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Old 23rd September 2012, 02:48   #136
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

The recent Rs 5 hike in diesel prices and the huge protest around it has perhaps shadowed out one intersting fact!

That is, this Rs 5 hike is only for regular diesel. The price of premium diesel has simultaneously raised by about Rs 21 per litre. The price of premium diesel is now just a few rupees lower than regular petrol.

I use two diesel cars and had been using premium diesel [ just about Rs 6 costlier so far] thinking about the better lubricity and low smoke etc reasons. However if I need to keep economy of using diesel fuel in mind, my natural choice would be the regular diesel only.

I am sure the reason for a substantial section of private diesel vehicle users are economy focussed and very few would now go in for premium diesel any more. This means much lower sale of premium diesel by the oil companys.

I am much worried that in some more time to come, the sale of regular diesel to non-commercial users may be suspended, citing pollution or similar reason.

If this becomes the reality then the extra 1.5~2.5 lac spent on getting the diesel variant car goes in vain.

I am very curious to know what all of us think about what seems to be the future of diesel private vehicles now on?
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Old 23rd September 2012, 09:33   #137
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by sgiitk View Post
Sorry, I am dead against any subsidies. The most invidious way of taxing the poor.
How exactly is a subsidy a tax on the poor?

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Originally Posted by harishpr View Post
Sixth, invalidate all unaccounted 1000 and 500 rupee notes.
What would be procedure for doing this?
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Old 23rd September 2012, 10:37   #138
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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How exactly is a subsidy a tax on the poor?
Easy. If your budget is not in synch, as it was and will be with currency printing as we have been doing with unbridled subsidies, then high inflation, rupees depreciation and national downgrade will follow. All these reduce the purchasing power of the currency in your pocket. Hurts the poor more than the rich. It was poor economics of the NRHM, MNREGA etc which contributed a lot to the current status.

It probably made sense in 2008-09 to reflate, but should have been stopped very very soon. Profligacy is no substitute for sound economics.

Last edited by sgiitk : 23rd September 2012 at 10:40.
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Old 23rd September 2012, 11:04   #139
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Originally Posted by carboy

How exactly is a subsidy a tax on the poor?

What would be procedure for doing this?
This was done once in past by indira Gandhi. Announce a deadline and have public get all their 500 and 1000 currencies to their bank account. Those who don't will end up having their black money converted to piece of paper post deadline
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Old 23rd September 2012, 11:31   #140
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by sgiitk View Post
Easy. If your budget is not in synch, as it was and will be with currency printing as we have been doing with unbridled subsidies, then high inflation, rupees depreciation and national downgrade will follow. All these reduce the purchasing power of the currency in your pocket. Hurts the poor more than the rich.
I know about effect currency printing on inflation. However, it's a tax on both the rich and the poor.

Assume, a population on 100 people. 75 poor and 25 rich. You print an extra 100 Rs and distribute it among the poor. The inflationary effect is felt by the whole population. But the poor still have an extra rupee and change in their pocket.

I am not arguing for or against subsidies here - I am just saying calling it tax on the poor doesn't make sense.
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Old 23rd September 2012, 11:59   #141
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

Basic problem in our country is that there is absolutely no way by which the average farmer in the country can sustain a family. The average landholding of a farmer is a little over an acre, while the minimum landholding needed for a farmer and his family to sustain themselves is about six times that.

No amount of money poured into the farming sector is going to overcome that.
The only solution is to generate as much employment outside the farming sector as possible to divert as many farmers as possible out of the farming sector. Till thenwe will be pouring money into a bottomless pit.

The government should not be in the business of giving subsidies, which end up benefiting people for whom the subsidy was not intended in the first place.

Diesel engines are thermodynamically more efficient, and if the government bans it on the advice of self-styled experts, it will be a disaster.

