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Old 7th November 2011, 11:58   #31
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Let us all start a campaign on Facebook, twitter et al and share the thoughts . Wish it would get viral and reach Anna's ears. These days it seems Anna is the only saviour.
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Old 7th November 2011, 12:16   #32
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by LonelyPlanet View Post
If we aren't ready to pay appox Rs 75 for the cost of petrol, let's get ready to pay income tax @ 50 percent or higher. After all govt needs to fund all it's newly launched schemes (nrega etc). Don't want to debate the effectiveness of these schemes in this thread.
Does this mean we pay the least income tax as compared to other countries? I would be surprised if we do.

Just so we talk some data

Tax rates around the world - Wikipedia, the free encyclopedia

We don't pay less taxes as compared to countries of similar size, potential, or economic living standards (take BRIC for example). Much more then Singapore, and less then UK/USA. Just so if this is really the case then i would not mind paying lesser tax and more petrol price at least by doing this the black money earner also ends up paying some tax.

Last edited by mayankjha1806 : 7th November 2011 at 12:18.
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Old 7th November 2011, 12:21   #33
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

IMO, there is more than meet eyes.

While I agree with the OPs analysis, IMHO the rise in fuel prices is more to meet the demand-supply gaps. Imagine the rate at which automobile industry is growing, there is an upward surge in demand for crude and the only way to curb this surge in demand is to increase the rates, and this is inline with the RBI's policy- Curbing Inflation== Rising the interest rates.

Yes an RTI should help!
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Old 7th November 2011, 12:29   #34
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

^ I agree. There seem to be many complex things under the skin of it!

OP has done a nice analysis on his personal front, however there must be something on which basis all these oil companies continue cribbing about loosing xxxx... Crores on daily basis for selling the fuel at a certain price! I understand the perspective of the market to make serious hue and cry to gain profits in the end but still!

@ antz.bin: Nice post and thoughtfully presented!
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Old 7th November 2011, 12:30   #35
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by pypkmsrikanth View Post
Good that some one else also thinks like me. There is seriously a scam going on in the Petrol Pricing. A couple of posts which I had made in the other thread on Fuel Price.

http://www.team-bhp.com/forum/indian...ml#post2547478

http://www.team-bhp.com/forum/indian...ml#post2565301

But there are a couple of flaws in the OP's argument.

1. The Indian Crude Basket is linked to the Brent Crude which is hovering around 110 USD and not 93.39 USD as assumed. In my post above I have given details of the crude prices in INR terms from May'11 which I am constantly updating, if you see the current prices it is certainly higher than earlier.

2. Though its all fine to say that the Government collects all the money whether they are in the form of taxes or as petrol prices, there is a huge difference, it is like saying why don't we fuel Diesel in our cars since they both come from the same source "Crude Oil".

The Refinery Gate Price of Petrol is Rs.41.64 at Delhi, Central Tax is Rs.14.78 and state taxes is Rs.11.44.

The Hindu : Business / Economy :

My issue with the Petrol Pricing is there is no transparency on what is the break even point for the OMC's in terms of "Crude Oil Prices in INR". The government does not seem to come out with that. The reason for that I feel is the government at times offsets the increased margin they get with lower crude oil rates to offset under recoveries in Diesel etc.
OK. Maybe I was referring to the wrong crude price chart. But still, I had calculated using a value of $100/barrel. Now considering the renewed data from a source who has done more research than I have , the renewed calculation would be:

Cost of 1 barrel of crude: 5392 (instead of the prior calculation of 4900)
Cost of 1 liter of crude: Rs.34 (approx)
After Refining, Transportation and Local taxes(octroi) deducted.
Money made on Petrol per barrel: Rs. 5093.81
Money made on Diesel per barrel: Rs. 1243.61
Money made on ATF per barrel: Rs. 650.54
Total Money received by government(including the money received by Govt. owned companies) : Rs.6987.96
Reducing cost of raw Material we get : 1595.96/barrel

Upscaling to August 2011 numbers:
Total Income for govt.(including govt. owned companies): Rs.1,61,30,59,56,230.88/- (OR 16,130 Crores) / month.

The figure ended up increasing as I accounted for ATF this time around. (Saved up LPG for the next round of attacks on these no.s )

The point here is not that this money will be misused. The point here is about lying to the public and saying that the OMCs are going into losses. Over-exaggerating the effects if the OMCs happen to collapse due to losses. And then increasing the price of petrol on the pretext of the losses.

Anyways, they do make quite a lot of money on the money we earn.

