if it works cheaper for India to import it directly from Venezuela.

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Originally Posted by R.I.P View Post
that is because Venezuela has vast oil reserves and can produce enough oil on its own to cater to local demand. also because Hugo Chavez(vilified in the US and by pro-US press) nationalized the oil companies and brought them under state control. India is not that Lucky unfortunately. In fact Venezuela makes enough money by exporting excess oil to fund (in part) its pro-poor programs.

PS: Petrol is 69 odd now in himachal.
Agree with you R.I.P. Venezuela is one of the most nature rich country and they are not just rich in Oil resources, they are good in Gold, Diamonds and many other unidentified natural resources and importantly green everywhere. But filling the tank of FORD EXPLORER with equivalent to 65 rupees was simply unbelievable. Until then I thought some Gulf country was selling it for cheaper...but a liter for less than a rupee is simply a wow factor.
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Old 3rd October 2011, 06:15   #79
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Guys, surprising part is that there is luxury tax charged on petrol, QUESTION: IS PETROL A LUXURY ITEM? My problem is, there is virtually non existent public transport and that forces me to drive a car to work and other places. The cities are no longer pedestrian friendly, there are no walkways, there are no by lanes and there is no way I can walk to my destination even if it is walkable distance and I chose to walk that distance.

What PC has to say about it is that if someone is well off enough to own a car, he shall be charged higher tax. Acording to him, rich people should be charged taxes at higher rates. I dont think we are living in a communist state, or are we?

Those of you who say that the petrol prices are justified and it is justified to price the commodities at the same level as in EU and other developed economies, I would support your opinion only IF the government here runs a social security programme like them, the government invests in public infrastructure like their governments do, provides healthcare services for free like they do and makes sure that people tainted in graft and tax evasion are hanged and their property and assets are acquired and declared national assets. ELSE, I even oppose any sort of taxes collected by the government and this petrol pricing is totally absurd. They cant provide for space to park at public places, nor can they provide for any roads worth driving on, so how can they levy taxes on you for that? If I am earning well, how is this government contributing to that factor? This government didnt provide for schools where I studied, they didnt pay for the professional courses and training I had to take and suddenly when I started earning money out of all my efforts they start charging me taxes and the day when I will retire and will not be able to fend for myself, surprisingly, they would still not do anything for me. That is so called LUXURY we have of living in this country.

Forget petrol, there is no price control mechanism anywhere on anything. 8 years ago a litre of milk was Rs. 22/- per liter max, today it is at 38, what just happened there, milk also becomes luxury item? Wheat flour prices going through the sky, that also is luxury? Going by what this government has to say, I guess anyone who is alive is paying for luxury of being alive in this country. JAI HO.
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Old 3rd October 2011, 15:23   #80
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Originally Posted by R.I.P View Post
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.
Agreed, which is why I indicated "...considering the inflation into account...". If inflationary pressures dictate that price cant be increased, then it CANNOT BE!
But then, isnt this artificial suppression of energy cost in turn fuelling inflation? Just to repeat, provided the needy are taken care of (if the BPL criteria is set more meaningfully), I think the best way to counter inflation is to limit the suppression of energy costs.
I really do not know which is better . Paying for subsidies or paying for overall cost of living?? I'm no economist to even remotely guess this! But my thought is, if the energy costs are kept artificially suppressed, people misuse it or waste it.
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Old 3rd October 2011, 15:53   #81
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My problem is, there is virtually non existent public transport and that forces me to drive a car to work and other places. The cities are no longer pedestrian friendly, there are no walkways, there are no by lanes and there is no way I can walk to my destination even if it is walkable distance and I chose to walk that distance.

What PC has to say about it is that if someone is well off enough to own a car, he shall be charged higher tax. Acording to him, rich people should be charged taxes at higher rates. I dont think we are living in a communist state, or are we?