Even if diesel is priced slightly higher than petrol, the diesel cars will be economic, as long as the tax policy is not skewed in favour of petrol cars. Diesel cars are popular in Europe for a reason.
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Old 23rd September 2012, 13:59   #142
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by sanyal779 View Post
I am much worried that in some more time to come, the sale of regular diesel to non-commercial users may be suspended, citing pollution or similar reason.

If this becomes the reality then the extra 1.5~2.5 lac spent on getting the diesel variant car goes in vain.

I am very curious to know what all of us think about what seems to be the future of diesel private vehicles now on?
Dont worry. Incase the govt is stupid enough to do that, there will be a PIL and a high court case which challenges whats so special in the 'power' diesel for which one pays a premium. Since there is nothing special, this rule will be rolled back..

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Originally Posted by harishpr View Post
This was done once in past by indira Gandhi. Announce a deadline and have public get all their 500 and 1000 currencies to their bank account. Those who don't will end up having their black money converted to piece of paper post deadline
Interesting exersise. If done correctly, most of the hoarding lalajis would be beggars on the road.

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Originally Posted by carboy View Post
I know about effect currency printing on inflation. However, it's a tax on both the rich and the poor.
I am not arguing for or against subsidies here - I am just saying calling it tax on the poor doesn't make sense.
Subsidy when it doesnt reach who it is intended for, is a tax for the poor only. If the middle class and rich use subsidised diesel for saving a few bucks, the overall defcit is going to hurt the poor the most.
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Old 24th September 2012, 09:30   #143
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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I know about effect currency printing on inflation. However, it's a tax on both the rich and the poor. ....
am not arguing for or against subsidies here - I am just saying calling it tax on the poor doesn't make sense.
Only the better off have some over in the forms of savings which shield to some extent. The poor have none so are hit more. I never said that the better off are not hit.
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Old 24th September 2012, 11:09   #144
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by sanyal779 View Post
The recent Rs 5 hike in diesel prices and the huge protest around it has perhaps shadowed out one intersting fact!

That is, this Rs 5 hike is only for regular diesel. The price of premium diesel has simultaneously raised by about Rs 21 per litre. The price of premium diesel is now just a few rupees lower than regular petrol.

I use two diesel cars and had been using premium diesel [ just about Rs 6 costlier so far] thinking about the better lubricity and low smoke etc reasons. However if I need to keep economy of using diesel fuel in mind, my natural choice would be the regular diesel only.

I am sure the reason for a substantial section of private diesel vehicle users are economy focussed and very few would now go in for premium diesel any more. This means much lower sale of premium diesel by the oil companys.

I am much worried that in some more time to come, the sale of regular diesel to non-commercial users may be suspended, citing pollution or similar reason.

If this becomes the reality then the extra 1.5~2.5 lac spent on getting the diesel variant car goes in vain.

I am very curious to know what all of us think about what seems to be the future of diesel private vehicles now on?
Naah, Dont worry. Differential pricing of Diesel for cars and commercial vehicles separately may not come as that will give arbitrage opportunity to black marketers. Also two seperate fuels like "premium diesel" for cars and regular for commercial vehicles also may not be reality because of the same reason.
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Old 27th September 2012, 00:56   #145
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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The price doesnt appear on the bill as the price at a Retail outlet is fully Tax paid. The Retailer further does not pay any tax on the price of product he sells. However if you are keen, you can send a query for tax structure to nearest oil company office. Or if you need it for a specific location I can give it you through this forum.

You should also know that all Indirect Taxes are always borne by the consumer. You pick up any other goods and the Indirect Taxes are stated in the bill. That is because it is required by Law that Indirect Taxes have to be mentioned separately on the bills.

The Indirect Taxes levied on petroleum products are not shown separately since the Govt. has a different law for petroleum products. The Govt. does not want to reveal the amount of tax that is levied on petroleum products. If the amount of tax was revealed, then it would not be able to fool the common man with its bogus claims of subsidy.

Frankly, you have missed the point. If you want to believe the Govt. and news papers, it is entirely up to you.

