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Old 13th February 2012, 09:29   #391
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

For those raising the issue of heavy taxation on fuel and the need to lower prices by removing those - taxes are for multiple reasons. For one, its revenue! Also, there's taxation to inhibit consumption; scarce resources are always taxed, as are those which have negative health implications. Automotive fuels fall into both of these, and the taxation is likely to go up, and rightly so.

Subsidies are another issue - right now freight across the country is largely dependent on diesel - and natural prices would have a huge impact, hence the subsidy. Given an alternative, diesel would not (and should not) enjoy the benefit it does today.
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Old 13th February 2012, 10:14   #392
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by shankar.balan View Post
Frankly I don't think even this Aadhar is going to help matters much in terms of providing proper information.
Specially when the departments within the government have refused to use Aadhar. The latest is the case of the public distribution system coming under Sharad Pawar. I guess the status quo of rampant corruption in the PDS department must continue hence the policy.

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Originally Posted by dingolphie View Post
Strong words, yes, but justified I felt and within the bounds of decency, given that as a diesel car owner, he (me too) was called a cheat, which for me was pretty out of line and I'd say sourav beat me to the response. Its one thing to say the govt has to find a way to ensure that the diesel subsidy is not extended to pvt car owners, but quite another to say that because diesel is subsidised all diesel car owners are cheats.
+1 to that. Sure we might not share the haloed sense of sacrifice of the poster who called diesel owners cheats but we do have good mathematical acumen and foresight to see how corrupt the government is.

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Originally Posted by zenx View Post
For those raising the issue of heavy taxation on fuel and the need to lower prices by removing those - taxes are for multiple reasons. For one, its revenue! Also, there's taxation to inhibit consumption; scarce resources are always taxed, as are those which have negative health implications. Automotive fuels fall into both of these, and the taxation is likely to go up, and rightly so.

Subsidies are another issue - right now freight across the country is largely dependent on diesel - and natural prices would have a huge impact, hence the subsidy. Given an alternative, diesel would not (and should not) enjoy the benefit it does today.
This I think is the most simplistic method of putting forward an argument I have ever come across. In the absence of decent infrastructure or public transport what do you expect ordinary citizens to do? There is ample proof that precious little has been done by successive governments till date even after collecting hefty taxes from people who could pay and then either wasting the money in pea brained schemes or siphoning it off to foreign shores.

Also what has the government done till now to promote use of alternate fuels or help reduce consumption while allowing maintain the strong economic growth the government wants. In many European nations governments provide tax sops for hybrid cars and alternate energy cars. From what I remember our questionable then finance minister and now home minister refused Toyota to launch the Prius in India at a reduced duty when they asked for concessions for introducing hybrid technology in India. Many nations are tying up with a company called Better Place to set up EV networks and help run EVs. What steps has our government taken in this direction except for raving and ranting against private diesel cars? So I guess we should park for now the proselytizing in favor of more revenue through taxing a necessary evil which is an engine for growth. My 2 cents on this.
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Old 13th February 2012, 10:33   #393
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

It would be incorrect to call Diesel Fuel users cheats so I think we need to desist from such comments.

My view is simple:
I pay my taxes and always have done so in all fairness to the government.
I pay a heavy road tax (life time tax) for my vehicles whenever I buy them.

I get very little back from the government in return - bad infrastructure, unsafe, lousy surfaced, ill lit roads, no health care, no social security etc.

My retired parents who have worked hard all their lives and paid their taxes faithfully, have very little coming back to them from this great government of ours. All they read in the papers every day is some new scam or other and it disgusts them, because they were part of the first generation of Free, Independent Indians!

Now, in their later years, it falls to themselves and the rest of us to look after their interests. They drive a Diesel car on the currently cheaper prices and why should they not? What returns have they had from years and years of tax paying? Very little if anything at all!

In a scenario like this, does their saving some of their hard earned bucks by driving a Diesel car, make them cheats? I know I would take grave exception to it if anyone even makes a reference to such a thing!

I see a lot of rampant corruption, bad behaviour, goonda-ism and general nastiness around me. Despite being on a higher growth path than many other economies, India is not much fun to live in, any more - when compared say, to the 1980's when at least one saw reasonably decent behaviour standards etc.

The rise of the new class of "book-learned" people is very good, but the fact that many of them dont have the essence of good education in terms of manners and decency, is a tragedy.