Those of you who say that the petrol prices are justified and it is justified to price the commodities at the same level as in EU and other developed economies, I would support your opinion only IF the government here runs a social security programme like them, the government invests in public infrastructure like their governments do, provides healthcare services for free like they do and makes sure that people tainted in graft and tax evasion are hanged and their property and assets are acquired and declared national assets. ELSE, I even oppose any sort of taxes collected by the government and this petrol pricing is totally absurd. They cant provide for space to park at public places, nor can they provide for any roads worth driving on, so how can they levy taxes on you for that? If I am earning well, how is this government contributing to that factor? This government didnt provide for schools where I studied, they didnt pay for the professional courses and training I had to take and suddenly when I started earning money out of all my efforts they start charging me taxes and the day when I will retire and will not be able to fend for myself, surprisingly, they would still not do anything for me. That is so called LUXURY we have of living in this country.

Forget petrol, there is no price control mechanism anywhere on anything. 8 years ago a litre of milk was Rs. 22/- per liter max, today it is at 38, what just happened there, milk also becomes luxury item? Wheat flour prices going through the sky, that also is luxury? Going by what this government has to say, I guess anyone who is alive is paying for luxury of being alive in this country. JAI HO.
Hi, Since your profile says delhi, i am assuming you live there(correct me if i am wrong)
OK, point given that Delhi is not much made for pedestrians but you do have the metro. and it is pretty big in terms of infrastructure for public transport. Not to mention amongst the lowest fuel rates in the Country.

In the case of social security would you care to elaborate which particular european country you are talking about? Social security system is there in many countries but they have had different levels of success form place to place. The governments have invested heavily in public infrastructure but it has been achieved in primarily two ways.
1. taking loans from world bank/IMF(look where it has landed many of those "developed" countries) or
2. public private partnership(which mind you will increase the spending from your pocket as well. case and point the toll taxes as well as taxes levied by developers in airports in our country).

I have a friend from denmark(a country have a very high human development index score) and this is what he says about his country: the social security is working very well due to the good governance structure and a less corrupt society. Although income taxes are at 70%, cars have to be imported and you have to pay 100% as environment tax alone. there is a variable fine structure where based on your wealth you are fined for wrongdoing. So where a normal person would be paying a few dollars for a parking fine, a royal could have to pay to the tune of hundred thousand dollars for the same offense(lets see how many of us would agree to that). and these are just a few examples he gave me. Ask yourself, would you agree to that? Mind you that there is no "developed" country today that hangs people for corruption.

In the field of healthcare, very few developed countries(i think canada has a good healthcare system yet) provide free healthcare. If you do not have insurance, well you can die on the pavement. it is that straight. One of our exchange students had fallen from his balcony and displaced his disk, he was flown to delhi where a private plane took him back to paris, you know why, because he had taken an insurance before coming to india. Indian Government has been fighting furiously over the years to not allow the patent regime so predominent and powerful in the developed world so that the poor can afford the medication in this country. I got a cyst removed from my state hospital, it costed me 50p for the form and approx Rs.250 for all other things and it was over in 30 minutes. I dare you to give a cheaper option from the so called developed world.

I believe you need to know more about how the government is responsible in helping you earn. The fact that most of the salaried class and to an extent the business class have a job is dependent entirely on the way government puts policy into place. Examples are numerous where government policy change led to growth and finally more employment and people like us to earn money. Be it IT, Infrastructure, Telecom, Transport, entertainment, only after government let private players get in, did the economy of our country grow. Without the government laying down guidelines on the academic structure, and providing facilities to these institutions at subsidized rates, you would not be here talking like this, nor would I. So my friend, government is responsible from the beginning to help you in your growth. You are just paying your country back for the help given in the past and the help you are getting today.

As far as your concern with the rising costs of other items except petrol, well it is a result of the capitalistic/free market structure our government is adopting. which mind you is also responsible for our rise in the last 20 years. as anyone with economics background would agree, inflation will rise with growth in the system, as purchasing power grows, so does the demand and so does the prices. China is facing same issues. I for one feel relieved that inflation is the only concern we have right now seeing the world in the state it is.

