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Old 7th November 2011, 14:05   #46
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

@Mik & anu21v

I agree with you both. When we compare the furel prices with the USA, we forget the Income Tax rates of both countries are not at all comparable.

My only grouse is they touch petrol prices alone! If something is done about the diesel prices for cars, I will be content. After all, misery loves company!
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Old 7th November 2011, 14:14   #47
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by Mik View Post
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.
I see you are a fellow P220er. When I bought mine, I tanked it up for the first time for 48 bucks a liter @Shell (PSU was 46 bucks a liter) on 7th August 2009. The crude prices at the time were hovering around $130-$140/barrel.

If we check prices now, We pay Rs.74.xx here in Pune (You guys don't since you guys are in Delhi/NCR). This price is at a time when Crude prices are at a much more moderate (in comparison) level of $110/barrel. There has been a 60% increase in fuel prices in the past exactly 2 years and 4 months since I got my bike. Extrapolating this 2 times, On 07-07-2016(in exactly 4 years and 8 months, i.e. the day my bike will be exactly 7 years old.), the Price of petrol will be 191.5/liter exactly 4 times the price I filled it up on day 1. Now tell me till what day will you be able to absorb the price rises?

Breaking News: Just saw on TV. They will be reducing taxes on Petrol within a day or 2. Proof that my calculations were not far off.

Last edited by antz.bin : 7th November 2011 at 14:23.
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Old 7th November 2011, 14:49   #48
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by Gansan View Post
My only grouse is they touch petrol prices alone! If something is done about the diesel prices for cars, I will be content. After all, misery loves company!
Going by your Misery loves company comment, I have thought of adding some mor misery to me. I have just planned to convert my Petrol Car into CNG. Good thing is at home I have a nearby CNG filling station which is hardly ever full and I can fill and get out in 10 mins time maximum. God bless those Supreme court Judges who brought CNG to India. I am just waiting to complete 3 years of my UVA to get over the warranty period time

Last edited by anu21v : 7th November 2011 at 14:50.
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Old 7th November 2011, 15:21   #49
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

So I've understood the break-up quite alright.

But one thing that I just don't seem to understand is the statements made by pump owners and others related to the petrol industry. Statements like: "If the prices aren't hiked by 1.5 rupees per liter of petrol, we will have to bear massive losses to the tune of 1000 crores per month!" Say what?

Great post Antz.bin.
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Old 7th November 2011, 16:06   #50
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by antz.bin View Post
I see you are a fellow P220er. When I bought mine, I tanked it up for the first time for 48 bucks a liter @Shell (PSU was 46 bucks a liter) on 7th August 2009. The crude prices at the time were hovering around $130-$140/barrel.

If we check prices now, We pay Rs.74.xx here in Pune (You guys don't since you guys are in Delhi/NCR). This price is at a time when Crude prices are at a much more moderate (in comparison) level of $110/barrel. There has been a 60% increase in fuel prices in the past exactly 2 years and 4 months since I got my bike. Extrapolating this 2 times, On 07-07-2016(in exactly 4 years and 8 months, i.e. the day my bike will be exactly 7 years old.), the Price of petrol will be 191.5/liter exactly 4 times the price I filled it up on day 1. Now tell me till what day will you be able to absorb the price rises?

Breaking News: Just saw on TV. They will be reducing taxes on Petrol within a day or 2. Proof that my calculations were not far off.
I believe direct taxation = income tax should be entirely done with in India.
In any case, the main earning of govt comes from indirect taxes and duties levied.
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Old 7th November 2011, 16:08   #51
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by antz.bin View Post
------If we check prices now, We pay Rs.74.xx here in Pune-------. There has been a 60% increase in fuel prices in the past exactly 2 years and 4 months since I got my bike. Extrapolating this 2 times, On 07-07-2016(in exactly 4 years and 8 months, i.e. the day my bike will be exactly 7 years old.), the Price of petrol will be 191.5/liter exactly 4 times the price I filled it up on day 1. Now tell me till what day will you be able to absorb the price rises?

Breaking News: Just saw on TV. They will be reducing taxes on Petrol within a day or 2. Proof that my calculations were not far off.
You have not understood the gist of my post. I am willing to pay the taxes - whatever it takes. If the petrol price ever reaches 190 Rs a liter ( a bit improbable though) then the govt will be getting a pretty good amount as tax. Not to mention that i will also be earning x times the money i make today. Also, with the country progressing at a pretty good pace(second fastest till last quarter), its a great time to invest.
People will finally realize that petrol is a perishable commodity and will make the switch to cleaner and greener options. Eventually, this is what has to happen. Isn't it. The world will run out of petrol eventually.
A basic law of economics
Ever increasing demand with limited supply = Price rise.

