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Old 27th April 2012, 11:35   #481
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by wildsdi5530 View Post
@Optimus7; There is a page on facebook quoting that base price of 1L of Petrol is INR 16.50/-. Even accepting your value that's more than 50% tax. Also many super rich pay their taxes. They also contribute a lot to charity to avoid taxed. And they do a lot for the country by creating jobs, manufacturing, innovation, etc. Actually it is the poor who never pay taxes. How many farmers do you know who pay income taxes? and 80% of India's population is farmer.
@samarjitdhar; I agree govt. missed a golden opportunity. They should have increased taxes to 120%. Who then would buy a diesel swift or figo for 12 Lakhs? We can kill the auto companies and have a few million people off work, including auto majors and component suppliers. We are already paying about 33% taxes on small passenger hatches (assuming no tax on CSD).
@cowardly lion; Diesel used for personal transportation should not be subsidized, but diesel used for commercial enterprises like truck fleets, intercity buses, illegal electric fences, etc. should be subsidized?
India is just socialist not yet communist.

1) Of the total price we pay for fuel the actual petrol is about 36-40% of the price paid.
2) The Cassandra’s in the oil companies repeatedly ask for a rise in the petrol prices pointing out worst case scenarios of the co’s going under and so on. If that is true then how come
• In 2008-09 HP had a Net profit of 574.5 crores. HPCL Posts Profit of Rs. 575 Crores for FY 2008- 09 Press Releases :: Hindustan Petroleum Corporation Limited
• In 2009-10 IOC had a Net Profit figure of 10000+ crore. - IOC profit rises 246% in 2009-10 - Times Of India
• Remember IOC gifting their employees gold coins? - PSUs opt for gold coins to reward loyal staff - Money Matters - livemint.com

There are under recoveries on Petrol/Diesel/Kerosene/LPG. But this is not the complete picture. Of the complete portfolio on offer these are but 4. There are many more and a breakup can be seen here - What are the products and uses of petroleum? - FAQ - U.S. Energy Information Administration (EIA)
Now I’m sure that products like Jet fuel, Benzene, Toulene, Asphalt are not being subsidized and these are where the money is being made!
This article (Removing diesel subsidy would lead to a functional market for oil retailing - Economic Times) explains further the malaise in the system and how to go about correcting the price anomalies therein.
We are already paying higher taxes on cars than those paid in the US (for example). Who is to say what that critical amount of taxation is where demand will get decimated. Someone pointed out about Figo @ 9 lacs. Consider Singapore – registrations are auctioned and not just handed over for a flat fee over the counter. That is a very good example of market dynamics.
I'm very clear in my mind that everyone should pay for the resources that they consume. I never said that Diesel for commercial enterprise should remain subsidized. To the contrary, it should not be subsidized. I also opine that except intercity STC buses and Truck fleets should be weaned off the subsidy slowly but any other private commercial enterprise that benefits very few should be given a wakeup call immediately. In fact they should have been woken up yesterday.
As far Socialism/Communism is concerned, we all live off the state in one way or the other. Numerous studies have been done in the world that point out that keeping our cities working the way they are requires a huge resource input that is not visible prima facie (read collective natural resources i.e. - lost ecosystems/ biodiversity). This is a bill that will confront us eventually and does not hit us in the face here and now so we don't realize the impact. There is a calculable cost to that which is born nationally in the form of natural resource utilization and not always paid for. So that topic can be a separate forum on its own.
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Old 27th April 2012, 13:37   #482
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by wildsdi5530 View Post
@Optimus7; There is a page on facebook quoting that base price of 1L of Petrol is INR 16.50/-. Even accepting your value that's more than 50% tax. Also many super rich pay their taxes. They also contribute a lot to charity to avoid taxed. And they do a lot for the country by creating jobs, manufacturing, innovation, etc. Actually it is the poor who never pay taxes. How many farmers do you know who pay income taxes? and 80% of India's population is farmer.
@samarjitdhar; I agree govt. missed a golden opportunity. They should have increased taxes to 120%. Who then would buy a diesel swift or figo for 12 Lakhs? We can kill the auto companies and have a few million people off work, including auto majors and component suppliers. We are already paying about 33% taxes on small passenger hatches (assuming no tax on CSD).
@cowardly lion; Diesel used for personal transportation should not be subsidized, but diesel used for commercial enterprises like truck fleets, intercity buses, illegal electric fences, etc. should be subsidized?
India is just socialist not yet communist.
How many farmers really earn more than 2L per annum. Most are struggling to meet their daily needs, repaying loans. Its grossly unfair to compare people struggling to meet their daily needs and people who earn in crores.
The truth is only the middle class people pay their taxes. The rich have too much money (a person earning 1 crore a year, should be paying ~30L as tax, is that happening), while the poor have/earn too less to pay taxes.