We can debate endlessly and rant and rave about the rights and wrongs of subsidies on Diesel and so on, but frankly it is not going to make any difference one way or another, because these views will not change a politically motivated, vote inspired set of policies on the part of our government officials and politicos.

Might as well accept the fact that our system and values etc are rotting away and live within ones means, within the system or live in ones own way in spite of the system.

Perhaps the only thing that may make a difference is a revolution of the people against the horrible state of affairs that is prevalent here.



If I am able to save something from the wreck by driving about on subsidized Fuel, well, why ever not? Until this subsidy is available to me, I for one, shall happily make use of it and I refuse absolutely to be apologetic about it at all!

Take another case of the "agriculturists" who are not taxed. Agriculture ought to be taxed according to income bracket. The poor farmer should certainly be spared, but what about the rich ones? Where is the fairness in not taxing them?

For every case, there is an argument, depending on the point of view, and this is what Im seeking to illustrate, in a round about way!

Last edited by shankar.balan : 13th February 2012 at 10:36.
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Old 13th February 2012, 11:58   #394
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

To add to SB,

I have both petrol and disel drives at home. And prefer the diesel ones for myself. We should also note that diesel vehicles are more expensive and also give much better fuel effeciency compared to equivalent petrols. I would have choosen to drive a diesel vehicle even if the price of petrol and diesel was the same simply due to the much better fuel effeciency.

Also while many believe that it is petrol prices that cross subsidize diesel, tjhat is not the case. Petrol is pegged at the the international price for petrol. While Diesel, LPG and Kerosene are subsidized. We all use LPG at home (petrol and disel car drivers and those that use public transport) and it is substantially more subsidised compared to diesel.

I would be the first to advocate that diesel and petrol should both be at the same international price point and neither need be subsidized but any Govt moving towards that would immediately fall so this will not happen for a long time.

Actually Tansport is normally less than 5% of the cost of a good. So for a good costing Rs. 100 the total cost of transport takes price up from 95 to 100. Now if we consider the cost of just fuel (removing the cost of capital and the cost of driver and maintenance - all of which are very substantial) the total cost of fuel as a % of cost of good is just 2.5% now if diesel price were increased to that of petrol the actual cost of transportation would be increased from 2.5 to about 4% - just a difference of 1.5%. So if we are paying Rs. 100 for a product today can we not pay Rs. 101.5? It is just political compulsions and the fact that the common man can be swayed by the opposition (whoever may be in the opposition at any point of time) that this uniform pricing does not come about.

Infact Trains (that use diesel) and public (Govt) buses that use Diesel can still be subsidised from the govt funds indirectly. Autoricks and Taxi's in most cities have already moved to CNG and would not be impacted (except the old ones that anyways should not be on the road).

But then unions and political compulsions will not permit this transition.

That said why should a person who has already paid more for a diesel vehicle (waited a long time for it (like for the swift) not take the benefit of what is on the table in front of him in the meanwhile. Do also note that the vehicle manufacturers offer phenomenal deals on petrols compared to diesel where both varients are available but never on the diesel.
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Old 14th February 2012, 07:41   #395
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by samarjitdhar View Post
This I think is the most simplistic method of putting forward an argument I have ever come across. In the absence of decent infrastructure or public transport what do you expect ordinary citizens to do? There is ample proof that precious little has been done by successive governments till date even after collecting hefty taxes from people who could pay and then either wasting the money in pea brained schemes or siphoning it off to foreign shores.

Also what has the government done till now to promote use of alternate fuels or help reduce consumption while allowing maintain the strong economic growth the government wants. In many European nations governments provide tax sops for hybrid cars and alternate energy cars. From what I remember our questionable then finance minister and now home minister refused Toyota to launch the Prius in India at a reduced duty when they asked for concessions for introducing hybrid technology in India. Many nations are tying up with a company called Better Place to set up EV networks and help run EVs. What steps has our government taken in this direction except for raving and ranting against private diesel cars? So I guess we should park for now the proselytizing in favor of more revenue through taxing a necessary evil which is an engine for growth. My 2 cents on this.
Simplistic? Perhaps. But those are the reasons! You cannot drag the governments inefficiency into the rationale for the taxation. That is a separate problem that we as a country are trying to solve at various levels with varying degrees of success. And to say that there's no infra etc anywhere - well - different debate but its a very lopsided view.