If the govt does backtrack and cuts down on taxes, it will be sad precedent. Cutting down taxes means less revenue - lesser money for welfare schemes. I wish the political class can rise above petty appeasement and take some hard decisions for better fiscal health of the nation.
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Old 7th November 2011, 16:19   #52
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

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Originally Posted by ObsessedByFIAT View Post
:-O is all I can think of!

Purely my thoughts: Till the time we do not have young heads in politics who have an urge to correct what is wrong, I think the country will go to dogs soon ...
BTW which young heads are you talking about? The once we see around all suffer from foot in mouth syndrome.
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Old 7th November 2011, 16:23   #53
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

The Govt. has cleverly washed its hands off the petrol pricing; they neither have to bear the brunt of subsidy nor be the bad guy to hike prices.

The oil companies meanwhile are having a free run.

Roads and indirectly petrol, they say are vital for a nation's progress and clearly in ours, nobody really cares.

The 3rd world war might just be fought over petrol and not water!

Quote:
Originally Posted by suhaas307 View Post
Statements like: "If the prices aren't hiked by 1.5 rupees per liter of petrol, we will have to bear massive losses to the tune of 1000 crores per month!" Say what?
Say, "we are making up for loses incurred earlier".
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Old 7th November 2011, 16:49   #54
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

I have mentioned this before, but will repeat anyway. I know of a lot of guys who are actually happy every time there is a hike in fuel prices! Their conveyance allowance is linked to petrol prices, and they commute by suburban train!

And two guys who "bike pool" regularly were cribbing about the price increase! Both own a CD Dawn each, and each guy brings his bike every alternate day!
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Old 7th November 2011, 16:51   #55
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Diesel might drive the economy, but Petrol drives the common man. Commuter bikes still outsell cars in India, and India's best-selling budget car is still a petrol model.

I don't mind paying higher taxes and have never cheated on my Income Tax, but I'm fast losing patience riding down this one-way street. What exactly is the government giving us in return? Most (if not all) of their welfare schemes neither leave nor are worth the paper they're written on. I'm ready to face some hardship if it helps some poorer guy down the food chain, but that isn't the direction our tax money is flowing, is it?
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Old 7th November 2011, 17:21   #56
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by suhaas307 View Post
So I've understood the break-up quite alright.

But one thing that I just don't seem to understand is the statements made by pump owners and others related to the petrol industry. Statements like: "If the prices aren't hiked by 1.5 rupees per liter of petrol, we will have to bear massive losses to the tune of 1000 crores per month!" Say what?

Great post Antz.bin.
+1. Thanks Antz.bin. Insightful information.

PSUs' (HPLC) say that they "still have under-recovery of 0.2 paise on petrol" even after this hike, and therefore any kind of roll back is ruled out.

In light of the data on this thread, I fail to understand this under-recovery funda.
Are the Oil Cos losing money on selling petrol?
Are they losing money of aggregate sale of all products that come out of the refinery, hence the hike on petrol to manage all the other losses?
or is it that they are not making as much money as they would like to make? - that can be then distributed to their lords in the govt and in other inefficient activities.

A clear breakup of costs with taxes till oil reaches us is a must. An RTI petition definitely seems to be in order.
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Old 7th November 2011, 19:23   #57
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by antz.bin View Post
Recently, Petrol pricing has been a topic of discussion since .....
Kudos to your analysis. But there is a slight FYI I thought I'd bring it up here.

I have a friend into some kind of carbon trading and from what I heard from him was that the Indian oil companies buy a combination of Brent and Light Crude. While one of the crudes is $93/bl the other is $110-odd/bl. So while you say "over-correction", $100/ barrel might actually believe-it-or-not be an "under-correction"!! If this changes the systemic equations or not, I'd say it wouldn't change the end result of your analysis, just reduce the delta.

Just thought of letting this on to you!! Unequivocally agree with everything else !
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Old 7th November 2011, 20:41   #58
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Very good discussion. Would like to highlight few points "under discussed" here.

1. Profit figures of Oil marketing companies are public documents anyone can check. While it is true that there could be some over paying to employees or some minor wastages, it doesn't seem to be on a notable scale. For instance, IOC had a total staff cost of around 6000 crores. Compare this to this year's total deficit projected at around 60,000 Crores. Without strong balance sheet, they could indeed become weaker affecting our national strength in this area (One rare areas where our greedy, corrupt politicians are totally correct - China is flexing its muscle across the world in this aspect)

2. State taxes. In the initial calculation, thread starter have just taken the total income compared to total expenses. But the income part includes significant state taxes, which are not received by Central Govt. Though this amount can be said to be taken by what we call 'Govt.', practically the particular treasuries do make a difference.