And then if we happen to spend whatever is left of it, they make money on
The steel, rubber, aluminium used to make our cars and our homes
The Dal, rice, wheat we eat daily
The clothes we wear
The service we avail, i.e. your cellphone, your credit card, your internet connection, your f'in electricity bill
The edible oil we consume
The Maggi noodles we eat
The electronics/professional equipment we import

If we decide to save some money and invest it,
They earn money on
The amount you kept in the bank
The amount you earned in the stock market

What we get in return:
Pathetic roads
No Social security
Zero Healthcare benefits
Expensive fuels
Abysmally inadequate public transport network
Low salaries
High inflation

Last edited by antz.bin : 7th November 2011 at 12:35.
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Old 7th November 2011, 12:37   #36
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by mayankjha1806 View Post
Does this mean we pay the least income tax as compared to other countries? I would be surprised if we do.
I am with you on the effectiveness of these schemes - don't get me wrong.
Till there is a solution to the blatant misuse of govt funds, its choosing between devil and the deep sea . Which one would you choose ?
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Old 7th November 2011, 12:47   #37
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by antz.bin View Post
The point here is about lying to the public and saying that the OMCs are going into losses.
IOC is in the Top 5 dividend paying companies in India. Their dividend history is here. They have paid great dividends without missing a year. Any loss making company won't pay dividends. Govt gets around Rs 3000 crores as dividends from IOC.
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Old 7th November 2011, 12:49   #38
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Thanks antz.bin for that analysis. This is a vicious circle. Everytime there is a hike in the prices of petrol OMC's get more money per litre, governments (Central and State) get higher revenues from taxes(VAT) the only person who suffers is the common-man. But who cares, right ?

Only during the election period they'll ensure that the prices are reduced for a few months before voting and declaration of results. A RTI petition into the pricing of fuel will help.
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Old 7th November 2011, 12:53   #39
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by LonelyPlanet View Post
I am with you on the effectiveness of these schemes - don't get me wrong.
Till there is a solution to the blatant misuse of govt funds, its choosing between devil and the deep sea . Which one would you choose ?
No question on getting you wrong, we are in the same boat

Well the post was not to contradict you but more in favor to what you were saying. The point i am trying to make is, to me it seems like the government wants to have best of both the worlds for its austerity (i.e. higher income taxes and higher taxes on petrol). As per the data listed on the link.
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Old 7th November 2011, 12:53   #40
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

The other day there was an article in The Telegraph 'metro' section, which had given a graphic of the break-up of fuel prices. What shocked me was that the actually selling price of petrol in the country is something in the region of Rs. 43.xx. The price of petrol in kolkata is 73.xx [not sure, we have a diesel car only]. That means 30 odd bucks is taken in the name of taxes [various: sales tax, excise duty etc. Not exactly sure about how the tax component is broken up into different parts]. It is divided among state and the centre, the distribution being 15.13 or so the state and the rest the the centre!

Now, what that basically means is, the state and the centre together charge 69.xx% tax on the selling of petrol! I know, that it is collected as per governing tax laws[oil being the few commodities sold in India on which sales tax is levied, other commodities being charged vat], but the swear amount of money going to the exchequer, but whatever name called, is just too much!
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Old 7th November 2011, 13:00   #41
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Quote:
Originally Posted by msdivy
IOC is in the Top 5 dividend paying companies in India. Their dividend history is here. They have paid great dividends without missing a year. Any loss making company won't pay dividends. Govt gets around Rs 3000 crores as dividends from IOC.
IOC doesn't have a choice, Finance ministry forces them to pay high dividend.
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Old 7th November 2011, 13:03   #42
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by antz.bin View Post

What we get in return:
Pathetic roads
No Social security
Zero Healthcare benefits
Expensive fuels
Abysmally inadequate public transport network
Low salaries
High inflation
Seriously antz.bin; what you have stated has been like a bed sore we all have been living for a long time.

But inspite of all this I feel that we all have gotten so used to this. While I watch this everyday when I either drive to office or take a bus; due to obvious reasons that you have indicated above.

There are huge gates/ entrances made at every checkpost / naka as you move in and out of city; the bridges take forever to make; auto guys dont heed to our pleas; buildings / complexes keep coming up just goes on and own.

Rich keep getting richer; poor keep getting poorer. There are controversies, scams or 1000s of crores unearthed every week; wonder what a crore looks like and we see ministers, bureaucrats stacking unaccounted cash in in swiss accounts

Its just a sorry state of life and trust me we (no offence) have worn it like second skin... the spirit of indians; we take whatever life throws at us and move on!