PS:i could not get who you referred to as PC. Further, I am not here defending anyone, just laying down the facts as i have seen them. There are leakages in our system which needs to be plugged but it does not mean we loose faith in the constitution of our country. We are as much responsible for our county's future as the person standing next to us.
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Old 3rd October 2011, 16:10   #82
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Default Re: Petroleum Pricing in India ? Debate

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Agreed, which is why I indicated "...considering the inflation into account...". If inflationary pressures dictate that price cant be increased, then it CANNOT BE!
But then, isnt this artificial suppression of energy cost in turn fuelling inflation? Just to repeat, provided the needy are taken care of (if the BPL criteria is set more meaningfully), I think the best way to counter inflation is to limit the suppression of energy costs.
I really do not know which is better . Paying for subsidies or paying for overall cost of living?? I'm no economist to even remotely guess this! But my thought is, if the energy costs are kept artificially suppressed, people misuse it or waste it.
True that subsidies to input costs is always a bad idea, it leads to inefficiency. But we are at a point where these subsidies have been in our system for a long long time. We cannot just stop them, repercussions would be extreme. the energy demands of the country have always been dependent on other countries so we always have to shield our citizens from the extremities of world trade. remember there is currency fluctuations as well as demand for the same source form all across the globe. as supply exceeds demand and futures trading adds in more prediction/risks, the prices of these commodities will increase.

the BPL criteria is a joke, only to provide statistical figures to support the claim that poverty has reduced. so that the burden (to support these families) on the government decreases and the fiscal deficit is reduced. In reality, BPL benefits are usually given to villagers where in my experience this criteria is seldom applied. It has more to do with how well you know your pradhan. There are no checks on how these cards are issued, so the whole hue and cry about these figures is useless. it is just a statistical figure and more serious gaps needs to be addressed.

Ideally paying for overall cost of living is more suitable but then most of us would need state protection again.
Remember, the capitalistic structure of growth Demands(read demands) that a certain section of society will not be able to afford the services(or as we say will be poor)
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Old 3rd October 2011, 17:14   #83
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Default Re: Petroleum Pricing in India ? Debate

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Originally Posted by R.I.P View Post
the BPL criteria is a joke, only to provide statistical figures to support the claim that poverty has reduced. so that the burden (to support these families) on the government decreases and the fiscal deficit is reduced. In reality, BPL benefits are usually given to villagers where in my experience this criteria is seldom applied. It has more to do with how well you know your pradhan. There are no checks on how these cards are issued, so the whole hue and cry about these figures is useless. it is just a statistical figure and more serious gaps needs to be addressed.
So, if this is done truthfully, I guess the issue of subsidy v/s cost of living issue should get sorted out! From what I know, the ones in the pocession of BPL card does get decent benefits - this is what I heard from some of the poor in the neighbourhood. But the problem is what you said - knowing the right persons well!
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Old 3rd October 2011, 17:46   #84
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Exclamation Re: Petroleum Pricing in India ? Debate

Hi Team,

One more bad news is round the corner for those people who are going towards the CNG cars.AS per the IGL:"Our sense is in three years’ time, assuming that rupee will stabilise around 48 levels... and if crude oil prices stabilise at $110 per barrel, the price of CNG might go to RS 43-44 per KG," Rajesh Vedvyas, MD of Indraprastha Gas Ltd told NDTV Profit.


Read more at: http://profit.ndtv.com/news/show/cng-prices-to-rise-to-rs-43-44-per-kg-igl-181147?pfrom=home-business&cp

I hope the future is very tight for those who LIVE to DRIVE !

Regards,
Lalit Tyagi
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Old 3rd October 2011, 18:40   #85
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Ok guys coming back on track : the debate topic!

Will the inclusion of cheaper Bio-diesel fuel hold off the current fuel-price war in the country?

Given that the political will in this country manages to pull off the large scale production of bio oils, which would be the major raw material to process bio-diesel from; the scales would turn, wouldn't they?

India being a huge bio-diverse country, where majority of the populace is into agriculture, the promotion of (cultivating &) harvesting the natural resource on a very large scale may lead to a suitable difference. IMHO we have the resources - manpower, infrastructure, land; to seriously take this to the next level.

