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Old 27th May 2012, 10:18   #661
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Something we knew all along and these are official figures, the unofficial figures probably would be even higher.

In 3 years, UPA-2 surpasses UPA-1 inflation figures - The Times of India

I am also a bit confused about how I should feel about a diesel price rationalization. A part of me says that the government should stop subsiding it completely and then another part knows that there are black marketers and these humongous number of middle men in the food chain who work to jack up the prices of commodities and for them a diesel price increase is the perfect opportunity to push the prices to the moon. That coupled with another bad monsoon this year, yes looks like another year like 2009 based on the latest ENSO (El Nino Southern Oscillation) predictions will deal a fatal blow. From what I have tracked and read till now, we are well on course for another El Nino year. If that happens, like 2009, we can expect around 40% less monsoons and with inflation already raging at its peak with a possible increase in diesel and LPG price, even God won't be able to save us .

though but I am pretty pissed with the situation of our met departments who rely on so poor forecasting models that their predictions only materialize after weather events have transpired. I do not blame them. We invest more of our precious resources on satellites which will bring HD reality shows on television rather than using them for weather prediction models. This in a country where 60% of agriculture still depends on timely monsoons. Only two emoticons allowed per post. End rant.
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Old 27th May 2012, 13:04   #662
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Proposal to hike duty on diesel cars on card - The Times of India

This was bound to happen. Many might disagree but it just isnt fair to see almost the entire 10+ lakh plus market consuming subsidised fuel. While the amount additional duty to be imposed on such vehicles is debatable, it definitely need to be % of the cost of the vehicle. A 15-20% duty seems reasonable, purely my personal opinion. With the kind of situation the economy is in, tough steps is the need of the hour.

Variable pricing is almost impossible to implement, given the state of bureaucracy.
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Old 27th May 2012, 17:10   #663
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by coldice4u View Post
Proposal to hike duty on diesel cars on card - The Times of India

This was bound to happen. Many might disagree but it just isnt fair to see almost the entire 10+ lakh plus market consuming subsidised fuel. While the amount additional duty to be imposed on such vehicles is debatable, it definitely need to be % of the cost of the vehicle. A 15-20% duty seems reasonable, purely my personal opinion. With the kind of situation the economy is in, tough steps is the need of the hour.

Variable pricing is almost impossible to implement, given the state of bureaucracy.

It isn't fair to see industries burning diesel for power generators, or the truck fleets or any of that.

And keep this in mind - diesel prices will have to rise, but this govt. or the next. The taxes on diesel vehicles, once they increase, are not going back down.
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Old 27th May 2012, 17:19   #664
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Cross posting from here (Do Petrol Price Hikes Really Affect Your Finances?) for members' benefit:

Quote:
Just consider. Every time petrol prices are raised, oil companies end up losing more money. Simply because the price differential between petrol and diesel increases further, and people gravitate towards diesel vehicles. More the use of diesel, more the oil companies bleed. Worse, we all bleed because diesel vehicles add to toxic pollution in our cities, which, in turn, adds to ill health and treatment costs.

This is very well understood. Yet nobody will do anything to fix the trend.

Today, it makes more sense for the next car buyer to buy an expensive personal car but run it on the subsidised diesel. Today, according to government’s own estimates, the use of diesel in personal vehicles has zoomed. Some 15 per cent of the current consumption of diesel is in passenger cars. The agricultural sector uses less—12 per cent of the country’s diesel. This busts the myth that diesel prices are kept low for reasons of public policy. In fact, keeping the price low but allowing its use in the private transport sector is clearly a deliberate policy to use the poor person’s fuel to subsidise the rich.

Oil companies also say that the under-recovery in diesel is now costing them big time. It is estimated that Rs 67,500 crore is lost annually in under-recovery on account of diesel alone. This is roughly 60 per cent of the total losses of the companies. Assuming that private cars consume 15 per cent of the diesel, the direct subsidy to car owners is over Rs 10,000 crore. This is socialism Indian style: taxing the poor to pay the rich. With each increase in the price of petrol, this gap widens. Bad for oil companies; worse for the environment.

