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Old 8th June 2011, 18:23   #46
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by mmxylorider View Post
This is actually doable. Introduce yearly registration (and other fitness checks) for all vehicles and charge a diesel fee while doing this renewal. It can be based on vehicle age and percentage of buying price.

Of course, enforcement is the key to any law and you pretty much have a good percentage of rural population not doing this.
Annual Road Tax collection was the norm till recently. I think it changed to "one time tax" around 1990 along with the registration numbering code.

I would welcome the annual road tax regime. It was there till the Government hit on the gold mine of collecting Road Tax at a go. In past you paid road tax annually, and if you changed your location you paid the tax there. Now a days, you are stuck with "one time tax", and if you change the location, you get no refund, while at the same time you have to pay the "one time tax" again in the new location. Imagine the plight of a person changing location every year or even three. For him the best bet is to sell the vehicle and buy a new one, what a waste of resources.
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Old 8th June 2011, 20:29   #47
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

While we are discussing rationalizing the prices, FM suggests the subsidy might be increased to keep the diesel prices low!

More here: Govt open to more fuel subsidy: Pranab - The Times of India
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Old 8th June 2011, 20:34   #48
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

As anyone with some economics background will tell you, free markets and subsidies are opposite poles, and India has somehow managed to convince itself that the both can co-exist. At some point, someone in south-block's gonna wake up and the realization will dawn upon him/her, that one needs to choose a path, its' either free markets and zero subsidies, or socialism. Any middle ground, is a disaster, as the diesel/petrol disparity is loudly proclaiming in India today.
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Old 9th June 2011, 10:43   #49
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by Dry Ice View Post
While we are discussing rationalizing the prices, FM suggests the subsidy might be increased to keep the diesel prices low!
Yes, He can talk all that now. 3 weeks back, he could not have said this.
Oil was trading at 125$ per barrel. And there were reports that it would touch 150.
Now that it has gone down a bit and stabilized at around 110-115$ per barrel for some time now, he can talk about continuing subsidies. (Even shell has dropped their prices by 3 rupees)

Oil prices down - for now
This article says a bit about the prices for the near future.

Also,
CRUDE OIL PRICE: Oil | Energy | Petroleum | Oil Price | Crude Oil Charts | Oil Price Forecast
This gives the graph of oil prices over past 5 years, 1 year and 1 month (Hover your mouse on the 1Y 1M 1Q tabs)

This is that graph that makes our Govt dance
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Old 9th June 2011, 11:21   #50
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Have said this before but will repeat.

1. Low Diesel prices benefit both petrol and diesel owners in terms of low commodity prices, food prices etc.

2. A person who goes for petrol does so knowing very well that his running is low. The lower price of diesel is not something which just started couple of days back or even years back. it's been there for a long long time. The vast majority of petrol car owners went for petrol because of their economic calculation that petrol + cost of the car works out cheaper for them.

3. A diesel car buyer pays a huge premium for his diesel vehicle and this benefits the car maker immensely. if there is a tax with retrospective effect or an annual tax that should go on the vehicle maker too.

4. When petrol car owners complain about the low diesel prices and implies that diesel car owners are taking undue advantage, the fact is that they are just jealous of the diesel guys. More than 90% of them would have shifted to diesel today itself if they had a choice. They are not doing it because the resale of the petrol cars is low and selling them also is probably not a good thing at this point of time.

Finally i believe the status quo of diesel/petrol prices should be maintained. if the goverment is interested in bringing in a new tax or deregularize diesel prices headsup of atleast 2 years should be given so that current/future vehicle owners can plan accordingly.
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Old 9th June 2011, 11:46   #51
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

My two cents: Diesel deregulation will have a domino effect on inflation. That is the principal reason why the government will not and should not deregulate diesel prices. Imagine what would happen if food prices were to shoot up a couple of days before an election due to an insurgency in Central Asia!

