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Old 5th August 2011, 14:52   #196
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by vishwas View Post
Don't subsidize anybody. Subsidies only encourage inefficiencies.

A tax on diesel vehicles/cars is punitive to manufacturers and bring a bad name to diesels - why penalize them and downgrade a more efficient engine technology for a fuel pricing inefficiency?

Further it is never practical to have differential pricing as the lower cost beneficiaries, will find a way to take it out of that structure and sell it at the higher price. For example, the kerosene mafia - this differential pricing will only encourage further corruption.

The argument that this will increase inflation is a convenient hiding place for the current beneficiaries of this subsidy. Consider the example of a 5 ton truck - suppose the fuel efficiency is 4 kmpl, and the average food item moves 200km before it is consumed. It takes 50l for 5000kgs or 1l for 100kgs. So a 20 Rs hike in fuel prices/l means a 0.20 Rs increase per Kg of food prices. In reality, we are already seeing food price inflation which is much higher. And not cutting the subsidy has not helped control that inflation.

Cheap fuel encourages inefficiencies - so many buses and trucks that we see on the road are way past their normal operating life - belching smoke, unsafe and very inefficient. Cheap fuel keeps these vehicles on the road for much longer.

A properly priced fuel will encourage other mechanisms - eg. rail freight is much more fuel efficient that trucks.

So it is time to bite the bullet and sell diesel at market prices.
Agree wholeheartedly to your concluding remark even though I must mention that its beyond doubt that food inflation would shoot up when diesel prices go up - but so what ? Lets reduce transportation and storage waste ( maybe disband FCI and fire all the corrupt babus there for starters) which would more than make up for the inflation uptick. All for removing all artificial controls , we will adjust and get used to it sooner than we think.

Quote:
Originally Posted by civic-sense View Post
Govt is losing money on the behest of "greedy" car owners who decides to cash in on subsidised diesel. Ignoring this fact and putting the blame squarely on the govt is just an attempt to run away from the blame.

Either the govt should remove all subsidies or tax diesel cars. There isn't an easier way.
You seem to be off your rockers calling diesel car owners " greedy' , the conditions are given they were just smarter to figure it out .. Don't you feel stupid everytime you tank up with petrol and pay so much more ?

Note from the Team-BHP Support Staff : Post edited. Personal attacks on fellow BHPians are STRICTLY prohibited on Team-BHP. Refrain from posting such remarks henceforth.

Last edited by n_aditya : 5th August 2011 at 17:44.
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Old 5th August 2011, 15:05   #197
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Dieselfan is right. Even if govt increases up the diesel price, it does not means price of petrol or petrol cars would reduce. So the petrol cars would still hurt. The benefit we might get for diesel cars is fun to drive and good fuel efficiency due to new engines. Also note that the guy with diesel car has already paid premium to company and govt in form of taxes that come with diesel cars hence he is not eating into anyone's tax money. Also its the state and the central government that screw up the pricing system, not to mention the free fuel all government servants and politicians enjoy in their premium cars at public expense. Strangely not a single leader, even from opposition, is raising this freebee issue in parliament.
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Old 5th August 2011, 15:58   #198
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by souravc View Post
You seem to be off your rockers calling diesel car owners " greedy' , the conditions are given they were just smarter to figure it out .. Don't you feel stupid everytime you tank up with petrol and pay so much more ?
While I agree it is off the mark to call diesel car owners greedy, it is also off the mark to term petrol car owners stupid.
Every person has their own requirements which they base their purchases on. As a petrol car owner, if I am happy with my purchase I would not take kindly to being bracketed as stupid. Similarly if I was a diesel car owner I would not appreciate being termed as greedy.
I dont think we should take liberties to paint people with a brush that no one has given us.
It would be better to stick to the topic on hand without questioning abilities, intentions and intelligence.

Last edited by n_aditya : 5th August 2011 at 17:44. Reason: quoted text edited
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Old 5th August 2011, 16:09   #199
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by civic-sense View Post
Govt is losing money on the behest of "greedy" car owners who decides to cash in on subsidised diesel. Ignoring this fact and putting the blame squarely on the govt is just an attempt to run away from the blame.