The diesel consumption by individuals is a very negligible percentage, so taxing diesel cars more and preventing buyers from choosing a diesel car, will not reduce the diesel consumption by much. Also, why should people be discouraged from buying a car which is more fuel efficient.

When most of the citizens are living in poverty, its not good to keep on increasing the price of essential commodities. If, India is short on natural fuel resources, then why not invest on alternative technology/fuel. Why are we waiting for someone from the pacific to invent something. We have been importing oil for many decades now, why can't we invest in reserching for an alternative for crude. Atleast it will free the agriculture, trucks, buses from the dependency on crude. It is a long shot, but so it seemed in the pre-steam engine era.
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Old 27th April 2012, 13:58   #483
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

See the latest. Proff of Nero fliiles while Rome burns.

Reduce petrol tax by Rs 6 per litre: Oil Ministry - The Economic Times

The S&P downgrade will come tomorrow if they do this. The deficit will skyrocket.
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Old 27th April 2012, 13:59   #484
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by Optimus7 View Post
When most of the citizens are living in poverty, its not good to keep on increasing the price of essential commodities.
I am with you on most of what is being written, only difference is world over the way poor are assisted and helped is vastly different from the way we do it in India. Rather then PDS, Subsidy (On Diesel) and other subsidies, the world has moved to financial assistance. Its easier to manage it financially also it sort of ensures only the needy get the benefit.

Hence this move to remove Subsidy (if it happens) then its good one. Farmers need to be compensated by not reducing diesel prices or reducing electricity cost, they can be helped better by giving financial assistance, cheaper loans form public sector banks etc.

What i specifically like from one of the ET news articles is this section.

Economists say that shielding consumer from market realities only encourages irrational consumption. "Consumption should not be incentivised.
Source : http://economictimes.indiatimes.com/...w/12889256.cms

Last edited by mayankjha1806 : 27th April 2012 at 14:02.
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Old 27th April 2012, 13:59   #485
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If the Reliance brothers are the highest earners in India as of now, are they also the highest tax payers? Same with the SUN TV chaps. Do they really fall under the higher tax paying individuals in the country?

The answer is implicit!

Hence, if we common, honest, tax paying men take a little advantage of cheaper diesel is it such a crime?

Till the blessed subsidy lasts, I for one, am using it to the hilt and I couldn't care less what anyone may think!

Last edited by shankar.balan : 27th April 2012 at 14:00.
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Old 27th April 2012, 14:15   #486
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by shankar.balan View Post
If the Reliance brothers are the highest earners in India as of now, are they also the highest tax payers? Same with the SUN TV chaps. Do they really fall under the higher tax paying individuals in the country?

The answer is implicit!
If I know someone who killed 10 and still got away, can I expect to get away after killing one?
Quote:
Hence, if we common, honest, tax paying men take a little advantage of cheaper diesel is it such a crime?
Maybe not a crime, but surely unethical. But then it is too old fashioned to be talking about ethics.
Quote:
Till the blessed subsidy lasts, I for one, am using it to the hilt and I couldn't care less what anyone may think!
Incredible India!
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Old 27th April 2012, 14:29   #487
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Mismanaged and disorganized = ethos of Indian government.