The claim of car companies that the modern diesel vehicle is clean is far from true. Emission data shows current diesel cars emit seven times more particulates and three to five times more nitrogen oxides than petrol cars. There is sufficient evidence that tiny particulates—PM 2.5—emitted from a diesel vehicle are toxic and carcinogenic. This toxin is firmly associated with significant increase in cases of asthma, lung diseases, chronic bronchitis and heart ailments. Long-term exposure can cause lung cancer. Diesel vehicles, however fancy and fitted, are costing us our health.

Today, Europe, which promoted diesel vehicles, is paying a heavy cost. It is struggling to meet air quality standards, even though it has invested heavily in the cleanest of fuels reducing sulfur levels to near-zero and has fitted vehicles with every kind of anti-pollution gizmos like particulate traps and de-NOx catalyst. Diesel also has higher levels of black carbon, which is today understood to be a key contributor to climate change. In the US, the car mecca, where emission standards and price do not differentiate between fuels, there is no market for diesel cars.

So why does Indian policy continue to provide this perverse incentive to pollute? The irony is that there is no policy that allows this use. It is a loophole. Car manufacturers struck gold when they realised that they could sell more vehicles if they could run them on cheaper and subsidised fuel. They exploit the fact that diesel price is kept lower because of its use for transportation of essential goods and for public transport—trucks use some 37 per cent of the diesel consumed and buses 12 per cent. They also know that dual pricing of fuel—different diesel prices for cars and buses or tractors—cannot be operated. They merrily exploit this helplessness.

Government agencies know this. They make all the right noises about the need to fix the price distortion. The market types glibly talk about the need to deregulate diesel. They say this because they know that even though they sit in power, they cannot remove government control over the price of this fuel, which is also essential for railways, transport of public goods and agriculture. They know that the inflationary impact of raising diesel price will be high; they know it will be opposed. But they use this convenient cover to do nothing about the most glaring of distortions—the use of the subsidised fuel by the rich and for private transport.

But given the rising economic cost and pollution, the option of doing nothing is not acceptable anymore. The options are either to link the price with emission standards or to ban production of personal diesel vehicles. If this is not possible, then the government should tax diesel vehicles—200 to 300 per cent of the price of the vehicle—to remove the fiscal distortion in price and policy. Our neighbour Sri Lanka has done so. In India, committee after committee has recommended that this be done. But it is not done.

Clearly, the lobby for big diesel is powerful. Clearly, it sits in glitzy chambers of commerce, which can bend policy to suit purse and purpose. It’s sad and deadly.
Link : http://www.downtoearth.org.in/conten...kes-toxic-hell

Rajan

Last edited by benbsb29 : 28th May 2012 at 19:36. Reason: Added link to article, and text in quote tags.
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Old 27th May 2012, 21:31   #665
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I agree with PatchyBoy's viewpoint even though I own two diesel cars. However some points do come to my mind which merit discussion.
- Cost of petrol makes travel by personal mode quite prohibitive. Taxes have to be reduced on petrol.
- Why penalise individuals for buying a diesel car. Make the.norms tight enough to ensure desired emission standards. If that makes a diesel car more expensive so be it. What purpose will levying additional taxes serve?
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Old 27th May 2012, 23:58   #666
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Sorry. I did not give credit while cross posting. This is Ms. Sunita Narain's article .

Having said that, I agree with her POV in general and hence posted here. It is not about penalizing individuals. The Auto makers are to blame for exploiting the loophole and the government for failing to nip it in the bud.

As posted in the other thread, my fuel expenses have gone up by approx Rs.900 a month, which is not a major setback. It is the majority of two wheeler users, who cannot afford to buy a car, that are bearing the brunt.

An additional levy in taxes might act as a deterrant for people switching over to diesel to exploit this loophole. However, in the longer term, if the government does want to subsidize farmers while excluding rich urbanites, it perhaps makes more sense to hike the price of diesel to what its cost would demand and provide direct income support to farmers to help them cover some of it.

Rajan

Last edited by PatchyBoy : 27th May 2012 at 23:59.
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Old 28th May 2012, 00:08   #667
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by PatchyBoy View Post
perhaps makes more sense to hike the price of diesel to what its cost would demand and provide direct income support to farmers to help them cover some of it.

Rajan
Well, its all in the hands of the govt. True. The UID project was on the same lines. That was one way you could identify true beneficiaries of the subsidy. The UID project would have enabled the govt to transfer the funds to help the farmer, not as a subsidy but in some other economically more robust scheme, like an interest free loan with a time bound rider and insurance against crop failure. That way the subsidy on diesel can be eliminated. But then the Govt, is not committed on the UID. On the one hand they cry foul that they can't identify the real needy and on the other hand they do not support a project that helps you with providing that identity.