Some steps the "government" has taken : the Reva has a bunch of subsidies in various states for various segments, shorter (and be inference, lighter and more efficient vehicles) enjoy lowered taxes, most cities have already switched to tighter BSIV norms, etc. India also has a fairly low direct taxation rate (your marginal tax works out to 25-27%, mostly), has a very small tax paying population, supports a huge range of subsidies (Bangalore gets water at a fraction of its "transport/production" price) whether right or wrong, and taxes goods with an eye towards public good and paying power. Don't paint it that black for the sake of the argument, please. Sure lots of fixes are needed, but thats orthogonal. Its as if my son were to come and say that the food last week wasn't nutritious/delicious enough as per his expectations, so he's not going to study or do household chores from here on. Unfair argument.

It is indeed an engine of growth. But its also an engine of pollution, congestion and in some sense, a tool thats at this point a necessary evil more than anything.

Most members on this board have the paying power, and are amongst the more affluent around here. This is true for anyone in India who can afford a car. Its indeed very tough to administer variable pricing at the pump. This is one alternative way of removing subsidies for car buyers/users. We often rail against subsidies for various segments (since they're overall negative) - so let's not raise a furore against whats, at its core, a very just intent. Each time LPG/diesel subsidies go - especially for our segment of users - we should welcome it as a step towards a more sustainable/robust economy.

Incidentally, I'm personally looking to buy a 7 seater/big diesel sometime in the next year or year and a half.
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Old 14th February 2012, 10:48   #396
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by zenx View Post
Simplistic? Perhaps. But those are the reasons! You cannot drag the governments inefficiency into the rationale for the taxation. That is a separate problem that we as a country are trying to solve at various levels with varying degrees of success. And to say that there's no infra etc anywhere - well - different debate but its a very lopsided view.
But why not? There is a direct co-relation between the government's inefficiency and increased taxation. Because it is the only quick fix and tool the government uses to plug budget gaps regardless of the point is there is enormous wastage and corruption at every level. If the NREGA scheme is being milked left and right with sometimes payments being made out of only Rs 10, to plug that gap the government needs more money. Where do you think this will come from? Just yesterday the CBI director agreed that at least 24 lakh crores ($500 billion) is stashed away in foreign shores illegally. So why should those who can pay taxes pay more to bridge that shortfall? I am not against socialism but it has to be responsibly implemented. You cannot treat a patient by bleeding him/her more and more till the patient dies. Right now this is exactly the government does with increased taxes and duties and a pithy report card on actual collection and monitoring. I know this is completely .

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Some steps the "government" has taken : the Reva has a bunch of subsidies in various states for various segments, shorter (and be inference, lighter and more efficient vehicles) enjoy lowered taxes, most cities have already switched to tighter BSIV norms, etc.
The less said the better about this. Why doesnt the government encourage Nissan and other EV makers to sell their cars at zero duty. I will be first in line to replace my hatch with an EV for use as a city runabout. M&M has been dragging its feet on the Reva NXR for 2 years now!!! Karl Sym of GM was lamenting that the government of India absolutely does not offer any sops for developing vehicles on alternative energy. GM was actually working with Reva to build the electric spark. Imagine the impact it would have had it been sold for even in the range of 5-6 lakhs. Sometimes when I put my tin foil hat and draw up conspiracy theories I think the government is afraid of alternate energy and EV transportation because if majority of the hatch buyers stopped buying petrol cars for their city runabouts, the government will go bankrupt.

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Its as if my son were to come and say that the food last week wasn't nutritious/delicious enough as per his expectations, so he's not going to study or do household chores from here on. Unfair argument.
I think nutritious/delicious food comes after we can get food. Right now there is no food available and I am sure the kid will stop doing household chores if he/she is not fed. We are talking of absence of infrastructure here, quality actually comes later.

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Originally Posted by zenx View Post
Most members on this board have the paying power, and are amongst the more affluent around here. This is true for anyone in India who can afford a car.
Sure, but if I can afford it, that doesn't mean I should be robbed unfairly.

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Originally Posted by zenx View Post
We often rail against subsidies for various segments (since they're overall negative) - so let's not raise a furore against whats, at its core, a very just intent. Each time LPG/diesel subsidies go - especially for our segment of users - we should welcome it as a step towards a more sustainable/robust economy.
Again the confusion on subsidy on diesel comes in. First there is a tax imposed on the product because of which the product becomes not affordable and then the government says here is a subsidy to buy it. This doesnt hold water at all. LPG, true it has a subsidy and I am ready to forego it.