I quote from a research article by Mr. Lele; a few excerpts from the Bio Diesel Policy announced by the government in 2009.

source: Biodiesel in India


Quote:
  1. Plantations of trees bearing non-edible oilseeds will be taken up on Government / Community wasteland, degraded or fallow land in forest and non forest areas. Contract farming on private wasteland could also be taken up through the Minimum Support Price mechanism proposed in the Policy. Plantations on agricultural lands will be discouraged.
  2. A major instrument of this Policy is that a Minimum Support Price (MSP) for oilseeds should be announced and implemented with a provision for its periodic revision so as to ensure a fair price to the farmers. The details about implementation of the MSP mechanism will be worked out carefully after due consultations with concerned Government agencies, States and other stakeholders.
  3. Employment provided in plantations of trees and shrub bearing non edible oilseeds will be made eligible for coverage under the National Rural Employment Guarantee Program (NREGP).
  4. The Minimum Purchase Price (MPP) for bio-diesel by the Oil Marketing Companies (OMCs) will be linked to the prevailing retail diesel price.
  5. Financial incentives, including subsidies and grants, may be considered upon merit for new and second generation feed stocks, advanced technologies and conversion processes; and, production units based on new and second generation feed stocks.
  6. Bio-ethanol already enjoys concessional excise duty of 16% and biodiesel is exempted from excise duty. No other Central taxes and duties are proposed to be levied on bio-diesel and bio-ethanol.
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Old 3rd October 2011, 19:28   #86
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It would have been very simple if our Govt. would have adopted the policy of Brazil where no passenger car can have a diesel engine, only petrol as they have a ethanol blend which works like charm, they are a major sugar cane producer and so are we (just that they produce enough for cars and alcohol too, where as we consume all the molasses only for alcohol), that said even we can adopt this system and offset the expensive import of oil to some extent. What say Guys.
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Old 3rd October 2011, 22:18   #87
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Shell in bangalore is costing 50 paise less than HP or other PSU's ! Clearly shows how failed our policies are! Shell price 74.48 , PSU proice 74.98!
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Old 3rd October 2011, 22:28   #88
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Petrol will soon be Rs.100 in another year or so. And Diesel will still remain at 50-55 odd then.
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Old 4th October 2011, 00:10   #89
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1) Petroleum pricing in India is a proof of how low politics can get. The indirect taxes that are collected by government in this form are so huge that those who are paying Income Tax regularly are worst hit as they end up paying both, Direct and Indirect taxes. Considering that we called ourselves good and sometimes the best, I wonder how such a huge injustice is there.

2) I would seriously like to update myself, but is there any official government website which says how much tax we are paying on a litre of petrol ? This is because the government efficiently increases prices under pretext of loss, but the Balance sheet of IOC or ONGC is not showing loss. Why is the government lying then ?

3) Show me one area where the taxes collected have helped our nation. I am Ok with such high taxes if those are evenly loaded like each and every tax payer pays equal indirect tax and direct tax as per his/her income. High taxes are ok if we are really gaining in any one positive area.

If government has right to tax us, we have a right to get service like safe, clean, efficient public transport system. Example is BRTS A'bad. Many have shifted, even doctors who would usually be driving Honda Civic/Accord, etc.

The salaried class is paying a high amount of taxes which can really shock everybody in the world. Nowhere in the world ( atleast developed and developing ) is fuel charged so high.

4) Private players. Why government is not supporting them or why did they not support them earlier ? Any logical and scientific reason ?



Well, what can we expect, we are a country where :
2G scam is bigger than Defense budget ( think of it especially after considering our neighbors )
Pizza can reach faster than Ambulance
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Old 4th October 2011, 18:57   #90
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This is a very interesting and a gripping thread.

IMO the government should do something to reduce the gap between Petrol and Diesel prices. Petrol is not a luxury product considering only the small car market owned by middle class uses petrol. All luxury car owners with gas guzzling engines already have diesel fuel power. I am ok if truck owners transporting goods are paying less for a liter of diesel as the impact on the inflation is considerable. On the flip side, a Merc owner (no offence meant for the owners out here!) is subsidised with diesel when he can afford to pay twice the cost of my petrol for every kilometer he runs...

Maybe it may make sense to charge differential rates depending on the category of cars people own. I know it is practically impossible, but I am thinking aloud.

The other issue being, today 70-80% of the cars sold, including the likes of the swift is with a diesel heart. Maybe one day there may be no petrol cars if the prices become prohibitive. What would the government do then?? Provide a uniform subsidy to all cars?? or tax car owners more than the truck owners?? They cant do too much on the initial prices as it would lead to a different issue altogether?? Any views on this?
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