3. Widespread evasion of taxes - both direct and indirect by many of us. Maybe the salaried people pay taxes, because there is no way out, but how many business men or professionals do? How many salaried persons pay proper wealth tax or capital gains tax. This is one area where most other countries fare a lot better. It is due to this reason Govt. is dependent on taxes on oil products, which is the easiest to collect. To put it in perspective the total tax income projected for budget year for Indian Govt. is only around 6.6 Lakh crores and where will we be if we totally forego the tax on petroleum products (should be around 1 Lakh gross, though a major part is now given back to OMCs)

My suggestions -

a. Increase diesel prices and LPG prices and subsidise needy directly. All public transport should be given maximum support including subsidy on taxes and insurance. This should help to bring down petrol taxes, while improving total Govt. revenue. Our prices would look similar to Pakistan's in this case

b. Allow free pricing, which should improve efficiencies all round. Tinker with taxes to control pricing whenever required.

Last edited by CoolFire : 7th November 2011 at 20:53.
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Old 7th November 2011, 20:48   #59
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Quote:
Originally Posted by cingsman View Post
Kudos to your analysis. But there is a slight FYI I thought I'd bring it up here.

I have a friend into some kind of carbon trading and from what I heard from him was that the Indian oil companies buy a combination of Brent and Light Crude. While one of the crudes is $93/bl the other is $110-odd/bl. So while you say "over-correction", $100/ barrel might actually believe-it-or-not be an "under-correction"!! If this changes the systemic equations or not, I'd say it wouldn't change the end result of your analysis, just reduce the delta.

Just thought of letting this on to you!! Unequivocally agree with everything else !
In fact that was already pointed out. So I did some magic and made the delta increase

Check here (Fuel Pricing in India. Detailed Robbery Analysis.)

Last edited by antz.bin : 7th November 2011 at 20:49. Reason: typo
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Old 7th November 2011, 21:10   #60
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Default Re: Fuel Pricing in India. Detailed Robbery Analysis.

Quote:
Originally Posted by Mik View Post
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.

...
There are many things wrong with how the government is functioning. But, i think we are picking the wrong issues.
Very well said. all the businessmen who dont pay tax (versus honest non-tax-frauding salaried folk like us) and then run their diesel SUVs with cheap fuel should pay for the fuel they are guzzling - not via my taxes paying for oil bonds.

What I am fed up with - is freaking cheap publicity stunts by politicians and populists like this: http://articles.timesofindia.indiati...dge-toll-plaza
Quote:
A group of residents and traders from Noida also met with the toll bridge company chairperson and demanded that the "hike be rolled back and, eventually, all vehicles be allowed to use the toll plaza free of cost."
Shameful idiots. Someone needs to do their homework on the gargantuan losses and problems in DND: http://www.sebi.gov.in/dp/noidalof.pdf Page 12 of 227:
Quote:
The projected level of commercial traffic on the Bridge has not materialised since inception. This
has adversely affected the revenues from toll collection. The Company has been incurrng losses
since inception and has not paid any dividends so far. The net loss for the year 2004-05 is Rs.
1649.83 lakhs and for the half year ended ended September, 2005 is Rs. 631.11 lakhs.
only last few years have they made profits! Making profits seems to be evil in the eyes of some folk (even if there are years of losses).


Quote:
Originally Posted by Gansan View Post
My only grouse is they touch petrol prices alone! If something is done about the diesel prices for cars, I will be content. After all, misery loves company!
Agreed - even as someone who drives a diesel 2k a month

Quote:
Originally Posted by antz.bin View Post
I see you are a fellow P220er. When I bought mine, I tanked it up for the first time for 48 bucks a liter @Shell (PSU was 46 bucks a liter) on 7th August 2009. The crude prices at the time were hovering around $130-$140/barrel.

If we check prices now, We pay Rs.74.xx here in Pune (You guys don't since you guys are in Delhi/NCR). This price is at a time when Crude prices are at a much more moderate (in comparison) level of $110/barrel. There has been a 60% increase in fuel prices in the past exactly 2 years and 4 months since I got my bike. Extrapolating this 2 times, On 07-07-2016(in exactly 4 years and 8 months, i.e. the day my bike will be exactly 7 years old.), the Price of petrol will be 191.5/liter exactly 4 times the price I filled it up on day 1. Now tell me till what day will you be able to absorb the price rises?

Breaking News: Just saw on TV. They will be reducing taxes on Petrol within a day or 2. Proof that my calculations were not far off.
You got your data in this post completely WRONG. You are comparing controlled 2009 prices with decontrolled nov 2011 prices. Therefore the subsequent assumed growth is incorrect. there's exchange rates to compare as well. bottomline - this post is WRONG.

btw - Reducing taxes on petrol are a separate discussion and not really related to your calculations (though they feed into it).

Last edited by phamilyman : 7th November 2011 at 21:21.
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