Its not impossible to work around the subsidy angle, where there is a will, there is a way. How many apartment blocks run lighting for the corridors and play area whole night! I know a few that do and they are big ones. Because the economics of scale help to buy the Diesel to do that. But if the price is brought to its true market value, the wastage will reduce.

The issue in the Indian version of Democracy is "Who will bell the cat"!
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Old 28th May 2012, 11:11   #668
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

I think the noise about the UID was the babus with the support of PC. After all how can some system run by the Private Sector be allowed to succeed. In any case the Aadhar card states boldly that it is a proof of residence and not citizenship.

You are starting with a population the majority of whom have no documentation, so when you generate for the first time you cannot expect them to carry passports. Also, one major bunch issuing certificates with no checks are the local MLAs and MPs. The media highlighted this. How many of these crooks have been brought to book, incl many from the Ruling dispensation.

If you are a cynic then you can also argue that with UID the leakage in the PDS may be curbed ans there are many with their trotters in the trough!
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Old 28th May 2012, 11:27   #669
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by PGA View Post
I agree with PatchyBoy's viewpoint even though I own two diesel cars. However some points do come to my mind which merit discussion.
- Cost of petrol makes travel by personal mode quite prohibitive. Taxes have to be reduced on petrol.
- Why penalise individuals for buying a diesel car. Make the.norms tight enough to ensure desired emission standards. If that makes a diesel car more expensive so be it. What purpose will levying additional taxes serve?
+100.

though but this discussion has now assumed pretty vitriolic proportions towards diesel car owners. It is as if the blame for the catastrophic fiscal situation lies at the feet of all those who bought Rs 10+ lacs car which run on diesel. Statistics be damned. Shows clearly how the government aided with a more than eager media has been successful to completely divert the discussion away from their incompetence towards a morality play of tax paying citizens. Now there is an insistence that citizens should be more patriotic and not buy diesel cars while spending through their nose for petrol to fund the disaster even more. A pity that a lot of our citizens are actively drinking the kool-aid being dished out by the government.

Well no point trying to fight out this point any more. The fact that 90% of Rs 67500 crore of that "subsidy" is actually an immaculate money transfer of the revenue collected by the center to the states which charge exorbitant taxes on retail diesel sales. Or the fact must be ignored that Rs 10+ lakh cars running on diesel are a minuscule percentage of the diesel consumed. Or the fact that an equally powered diesel car gives around twice the fuel efficiency in choc a bloc city driving conditions making the pollution numbers awash unless one wants to split hairs. Or the fact that the government presents a blank paper in the name of a white paper on black money stashed abroad refusing to collect taxes or penalize tax evaders and dodgers with the outrageous argument that the same black money has come into the country as FDI even if it has only filled the pockets of those who dodged or evaded their taxes in the first place. Honest tax paying citizens are ready to tear each other apart on a petrol vs diesel debate while ready to pay taxes through their noses over and above income taxes while they shirk their responsibilities about asking the government to do a better job of revenue generation through better collection of taxes. Splendid !!!
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Old 28th May 2012, 12:31   #670
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by man_and_machine View Post
Well, its all in the hands of the govt. True. The UID project was on the same lines. That was one way you could identify true beneficiaries of the subsidy.
Ha! Are you kidding? Such an identification would disastrous the thriving corruption. (Which why this system is set in first place). Any who wants all in white!

Quote:
Originally Posted by samarjitdhar View Post
+100.
...
The fact that 90% of Rs 67500 crore of that "subsidy" is actually an immaculate money transfer of the revenue collected by the center to the states which charge exorbitant taxes on retail diesel sales.
...
Or the fact must be ignored that Rs 10+ lakh cars running on diesel are a minuscule percentage of the diesel consumed.
...
The Govt taxes are to generate revenue. As the taxes are not affordable, a part of the tax is given back as subsidy. The whole issue is Govt spends more than what it "can" earn (causing the subsidy mockery).

