Govt seriously considering dual pricing for diesel

[VBV]

If the dual pricing happens, there will be wide spread leaks (remember the days when a lot of people used domestic lpg to run their cars). Leaks will lead to corruption and this will lead to some officer being given a higher approval authority or whatever.

Its very interesting that the system is being given more babu-dom. The National Rural employment guarantee scheme has now been acknowledged to be a failure not because of the intention, but because of the implementation. Even with this policy, the scheme would be doomed because of its inherent complexity in implementation.

[ethanhunt123]

More News on the same - Govt considering 25% cess on Diesel Cars

25% cess on big diesel cars likely

"Government may impose a 25 per cent cess on big diesel cars and charge bulk users other than railways and state transport corporations Rs 22 a litre more for diesel as part of a dual fuel pricing policy.
"Big car owners do not deserve subsidised diesel. We want them to pay market price but it will be difficult to ask petrol pumps to charge them higher than other vehicles. So it is being debated if a 25 per cent cess on the car price may be imposed on big cars," a top petroleum ministry official said.
This is part of a dual diesel pricing proposal the ministry is preparing for the Cabinet, he said. "Diesel to industrial users other than railways and state transport departments will be sold at market price of Rs 57 a litre."
At present, diesel in Delhi costs Rs 34.86 a litre.
Industrial units like power generators in IT industry find subsidised diesel cheaper than freely priced fuel oil and naphtha, pushing demand that has forced refiners import the fuel to meet the requirement.
"The idea is to limit sale of subsidised diesel to transport and agriculture sectors only," he said, adding the petroleum ministry was holding consultations with various stakeholders and will move a Cabinet note this month.
While the cess on big diesel cars would give about Rs 150 crore (Rs 1.5 billion) additional revenues annually, charging bulk users higher price would reduce loss of state retailers Indian Oil , Bharat Petroleum and Hindustan Petroleum by Rs 14,000-15,000 crore (Rs 140-Rs 150 billion).
"More than half of the projected Rs 1,65,300 crore (Rs 1,653 billion) revenue loss on sale of petrol, diesel, domestic LPG and kerosene this fiscal is on account of diesel sales," the official said.
Diesel demand in April-July had grown by 18 per cent, with bulk of the growth coming from industrial users like power plants.

The official said the proposal under consideration is a watered down version of what the industry was seeking. IOC, BPCL had sought all bulk users including railways to be charged a higher price to reduce their revenue loss by Rs 27,202 crore (Rs 272.02 billion) in 2008-09.
"We are sensitive to the burden on common man and since railways is used by common people for transportation, we have decided to exempt it from higher fuel bill," he said.
Sources said the power sector had seen a whopping 152 per cent rise in demand in the first quarter to 53,000 tons, while fisheries and marine sector had seen a near-40 per cent growth.
The three retailers at present lose 13.69 a litre on diesel sales.
This unprecedented demand growth has seen domestic output fall short of the requirement and a total of 4.14 million tons of diesel may be required to be imported in 2008-09.

Of this, 1.267 million tons has been imported in April-July.
Behuria said while transport and agriculture demand for diesel had grown by 10-12 per cent, consumption by power producers and other industries had risen 30 per cent."

[GenuineOptimist]

but it will be difficult to ask petrol pumps to charge them higher than other vehicles
"The idea is to limit sale of subsidised diesel to transport and agriculture sectors only," he said,

Does this mean the small diesel car users can sleep peacefully at least for the time being?

It doesn't sound a very fair move by making only "new" big diesel consumers while the existing scorpio/safari owners make hay.. :-)

[ibm_jennifer]

It doesn't sound a very fair move by making only "new" big diesel consumers while the existing scorpio/safari owners make hay.. :-)

Man!!!! Are you the Genuine Optimist?

[GenuineOptimist]

Quote:
It doesn't sound a very fair move by making only "new" big diesel consumers while the existing scorpio/safari owners make hay.. :-)
Man!!!! Are you the Genuine Optimist?