At the same time, a gradual increase in diesel prices will not affect the consumer immediately and if timed right with inflation trends, might actually end up increasing liquidity in the market. Food prices will go up, yes. But the Indian consumer is notoriously fickle and would probably not feel the pinch if it is not an immediate one.
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Old 9th June 2011, 12:09   #52
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Some comments in bold next to yours here:

Quote:
Originally Posted by vishnurp99 View Post
3. A diesel car buyer pays a huge premium for his diesel vehicle and this benefits the car maker immensely. if there is a tax with retrospective effect or an annual tax that should go on the vehicle maker too. Look at the case of Renault Fluence - Petrol version more expensive than the Diesel Version.

4. When petrol car owners complain about the low diesel prices and implies that diesel car owners are taking undue advantage, the fact is that they are just jealous of the diesel guys. More than 90% of them would have shifted to diesel today itself if they had a choice. They are not doing it because the resale of the petrol cars is low and selling them also is probably not a good thing at this point of time. Ha ha!! This is quite possibly true though no one here or anywhere else will even admit to it!!

Finally i believe the status quo of diesel/petrol prices should be maintained. if the goverment is interested in bringing in a new tax or deregularize diesel prices headsup of atleast 2 years should be given so that current/future vehicle owners can plan accordingly.
Perhaps you're right in this. Because the cost of commodities and foodstuffs etc and indeed the WPI (Wholesale price index) is always affected by a hike in Diesel prices. However, the calculation of inflation based on WPI is totally erroneous in my opinion. It should be linked to real retail market prices instead because we poor Indian tax payers pay out big bucks from our hard taxed money to buy our essentials in the retail marketplace and not in the Wholesale market.
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Old 23rd June 2011, 11:25   #53
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Diesel prices could go up in coming days.

Diesel, kerosene & LPG price hike coming in July - The Economic Times

Cheers!
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Old 23rd June 2011, 12:14   #54
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

If government can have a dual price policy for LPG cooking gas (commercial establishments pay market rates where as home users are given subsidy) why cant they have a similar strategy with diesel. Retain subsidy for transporters and farmers and make personal vehicles pay the market price.
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Old 23rd June 2011, 14:37   #55
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by crazyro View Post
If government can have a dual price policy for LPG cooking gas (commercial establishments pay market rates where as home users are given subsidy) why cant they have a similar strategy with diesel. Retain subsidy for transporters and farmers and make personal vehicles pay the market price.
There is a massive black marketeering going on in LPG cooking gas - Just ask someone you know in the restaurant industry. Doing the same for Diesel will bring in more black market issues, more corruption and in general more problems for everyone around.

I think the only solution to the price disparity is to remove the subsidy over diesel completely. Perhaps using the money used for subsidising diesel to subsidise food prices and essential commodities in some way ?

What people dont realize is that a subsidy is derived from the very money the people pay as Income tax to the government. So essentially, money that could have been used to provide :
1. Better roads [resulting in lower usage of diesel / petrol]
2. Building better bridges, power plants, ports etc.
3. World class urban mass transit systems [reducing the need for the middle class to use personal vehicles]
4. Providing better irrigation facilities and improving the value created by farmers thus directly attacking the problem of food inflation due to increased costs
5. Building more freight corridors for faster and more efficient transportation of goods [thus reducing dependency on diesel]

All of these simple moves would have resulted in the country reducing its dependence on importing oil from other countries and being at the mercy of the OPEC.

The subsidy that the government has been handing out over the past so many years for crude oil related products has added up to lakhs of Crores which could have been used in much better ways contributing to the nations' development.

Essentially, I think this is one of the shortfalls of a vibrant democracy : Good economics takes a backseat to short term considerations for retaining power.

EDIT : We havent considered the massive impact of Telecom companies on diesel. They use diesel generators for all their Mobile towers which adds up to a loss of Rs 2600 Crore !