But, if you want to really get to the bottom of this, maybe instead of looking up newspapers, you could go through the Union Budget and find out the total taxes levied on petroleum products and then compare it with the so-called subsidy figures.

When calculating the total revenue collected by the Govt., remember to add the taxes on vessels carrying crude, import duty on crude, excise on refining process, Central VAT and also the VAT levied by the states.

Do your own research, talk to people in the refining industry, find out the process gains in cracking crude, get to the bottom of this and not just by reading newspapers and Govt. propaganda.

Last edited by lapsi : 27th September 2012 at 01:00.
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Old 27th September 2012, 07:04   #146
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by sgiitk View Post
Sorry, I am dead against any subsidies. The most invidious way of taxing the poor.

As I have stated many times I do not expect taxation on Diesel to approach that on Petrol so a price differential will persist.
So the Government should start looking at other options. Let the price of diesel be market driven but subsidize other parameters. For eg - for public transport, give them a subsidy or cut taxes to make up for the rise in diesel prices. The same for transporters. A cut in taxes for them and maybe some other changes to them could easily make up for the diesel loss.
I agree this is not easy, but could be possible.
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Old 27th September 2012, 09:36   #147
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

hi folks,
In Goa diesel Rs. 50 per litre and petrol Rs. 58 per litre.Difficult now to convince people to buy diesel cars here.
cheers
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Old 27th September 2012, 09:51   #148
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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So the Government should start looking at other options. Let the price of diesel be market driven but subsidize other parameters. For eg - for public transport, give them a subsidy or cut taxes to make up for the rise in diesel prices. The same for transporters. A cut in taxes for them and maybe some other changes to them could easily make up for the diesel loss.
Targeted subsidy is the answer. Use Aadhar for transferring the subsidy directly into the account. Now you see why so many are opposing Aadhar!! I will say full pricing for everything, and then give the dole to the poor by transfer into their bank accounts. Of course the banks will have to be coerced into opening zero balance accounts, with less red tape.

Seems they have started logging the delivery receipt slips in gas dealerships. It the past I used to just sign and give it. Yesterday the chap insisted that I fully fill in the slip.
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Old 27th September 2012, 10:23   #149
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

we need to look after some renewable energy,

Attached statistics from Gujarat State.
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Old 27th September 2012, 12:09   #150
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by lapsi View Post
You should also know that all Indirect Taxes are always borne by the consumer. You pick up any other goods and the Indirect Taxes are stated in the bill. That is because it is required by Law that Indirect Taxes have to be mentioned separately on the bills.

Do your own research, talk to people in the refining industry, find out the process gains in cracking crude, get to the bottom of this and not just by reading newspapers and Govt. propaganda.
Dear Sir,

I am a PSU Oil Company manager and hence can claim insider knowledge of the information which is considered privileged but otherwise available to public.

I am also aware that all indirect taxes are borne by the consumer. The taxes levied at the time of actual transaction at the transaction are shown in the bill. Eg if you buy a mobile, local govt levies VAT on the product which is levied at the time of sale transaction between by the seller the customer and recovered from him/ her and shown in the bill.

However in case of petroleum products the oil company pays the VAT and is recovered from the buying dealer and is shown in his bill at the time of the transaction. Since the transaction between the dealer and customer is not taxed any further the dealer does not pay any further tax on the product hence does not recover any additional amount from the final customer, hence does not show any taxes on the bill.

Oil industry contributes almost 15% of the total revenues of Govt of India (all heads included) and in some states like Kerala 50% of their tax revenue in the form of VAT levied.

The point that I wanted to make is that Govt collects the taxes but, does it passes on the full loss/ underrecovery to the oil companies?? It does not. Part of the losses are covered in form of what is called Subsidy. Both Govt and Oil Companies are separate bodies.

The info shared by me in my post No 127 is the actual information. I just wanted to state that information such as losses of oil companies etc can be gained from the newspapers and public websites etc.
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