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Incidentally, I'm personally looking to buy a 7 seater/big diesel sometime in the next year or year and a half.
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Old 14th February 2012, 11:04   #397
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by samarjitdhar View Post
I think nutritious/delicious food comes after we can get food. Right now there is no food available and I am sure the kid will stop doing household chores if he/she is not fed. We are talking of absence of infrastructure here, quality actually comes later.
Well, if you have such a strong black/white take on how/whether things work, that's already in the blind-belief category. I have toured the country, on a bike, car, trains, cycle. There are lots of places with decent roads to varying degrees, i have been relatively safe, Bangalore does have street lighting in most parts, there is water supply (though not to our part of town yet), the traffic cops do manage to keep things moving despite the personal and logistical challenges, etc. I have even used the services of a PHC in Coorg! There's huge lacunae, resource issues, implementation issues. There's a huge way to go. But the cynicism and nihilism is unwarranted and unsubstantiated by fact. So there's not much to debating there. Its as if my kid were to say "This isn't even food"!

I despise the corruption/small tax net/inefficiencies too. And in whatever little ways I can, I try and fight or fix it. But I will not use that as an excuse to resist/denounce paying taxes, or the taxation on stuff which the government rightly is trying to reduce consumption of.
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Old 14th February 2012, 11:25   #398
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Now it seems that the vehicle manufacturers led by Mahindra & Tata are up in arms against the proposed Rs.80,000 tax on new diesel vehicles. The Govt. is in a hole (of its own making) and is now seriously considering doing away with (my guess is part of) the so called subsidy in Diesel. Let us wait and see. It may be immediately after the elections.
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Old 14th February 2012, 11:33   #399
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Well, if you have such a strong black/white take on how/whether things work, that's already in the blind-belief category. I have toured the country, on a bike, car, trains, cycle. There are lots of places with decent roads to varying degrees, i have been relatively safe, Bangalore does have street lighting in most parts, there is water supply (though not to our part of town yet), the traffic cops do manage to keep things moving despite the personal and logistical challenges, etc. I have even used the services of a PHC in Coorg! There's huge lacunae, resource issues, implementation issues. There's a huge way to go. But the cynicism and nihilism is unwarranted and unsubstantiated by fact. So there's not much to debating there. Its as if my kid were to say "This isn't even food"!
Well just roads dont make infrastructure. It needs a lot more than that. A sound and efficient public transportation system is a must. One doesnt need to network all the country but even building a good one in economic hubs where a majority of the population reside and work would go a long way in reducing consumption of dirty fuels. Imagine the state of public transport in most cities, where it takes 2 hours upwards one way if public transport is availed to reach one's place of work. Multiply that and it becomes so many hours of lost productivity. If I use my car, I cut that wasted time by half. Its not about being cynical but asking questions and challenging status quo. We have reached this situation because every time we have avoided asking questions or accepted status quo for fear of sounding cynical.

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I despise the corruption/small tax net/inefficiencies too. And in whatever little ways I can, I try and fight or fix it. But I will not use that as an excuse to resist/denounce paying taxes, or the taxation on stuff which the government rightly is trying to reduce consumption of.
Nowhere have I denounced paying taxes. I am asking that my taxes be put to use efficiently and bring real results for what they are being taken for. Currently a majority of that is going to corrupt officials creating the need for me to paying more taxes to bridge the shortfall. If I oppose that, why should that be unfair?
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Old 14th February 2012, 12:27   #400
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

I use public transport a LOT. And, in Bangalore, its nowhere as bad as its made out to be. I also cycle a lot. I'm thankful I can.

We've not been cynical?? If there's one trait that defines the middle class since the 70s, its that, and using the same to justify inaction ("kuchh nahin hoga/what'll one person do?"/etc).

Of course you must ask for better, more efficient public spending, and not just quietly. But don't introduce that as a red herring to dispute a policy/directions thats based on very sound principles otherwise.

The idea behind this move is not to "bridge the shortfall". If some of the reports about what percentage of diesel is actually consumed by private vehicles are right, it'll hardly make a dent in the overall collections. You cannot deny that the subsidy-led pricing has caused a massive skew towards diesel vehicles (I'd have loved it if it had been driven primarily due to their inherent efficiency, their torque/driving characteristics and improved tech instead). And this is just a step to balance things out. You can debate the efficacy of the solution itself, but its grounded in very sound logic and decent intent.