Including out Politicians
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Old 7th November 2011, 13:04   #43
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Excellent analysis, antz. Thanks to you and everyone else who clarified on this.

It is indeed a shocker if we are paying more than 150% for something which is as basic a necessity as any. Just goes to show how much money is pouring into someone's pockets everytime the meat-grinder called pricing grinds the common man and squeezes more life blood out of him.

I have taken the link of this thread and posted it in an e-mail to all of my friends and contacts in my Gmail and Yahoo accounts, urging them to go through it and forward it to their friends/contacts as well. Hopefully someone who matters will see this sooner than later and does something about it.

Thank you for this very insightful and superb thread.
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Old 7th November 2011, 13:47   #44
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

While the calculations can be debated, i am not averse to paying more for fuel. Keeping the cynicism of corruption aside, a government needs its taxes.
Income Tax is paid only by 2% of the people in India. If that means that i can mop up some revenue from the rest of the capable 60% (approx of Total - IT paying guys - 30%/35% BPL/PL people) then so be it.

The definition of the "common man" has been expanded and abused by one and all. I see even people owning decent cars saying that they are the "common man". Really! Just because everybody in my neighbourhood owns a car doesn't mean that we are "common man"
There are crores and crores of people in India who don't depend on petrol one bit and couldn't care less if it was priced at 100 Rs a liter. All they want is clean water, some electricity, subsidized PDS grains and kerosene.

There are many things wrong with how the government is functioning. But, i think we are picking the wrong issues.
The corruption and inefficiency of the PDS, the corrupt implementation of MNREGA and the file pushing by the babus are huge issues as these effect most of India.
A 1.82 rupee petrol hike isn't that big. For a 40km a day biker, its barely 55Rs additional burden (1200 km at 40kmpl) per month. For a 40km/day car goer, it is just 200 odd rupees increase per month(calculated at 1200 km with 12kmpl)
If we can afford a 300 Rupee burger at the F1 race, can we not absorb this!

The argument that we don't have proper roads etc. isn't a very good one. While things are slow, work is getting done - despite all the apathy and chalta hai attitude of everyone involved(everyone means everyone - not just the neta on top)
While the world economy is jumping from one crisis to another, we have been doing fairly OK.
Its a good time to be in India. Lets be proud and make noise for the bigger issues.

P.S: I maybe ranting, but its just my personal view.
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Old 7th November 2011, 13:56   #45
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by antz.bin View Post
OK. The point here is not that this money will be misused. The point here is about lying to the public and saying that the OMCs are going into losses. Over-exaggerating the effects if the OMCs happen to collapse due to losses. And then increasing the price of petrol on the pretext of the losses.

Anyways, they do make quite a lot of money on the money we earn.
Well, I quite oppose the move to reduce the taxes on petrol for few reasons

a) Since we in India do not produce any (o.k. 10%) of our petrol demand in India, all the money spent by consumers will go to foreign Oil producing Countries.

b) Assume a scenario, that there would not have been any taxes, then prices were sure lower, which would have led to great Demand from Country india, Leading to world Crude prices going higher. I would rather support the move of government to increase the taxes to lower the consumption of petro products in India. I am also secretly hoping we figure out another way of energy for our urban mobility demands

c) As per the law of economics, the Tax Burden is more on the seller than buyer. Taxes reduces the demand and hence pushes sellers to innovate and manage their costs within the price net of taxes they receive. On the other side, Tax reduction leads an incentive to seller to hike the prices because there is anyways an inherent demand. Hence for consumers reducing the taxes do not matter.

d) Since government has to fill its coffer anyways for running its operations, it can simply increase the Income Tax rate which would be even worse. I would rather prefer to pay it on variable basis on my Usage level than pay to government straight from my salary.


e) I do not mind on what pretext Government does it. whether it does in the name of Losses to OMCs or whatever, I think they are doing the right thing.

f) I think it would be a good idea to Deregulate the Prices of PEtrol/Diesel/LPG and CNG and allow the provate palyers alike. It will lead to eaking out the inefficiencies of Government run Oil MarKCos.

Ofcourse Government uses the petrol prices tax as a taxation on higher section of society. what they forget is that Higher section of society is not using petrol anymore. They use Mercedes, BMWs, Audis, SKodas, Cruzes and Mahindra SUV all of which are diesel vehicles. I think the maximum consumption of petrol in this country are done by Motorcycle and Scooter owners, who are the most efficient users and mostly likely are amongst the aam junta or weaker section of society. Its too bad government has decided to Put taxation on weaker section of society and giving discounts to privileged section of society.

Last edited by anu21v : 7th November 2011 at 14:00.
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