I was expecting this.. :-)

If you had read my earlier replies, I believe that the way forward is to pay market price for diesel, just to ensure adequate supply. I'm tired of waiting for days just to fill-up the car.

It is any day better to have diesel at Rs. 55/- and get an assured supply rather than have it at Rs. 38/- and have empty petrol pumps. :-)

[mjothi]

Here comes the next axe. education cess and now what Diesel cess? We were wondering where the previously collected cess went, and now we have one more addition. If its utilized in proper way, we should have no problem. But?

[akash_m]

Is Dzire Vdi a small or a big car in terms of 25% cess?

[mjothi]

Originally Posted by akash_m

Is Dzire Vdi a small or a big car in terms of 25% cess?

I think the distinguish it by engine capacity. So mostly it should be higher than 1500cc? or 1800?

Btw, we already have this classification in terms of Road tax, and now this is in addition to that.

Dezire is 1300cc right, so it should not have any issue.

[akash_m]

Thnx..... but i guess its time to hold on any purchase of new diesel cars. Govt may come up with any stupid policy on diesel anytime. I heard elsewhere that diesel for private cars may cost Rs 57 a litre. Imagine the fate of diesel car owners who bought these cars for economy purpose!!

[appuchan]

This policy wil lead to wide spread corruption and other malpractices just like that of LPG and kerosene for domestic and commercial use. Fuel pumps will offer subsidized fuel to car owners for a "small commission" diversion of fuels will be a big business.

[simplyself]

The Hindu : Business : Cess on diesel cars on anvil

[condor]

Taxation based on classification can be skewed. The smaller the car ( hence lower price tag) will sell more. The bigger cars will sell less. Taxing the bigger cars alone may get the govt more revenue per car. Taxing all cars but at significantly smaller levels can get the govt more revenue, but from a wider spread. By not taxing the smaller cars, the govt is missing on a big group. Then again, by not taxing the petrol cars, the govt is missing a bigger chunk of cars that can be taxed.

Any increase in taxes for bigger cars will surely see some drop in their sales. This is where I am looking for support from the manufacturers to put pressure on the govt to not impose so high a tax that sales are affected.

Another factor is that the bigger cars are also where manufacturers get better margins. If sales are affected, there is scope for them to reduce the prices.

But then, this is India. Tax is supposed to be paid on income. If we pay tax on the tax paid, is there anything that will be spared ?

The whole thing reminds of Tennessee Ernie Ford singing Sixteen Tons.
Classic Country, Sixteen Tons - Tennessee Ernie Ford Lyrics

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store

This tax on tax & more taxes makes me wonder if it's the gov't thinks that it is their birth-right to tax citizenss. Or if the citizens owe their soul to the govt !

[k2_4_u]

Instead of dyeing the subsidized diesel in a different color, may be it can come with an additive which makes it incompatible to use with normal diesel engines unless the vehicles have some sort of Adapter/Kit fitted in them.

All existing vehicles which are eligible for subsidized diesel can get this kit from authorized vendors after proper verification (this would be one time)

All new vehicles in this category come factory fitted with this kit.

The Adapter can be designed to be 'technically' difficult to duplicate.

Though this system might not be entirely foolproof, it does help in minimizing corruption & leaks. The key is the technology of the Additive & the Adapter kit.

[simplyself]

A diesel vehicle costs more to produce. Higher price of diesel vehicles is not solely due to the fact that the seller can be sure that the maintenance cost is low.

We here talk about heavily subsidized diesel. How much is the so called heavy subsidy?
Even the newspaper reports say nothing about the quantum of subsidy. Someone please enlighten me.

[condor]

Parkinson's Law :
Work expands to fill time available.

To cover up a short-coming/ mistake, put in a rule. But rules with holes in it. To plug a hole, put in a new law/rule. To fix problems created by that, put in another requirement. That requirement will have a loop hole, or some one else will put an objection to it (hint : just like taxi owners protesting against speed governors because of additional cost).

Continue this till no one remembers the original reason for anything in that mess.