Either the govt should remove all subsidies or tax diesel cars. There isn't an easier way.

That's the most ridiculous thing you could say.
I guess you don't own a diesel car and getting ripped off with the constant increase in petrol price. I can see your anger but you should take it out on the govt and not the diesel car owners.
I own 2 petrol cars for evryday use and monthly expense on them has sky rocketed.

My advice to FM will be to ration fuel.
First 10L in a month at some rate
Next 10L at a little higher price and so on.

Car Reg no. and no. of liters to be linked into a self updating data base at every petrol pump.
It will bring a self control in at least some group of the population and let the over spenders be over spenders
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Old 5th August 2011, 16:23   #200
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

@Civic Sense: Seriously Dude? What were you thinking when making a statement like that? Were you thinking at all? Its not like we diesel car owners are enjoying at someone else's plight. We have already paid our taxes at a premuim when buying the car.
If someone is enjoying at our (civilians) expenses, its the government. They need to cut down on their subsidies.

@Visaster: Very well said indeed. If a number of LPG cylinders can be given at subsidized rates, so can fuel. Problem with that being, one would need to implement a system to keep a track of the number of times one fills fuel. That, is easier said then done in our country, where red-tapism is of paramount importance. Solutions can wait.

Hence, my earlier statement - This is going to create more ground for more corrupt practices.

Last edited by Swanand Inamdar : 5th August 2011 at 16:27. Reason: Spelling correction
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Old 5th August 2011, 16:23   #201
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Honestly, there can never be a please all policy. Period. What this beating around the bush does is delay the inevitable. This problem is so deep rooted that it cannot be corrected simply by increasing the price of diesel. And this segregation for subsidy thing is a joke. We live in a country where we can still get diesel in a plastic bottle! What segment would that fall under?

I don't foresee this happening anytime soon. There is enough negative sentiment right now in the country as it is.

P.S. There are enough capable economists and policy makers in the country. If only they are allowed to do their job
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Old 5th August 2011, 16:51   #202
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Being a petrol car owner, I will say it's unfair to call diesel car owners "greedy".

However I am in favor of removing all subsidies - at least for those who can afford it. Dual fuel pricing or increasing taxes on diesel vehicles is a half-hearted attempt which probably will do more harm than any good.

Removing subsidy completely will not be possible as it will cause a whole lot of problems. For me the best way to do it - is reduce taxes on fuel and increase taxes on private vehicles - maybe commercial too (both diesel & petrol) and of course the DGs. Common man will not be hit much. Auto sector might be hit initially but sooner than later people will get used it and everything will be back to normal.

PS: in case of dual pricing, 1 way to implement that would be to have subsidized diesel at only a few selected pumps depending on the region. Metros could have only 10% of the pumps selling diesel at subsidized rates. Long queues at such pumps might dissuade people from going to them.

Last edited by asr245 : 5th August 2011 at 16:55.
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Old 5th August 2011, 17:02   #203
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Came across this article on Rediff today:

Diesel subsidy end good news for smaller cars - Rediff.com Business

It says "Smaller vehicle manufacturers such as Maruti Suzuki India Ltd, Honda Siel Cars India, General Motors India and Toyota Kirloskar Motors, are likely to gain from the government's proposal to end subsidy on diesel for passenger vehicles."

So, is there an official proposal to rationalize diesel prices end ? I thought it is only mulled about and no concrete steps have been taken.
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Old 5th August 2011, 17:05   #204
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

This debate is turning into an argument for no reason.
Guys, Lets discuss about the topic and refrain from unnecessary mud slinging.

Quote:
Originally Posted by Anandg View Post
Also note that the guy with diesel car has already paid premium to company and govt in form of taxes that come with diesel cars hence he is not eating into anyone's tax money.
@Anandg,
Getting subsidy not meant for him is indeed eating into someone else's tax money. (now don't tell me that our dirty politicians eat into taxmoney...thats something else, better we keep it out of this discussion)

Agreed that the diesel car guy has paid more money while buying, but its not priced high because he gets subsidy later...its because diesel technology is costlier than petrol technology.