Oil is just a part of the story, we have similar stories in ALL natural resources of India:
1. Gas
2. Ores
3. Renewable Power
4. Human (before the advent of IT & BPO, what was the govt doing?)
5. Capital (what is the health of all PSUs and Govt enterprises?)

The funny thing is that common voters are not aware / believe its someone else's problem (Somebody Else's Problem - Wikipedia, the free encyclopedia).

How about a no taxation without results movement?
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Old 27th April 2012, 14:53   #488
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Quote:
Originally Posted by civic-sense
If I know someone who killed 10 and still got away, can I expect to get away after killing one?

Maybe not a crime, but surely unethical. But then it is too old fashioned to be talking about ethics.

Incredible India!
Yes. Incredible India is right. Where the CWG and 3G and 4G and what have you can burn our hard earned hard paid tax rupees with nothing being given back to the tax payer! Yes I will most definitely use the subsidy every day and enjoy it! Why not? No apologies mind you! Ethics are great and I wouldn't do anything unethical per se but the diesel subsidy is commonly available to anyone who chooses to take it! In what way is this unethical?

Last edited by shankar.balan : 27th April 2012 at 14:55.
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Old 27th April 2012, 14:59   #489
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by sgiitk View Post
See the latest. Proff of Nero fliiles while Rome burns.

Reduce petrol tax by Rs 6 per litre: Oil Ministry - The Economic Times

The S&P downgrade will come tomorrow if they do this. The deficit will skyrocket.
So basically international (read western-backed) organisations blackmailing developing countries into sustaining high oil prices ?
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Old 27th April 2012, 15:15   #490
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Only God knows the number of biggie's who got benefited from all the 'G' scams in the country. There was a huge loss to the exchequer in the last few years alone and a huge amount of money is still hidden in banks all over the world, and the government doesn't feel it was an opportunity lost to generate revenue and continue to ignore it, rather choosing to tax a very essential commodity to generate revenue, something is seriously wrong with our system.

Why does a country with a such a large middle class and lot of potential, have to depend on revenue from taxing essential commodity. We pay a huge amount as tax to the government for every litre of fuel we consume, yet we are made to feel like we are living with the subsidy given by the government.

The government should do away with the subsidy and tax for diesel and sell it at the market price. We pay for what we get.

Few quotes from the economic times article,

"Indian Oil Corp, India's biggest fuel retailer by volume, had said last week that the companies could not meet country's fuel demand if they continue to sell petrol below market rates.

Continuation of such pricing will only impede the ability of the company to import crude oil and may affect product supply-demand balance; or else the company increase the price of petrol by Rs 8.04 per litre (excluding state levies) with immediate effect," IOC said. If the price were raised, with taxes, petrol would become costlier by 9.65 a litre in New Delhi"

"State oil retailers have requested the government to "declare petrol a regulated product temporarily and provide 100% cash compensation to OMCs, or reduce the excise duty on petrol from Rs 14.78/lt by an amount equivalent to the under-recoveries on petrol and simultaneously advise the states to reduce the rates of sales tax, which vary from 15% to 33%. States taxes are ranging between Rs 10.30 per litre and to Rs 18.74 per litre on petrol."

@alpha1: Entirely agree with you.

Last edited by Optimus7 : 27th April 2012 at 15:26.
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Old 27th April 2012, 15:32   #491
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by shankar.balan View Post
If the Reliance brothers are the highest earners in India as of now, are they also the highest tax payers? Same with the SUN TV chaps. Do they really fall under the higher tax paying individuals in the country?

The answer is implicit!

Hence, if we common, honest, tax paying men take a little advantage of cheaper diesel is it such a crime?

Till the blessed subsidy lasts, I for one, am using it to the hilt and I couldn't care less what anyone may think!
+100 to that! Except for the word in bold. It ain't a subsidy, but just that the government is not able to tax (read:fleece) diesel users as much as it does the petrol users.

And if someone's wants to be so "ethical", then they might please not show HRA, not avail deduction under 80C/80CC, not opt for income tax benefits on house loan, etc etc. After all, their actual income without these deductions should be taxed accordingly right?