Last edited by PuntoMania : 23rd June 2011 at 14:42.
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Old 23rd June 2011, 14:50   #56
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by lordavenger View Post
My two cents: Diesel deregulation will have a domino effect on inflation. That is the principal reason why the government will not and should not deregulate diesel prices. Imagine what would happen if food prices were to shoot up a couple of days before an election due to an insurgency in Central Asia!
There is no free lunch. For every Rupee of subsidy, we probably pay three rupees in taxes. I am being generous since Rajiv Gandhi estimated (in a different context) that only 15p out of a Rupee actually reaches the target.

For all you how much tax money goes to subsidize the white elephants like Air India and BSNL will be interesting?
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Old 23rd June 2011, 15:03   #57
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by sgiitk View Post
There is no free lunch. For every Rupee of subsidy, we probably pay three rupees in taxes. I am being generous since Rajiv Gandhi estimated (in a different context) that only 15p out of a Rupee actually reaches the target.

For all you how much tax money goes to subsidize the white elephants like Air India and BSNL will be interesting?

Agree to you.

Also it is fair enough . A Guy purchasing a Skoda Laura would have paid up close to 2 Lakhs of Road tax and than you expect him to pay higher prices for deisel as well?

For all the taxes we have paid are we getting back what we deserve?

So lets enjoy lower prices of deisel atleast
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Old 23rd June 2011, 15:31   #58
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by vinukm View Post
Agree to you.

Also it is fair enough . A Guy purchasing a Skoda Laura would have paid up close to 2 Lakhs of Road tax and than you expect him to pay higher prices for deisel as well?

For all the taxes we have paid are we getting back what we deserve?

So lets enjoy lower prices of deisel atleast
How can it be fair when a common man riding a bike pays the full market price for fuel and someone driving a Skoda or BMW buys fuel at subsidized rates.
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Old 23rd June 2011, 15:38   #59
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

@vinukm; What about us petrol car owners - they can continue fleecing us in your view? The road tax in most states is the same for petrol or diesel cars. How about the Kirit Parikh recommendation - Rs.80,000 extra as tax on diesel cars. Then you can have a case for lower prices.
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Old 23rd June 2011, 16:01   #60
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by vishnurp99 View Post
4. When petrol car owners complain about the low diesel prices and implies that diesel car owners are taking undue advantage, the fact is that they are just jealous of the diesel guys. More than 90% of them would have shifted to diesel today itself if they had a choice. They are not doing it because the resale of the petrol cars is low and selling them also is probably not a good thing at this point of time.
You are wrong. I am for diesel de-regulation. Yes, I own petrol cars and if I were to buy a car today most likely it will be petrol (not much running). And yes diesel owners have an undue advantage but not because of the low cost of fuel but because of the fact that my taxes which provide for diesel subsidy ends up going to fuel someone's car/SUV for whom that subsidy is not meant. Not to mention the fact that it doesn't do much good for our economy.

Anyway, as it happens, VW has already increased prices of diesel cars (i.e. making more money). Other might follow. This artificially low price is only helping manufacturers & dealers make more profit. Not exactly helping the country is it?

Quote:
Originally Posted by vishnurp99 View Post
Finally i believe the status quo of diesel/petrol prices should be maintained. if the goverment is interested in bringing in a new tax or deregularize diesel prices headsup of atleast 2 years should be given so that current/future vehicle owners can plan accordingly.
You should consider current situation a heads-up. This plan has been on for years and it might still take some time to implement but it will happen (maybe in phases).

Quote:
Originally Posted by vinukm View Post
Agree to you.

Also it is fair enough . A Guy purchasing a Skoda Laura would have paid up close to 2 Lakhs of Road tax and than you expect him to pay higher prices for deisel as well?

For all the taxes we have paid are we getting back what we deserve?

So lets enjoy lower prices of deisel atleast
Were you presenting an argument? A guy buying a Skoda Laura could well afford to buy diesel even without the subsidy.
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