Now...A buyer's willingness to buy a diesel car even though its expensive (because of the costly technology), is because he gets subsidy in the present situation.

If subsidies are removed, this percentage of people willing to spend more while buying the car, will reduce because the subsidy is removed from the equation.
Even after subsidy is removed, diesel running cost will be less, but the time by which the higher investment breaks even will be delayed.
For many, it won't be worth waiting that long for the investment to breakeven and start giving profits.

I would like to repeat my opinion here again that the diesel subsidies must go.
The best way is to have a system similar to what you said, but in the opposite direction: Have the agricultural vehicles (or any class which is in need of this subsidy) priced low because diesel will not be subsidised later.

@civic-sense, I hope you meant something else which we all are not able to understand.
Come on dude, how can you call a diesel owner greedy?? (and Mr. souravc, you can't call a petrol car owner as "stupid" as well)
when there is a cheaper option available, who would not want it. who would not want to save money.
if a guy is running 5k kilometres a month, why will he buy a petrol car instead of a cheaper diesel one.

Now in our country, any system will have loopholes and possibilities of corruption. I agree with ra'ul M...A please-all policy is just a dream.

I don't see this deruglarisation of diesel prices coming soon...till then diesel car owners can have fun without guilt.

Last edited by hemanth.anand : 5th August 2011 at 17:06.
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Old 5th August 2011, 17:39   #205
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by civic-sense View Post
Govt is losing money on the behest of "greedy" car owners who decides to cash in on subsidised diesel. Ignoring this fact and putting the blame squarely on the govt is just an attempt to run away from the blame.
Either the govt should remove all subsidies or tax diesel cars. There isn't an easier way.
Quote:
Originally Posted by souravc View Post
You seem to be off your rockers calling diesel car owners " greedy' , the conditions are given they were just smarter to figure it out ... Don't you feel stupid everytime you tank up with petrol and pay so much more ?

The level of discourse on this thread is degenerating by the day. I had ignored the earlier comment thinking it was a one-of but when an otherwise sensible poster like souravc decides to join the party, I think I must speak up.
There is nothing "greedy" about people preferring diesel vehicles over petrol ones for their lower running costs. A simple cost: benefit analysis shows this. But are all petrol car owners "stupid"?
There are several reasons why someone may be "stuck" (for want of a better word) with a petrol vehicle. Am listing a few here:
  • Some cars are just not available in diesel: my Vento AT and selfdrive's Jazz for example. Or the humble Nano and Alto.
  • Petrol cars are about a lakh on average cheaper. So for low running it makes sense.
  • At least that argument worked wen the price of diesel was marginally lower than petrol/ petrol was still affordable. Maybe I did all the math and bought a petrol car when I could afford to. The rampant fuel price hikes have sent all those careful calculations haywire!
  • As someone said, a preference for high-revving, noiseless gasoline drivetrains over clattery, black-smoke-belching oil burners
Having chosen a vehicle, when fuel prices go up, it's only fair that one group should not be penalised AT THE EXPENSE OF THE OTHER. That's all we ask.

Having said that, price discrimination within diesel buyers is an idea doomed to failure in India or indeed anywhere else. Lots of people included myself have outlined why they think this is so, so won't rehash that again!

Quote:
Originally Posted by Visaster View Post
My advice to FM will be to ration fuel.
First 10L in a month at some rate
Next 10L at a little higher price and so on.
Some of the solutions proposed on this thread are worse than the problem. Rationing INDEED! Good luck with that.

Last edited by noopster : 5th August 2011 at 17:56. Reason: corrected typos
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Old 5th August 2011, 17:46   #206
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

@noopster: You say "Maybe I did all the math and bought a petrol car when I could afford to". True, lot of people might be in this situation. Misquitas for example has said so in is i10 ownership thread.

Truth be said, the comments from diesel car owners is on expected lines.
If they rationalise diesel prices (across the board or via price discrimination amongst diesel buyers) you might see the comment "Maybe I did all the math and bought a diesel car when I could afford to"
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Old 5th August 2011, 18:24   #207
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

In the midst of all this, I'm having a hearty laugh at the car companies who tend to unnecessarily cash in on Diesel difference.