Last edited by zenx : 14th February 2012 at 12:31.
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Old 14th February 2012, 12:28   #401
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Given our colonial past and the fact that we are the 7th biggest country with the second highest population in the world coupled with rampant illiteracy, corruption and bad public transport, can we (the educated,tax paying, better off) citizens of India even think of having a better life? Sure, we think, because we pay taxes and those who don't pay taxes rob the government and the government allows itself to be robbed to stay in power!

I think there is a Big clash between BHARAT and India over diesel subsidies.

Bharat cannot afford costly fuel, so diesel is subsidized. India wants it pound of flesh back due to being shortchanged by the government after years of faithfully paying tax, and hence revolt against the system.

So where is this leading other than Status Quo? ( you rob me of my basic necessities and i cheat you back by withholding taxes )

If a group of people can be called a Church, then the Church of BHARAT is mighty bigger than the Church of India and this is the way it's going to stay. Sure clever people like agriculturalists keep avoiding taxes and keep getting richer thanks to flawed policy making.
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Old 14th February 2012, 13:02   #402
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Given our colonial past and the fact that we are the 7th biggest country with the second highest population in the world coupled with rampant illiteracy, corruption and bad public transport, can we (the educated,tax paying, better off) citizens of India even think of having a better life? Sure, we think, because we pay taxes and those who don't pay taxes rob the government and the government allows itself to be robbed to stay in power!

I think there is a Big clash between BHARAT and India over diesel subsidies.

Bharat cannot afford costly fuel, so diesel is subsidized. India wants it pound of flesh back due to being shortchanged by the government after years of faithfully paying tax, and hence revolt against the system.

So where is this leading other than Status Quo? ( you rob me of my basic necessities and i cheat you back by withholding taxes )

If a group of people can be called a Church, then the Church of BHARAT is mighty bigger than the Church of India and this is the way it's going to stay. Sure clever people like agriculturalists keep avoiding taxes and keep getting richer thanks to flawed policy making.
I hope you have never used a cellphone on a highway, those remote towers gobble up a lot subsidised diesel. The subsidy exists because that is one way we can avoid hyperinflation, transport costs with unsubsidised diesel will put food out of reach for a good chunk of the population. There is no revolt against the system, just some armchair warriors whining about the status quo. I doubt the "India" that you refer to has faithfully paid taxes that matter, rural India can't depend on government for anything, thats why the exemption from taxes.

The rich agriculturalists you refer to are urban tycoons laundering their money using the farmer tag. The average rich farmer is on his own, when things are good, urban pencil pushers begrudge his lifestyle with no thought to the effort he has put in, when he is down, he deserves it for being uppity.
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Old 14th February 2012, 13:47   #403
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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I hope you have never used a cellphone on a highway, those remote towers gobble up a lot subsidised diesel.
FYI cell phone towers use Subsidised diesel even in urban metros. When there is no power the gensets run on Diesel. And on the highways its the same story my friend.

If india had sufficient power these cell towers would run on electricity only.
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Old 14th February 2012, 15:05   #404
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Owing to subsidy policy which has been continuing for years the Government is in deep trouble and will find it extremely challenging to wriggle out. Though radical approach of bringing diesel price at par to international prices looks good on paper, it can be disastrous with inflation soaring, riots and what not.

On one side Govt has to start increasing prices of diesel gradually (2-3 years to bring it to par) and on other side, tax private diesel verhicles at 2-5% of vehicle price capped at lets say Rs. 25,000 per annum. The motor insurance industry could be used for implementation and compliance.

Else its dreadful to think where this subsidy bill could take the country!

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Old 14th February 2012, 15:21   #405
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

The demand from the OMC is to raise the prices of diesel by 9/ltr. This will happen after the elections, the government has to hold out till then. Suggestions to tax private diesel car owners is just another form of the politics of envy, the government has no obligation to make private transportation cheap,or in this case, same for both fuel types.

Petrol car owners decided to save on initials or put refinement ahead of running costs, I don't know why they need any sympathy. I haven't seen anyone in the extended family buy a petrol car in the last 2 decades. This disparity in running costs is not recent, and with advances in diesel tech, even if prices were equal we would have upto 50% lower running cost depending on vehicle type, diesels are here to stay although the current price difference definitely won't.
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