Ridiculous comparison, one would say. But so is the one being quoted in earlier posts!
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Old 27th April 2012, 16:23   #492
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by shankar.balan View Post
If the Reliance brothers are the highest earners in India as of now, are they also the highest tax payers? Same with the SUN TV chaps. Do they really fall under the higher tax paying individuals in the country?

The answer is implicit!

Hence, if we common, honest, tax paying men take a little advantage of cheaper diesel is it such a crime?

Till the blessed subsidy lasts, I for one, am using it to the hilt and I couldn't care less what anyone may think!
+1. No one in India or Globally is fair and we all are opportunistic & make use of whatever opportunity we get. Yes even I too have diesel cars only.

But how long is this going to continue, if India's deficit goes higher than its GDP, all hell will let lose. Its high time Govt. read UPA, needs to bite the bullet. How long can they keep the prices under control and make us parasites by giving subsidy.

Yes Govt has made use parasites of our own fortune by giving these subsidy. Give it to those who needs it, that is the farmers and for transportation of consumable item i.e. trucks.

Looking forward to the day when there be no subsidy and everything be available at market rate. End of story. Period..
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Old 27th April 2012, 16:53   #493
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Raising diesel prices or aligning it with petrol is akin to playing around with fertilizers, urea, and other farmer stuff "nutrients" as they call it. Mayawati lost out due to this very reason. Out of all the things the government controls the last thing they want to touch is farmer stuff. But, quite ironically this government want's to increase diesel prices which is again one component of farmer stuff (mostly).

could there be a work around wherein HSD is catered to private vehicles in cities? Like they have CNG and LPG refilling stations?
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Old 27th April 2012, 17:34   #494
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by shankar.balan View Post
Ethics are great and I wouldn't do anything unethical per se but the diesel subsidy is commonly available to anyone who chooses to take it! In what way is this unethical?
Quote:
Originally Posted by ninjatalli View Post
+100 to that! Except for the word in bold. It ain't a subsidy, but just that the government is not able to tax (read:fleece) diesel users as much as it does the petrol users.

And if someone's wants to be so "ethical", then they might please not show HRA, not avail deduction under 80C/80CC, not opt for income tax benefits on house loan, etc etc. After all, their actual income without these deductions should be taxed accordingly right?

Ridiculous comparison, one would say. But so is the one being quoted in earlier posts!
Quite aptly put. In that case, everybody who can should forego the subsidy provided on each LPG cylinder which is actually a true subsidy. Given that we probably use a maximum of 12 cylinders in a year on an average, shelling out Rs 3600 extra in an year will not pinch the pockets of those who are getting decent salaries and can afford to own cars. Its just the cost maybe of one eat out/dinner. If the subsidy bill on LPG can be reduced the taxes on petrol and diesel can be reduced.

TBHP member antz.bin has put up an excellent and informative thread on the daylight robbery conducted by the OMCs in the name of under recoveries. You can read it here http://www.team-bhp.com/forum/indian...ml#post2728659 (Fuel Pricing in India. Detailed Robbery Analysis.).

Last edited by samarjitdhar : 27th April 2012 at 17:35.
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Old 27th April 2012, 17:52   #495
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Raising the price of petroleum products by removing subsidies is not going to affect any one more than the rising prices are affecting us. In the last two years most of the commodities of daily use have nearly doubled, and we bear it as it is unavoidable.

We tend to equate the increase in the commodity cost in direct proportion to the rise in fuel prices. That is not so, as the fuel cost is a percentage of the transport cost, which in turn is a percentage of the retail price. If vegetable "A" costs Rs. 10/ in the whole sale market, it is retailed at Rs. 20/ and bought at Rs.2 from the farmer (Statistics from various articles in TOI from time to time). So you are as it is paying 10 times more than what the farmer gets.

In case the fuel subsidies are withdrawn, the transporters will switch to more fuel efficient vehicles, and will in fact reduce the consumption, and it mat reduce the transportation cost
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