Agreed that Diesel technology is expensive, but i find it hard to believe that a company like VW incurs a cost of 1 lakh rupees difference in building a petrol car v/s diesel. I understand all the parts that go in, but justifying 1 lakh rupee difference seems to be difficult.

Removal of subsidy will definitely keep the car companies more honest (one of the primary reasons of their protest, because Diesel is so profitable).

With the intention of hurting no one, Diesel seems to be a fuel that seems to be profitable for every one (people, car companies alike) except the Government.
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Old 5th August 2011, 20:14   #208
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Default Re: Gov't considering tax hike on diesel cars

Quote:
Originally Posted by PuntoMania View Post
This is not true as far as I know. GDP growth does factor in price rise before giving us growth figures. So 6% is 6% after inflation and not before (learnt this in economics,some economics guru here please correct if I'm wrong)
Good observation, true in actual economics. But the point I was trying to make was, when the country is growing at 6%, typically the rich and the upper middle class gets the benefit of the growth.

Other social classes of the country gets generally only a part of the growth, but the inflation is hit directly on them. When their wages, salary is increased by a percentage, inflation hits them harder as cost inflation spirals.
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Old 5th August 2011, 21:04   #209
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by azeemhafiz View Post
In the midst of all this, I'm having a hearty laugh at the car companies who tend to unnecessarily cash in on Diesel difference.

Agreed that Diesel technology is expensive, but i find it hard to believe that a company like VW incurs a cost of 1 lakh rupees difference in building a petrol car v/s diesel. I understand all the parts that go in, but justifying 1 lakh rupee difference seems to be difficult.

Removal of subsidy will definitely keep the car companies more honest...
Not necessarily so.

In UK, diesel is more expensive than petrol. Diesel cars are still more expensive. I can't say by how much, but enough to make them unattractive to people who do not do sufficient mileage to balance out the cost.
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Old 5th August 2011, 21:42   #210
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by carZest View Post
@noopster: You say "Maybe I did all the math and bought a petrol car when I could afford to". True, lot of people might be in this situation. Misquitas for example has said so in is i10 ownership thread."
True, I too did some calculations in December 2010, at a time when petrol was Rs 56 and diesel was Rs 40 here in Goa. With the government increasing diesel by Rs 3, the price is now about Rs 63 for petrol and Rs 43 for diesel.

I have already invested the Rs 80,000 which was saved when I bought a petrol car (I10) over a diesel car (Ritz LDI). My revised calculations (applicable here in Goa) are now as follows:

A. Approximate cost to run I10 per km:
Rs 63 (price of petrol per litre) / 16 (average FE) = Rs 3.9 per km

B. Approximate cost to run Ritz LDI per km:
Rs 43 (price of diesel per litre) / 19 (average FE) = Rs 2.7 per km

C. Difference in running cost:
A - B = Rs 1.2 per km

D. My average yearly driving:
20,000 kms

E. Extra cost to run I10 vis-a-vis Ritz LDI for these 20,000 kms:
Rs 24,000

F. Savings on initial cost of I10 vs Ritz LDI :
Rs 80,000

G. A
nnual interest on these savings:
Rs 8,000

H. Approximate annual saving on car insurance of I10 vz Ritz LDI:
Rs 1000

I. Approximate annual net savings of I10:
G+H = Rs 9,000

J. Approximate annual net expenditure of my I10 (vs Ritz LDI):
E-I = Rs 15,000

These are my basic calculations as of now and I have not taken into account the maintenance costs of I10 vz Ritz LDI. Under these rough calculations, it would take me at least five years (price difference of I10 vz Ritz LDI = Rs 80,000) for the break-even period, when the Ritz LDI would become beneficial to run.

My calculations have been arrived on the assumption that my annual drive is about 20,000 kms. at this point in time, I have covered only 8000 kms in 8 months, which is well below my estimated annual drive. Hence, even more savings for me and a longer break even period in favour of my I10.

Others may not agree to my calculations, but it makes perfect sense to me and more importantly, it makes me happy.

Last edited by misquitas : 5th August 2011 at 21:55.
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