On second line, with no offense to Diesel car owners, I tend to differ a bit. It is not the question of "how much" one can be wrong. If Govt does not want private cars to use Diesel, the cars expected life time and hence expected diesel consumption is known, and that could be charged one time. That would be a rather neat solution than bending to pressure from Tatas & M&Ms.
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Old 28th May 2012, 12:51   #671
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by samarjitdhar View Post
... Honest tax paying citizens are ready to tear each other apart on a petrol vs diesel debate while ready to pay taxes through their noses over and above income taxes while they shirk their responsibilities about asking the government to do a better job of revenue generation through better collection of taxes. Splendid !!!
We didn't learn a lot from the British when they ruled our country, but there is one art that our present "rulers" inherited from the British before they left our shores for good. We see a huge presence of that very "art" in each and every walk of life today, as our "rulers" simply love to use it to the hilt. And we, the gullible, simply love to fall for that old trick, even for the gazillionth time. It's called DIVIDE AND RULE!!!

End of Rant.

BTW, I've been following this thread religiously for quite a few days now, as it makes for a very very interesting read. There are quite a few interesting posts out here, which add something or the other to my miniscule pool of knowledge. Thanks guys. Keep it up.
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Old 28th May 2012, 13:05   #672
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Hello All,

Oil Minister Jaipal Reddy has rulled out Dual Pricing for Diesel. (For benefit of everybody - Dual Pricing is followed in countries like Uk where Diesel is available in two colours - one at price of Petrol & other is subsidized. This is done using Fuel Dyes - Fuel dyes - Wikipedia, the free encyclopedia).

In his opinion Dual Pricing will lead to further lead to black market (For a change politicians are speaking truth).

Also the EGOM meeting on Diesel / LPG Price hike is postporned due to the protest after Petrol Price Hike.

Thus, it seems as of now government is having no clear plans for Diesel Price Rationalization.

Jaipal Reddy has also said that what is followed since decades (Subsidized Diesel) cannot be changed over-night

Let us all wait & watch what happens in near future. As of now, I am holding to my view - Diesel Prices will not increase before 2014 Elections.

Thanks,
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Old 28th May 2012, 13:21   #673
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by Jignesh View Post
Oil Minister Jaipal Reddy has rulled out Dual Pricing for Diesel.
Jaipal Reddy has also said that what is followed since decades (Subsidized Diesel) cannot be changed over-night

Let us all wait & watch what happens in near future. As of now, I am holding to my view - Diesel Prices will not increase before 2014 Elections.
I will be interesting to keep an eye on the stock market and the exchange rates vs. the dollar.

Somebody, please tell Mr. Reddy that subsidies can be dealt with in ways other than at the selling point. What can be given at selling point should be done away with and it can be given later through other channels.

After all, are we not taxed at both income and expenditure points?

If we cannot implement a system that works elsewhere why can we not think of a system that works for us here in India? Something that could take the subsidy point away from time of sale and delay it to an annual tax refund.

I may not be important or qualified, but is there a way I can send this idea to him? Perhaps the idea is not the solution, but it is a proposal that I think is worth consideration.

Last edited by selfdrive : 28th May 2012 at 13:26.
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Old 28th May 2012, 14:10   #674
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

How about banning diesel cars in India?
That may solve the problem.

We need a wide vision and so do our govt.
- 5 year plan of revamping and improving the public transportation system and infrastructure.
The development should be based on growing population, expansion flexibilities, annual usage and saving of fuel. Safety,convenience and affordablity should be taken into picture.

- Alternate sources of energy, hybrid cars,battery powered two wheelers etc. Govt should promote and heavily support the upcoming projects, cut the taxes to help their way. They are the only way forward.

- RnD for vehicles running on solar energy,supercharged capacitors to run powerful electric vehicles etc. We should be the first country to develop it. Why depend on others?
We can develop a Nano, so we can develop anything.

Last edited by Turbokick : 28th May 2012 at 14:13.
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Old 28th May 2012, 14:18   #675
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Hello All,

Final confirmation by Mr. Jaipal Reddy:"We are not considering hike prices of diesel, domestic LPG and kerosene. It is out of question right now," "I am not going to touch the prices of LPG, diesel, kerosene."

Full Link here: No date fixed yet for EGoM on diesel, LPG prices: Jaipal Reddy - The Times of India

This confirms my worst fears - no Diesel Price hike (rationalization) before 2014 Elections.

Thanks,
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