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Old 23rd June 2011, 16:07   #61
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Instead of double pricing of diesel, Kirit Parikh recommendation is always a better option, At least when selling new diesel cars it can be implemented easily. And at any resale of private diesel vehicles they can charge again may be not 80k but prorated by age of vehicle.
Existing owners will still benefit and enjoy the low price of diesel. But still if govt wishes they can implement to ask them to pay a prorated tax or something.
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Old 23rd June 2011, 16:11   #62
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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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.
Status quo should be maintained with a reasonable difference. It cannot be maintained with difference of 15 rs to market price for diesel (as demanded by oil companies)
Why should anyones taxes go into someone's personal car usage?

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Originally Posted by sgiitk View Post
@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.
Sir, with all due respect this will only tax newly purchased cars from date. Why let off the cars that have been already purchased, these should also be taxed the same.
Please correct me if my understanding is off the mark
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Old 23rd June 2011, 16:25   #63
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by selfdrive View Post
Sir, with all due respect this will only tax newly purchased cars from date. Why let off the cars that have been already purchased, these should also be taxed the same.
Please correct me if my understanding is off the mark
I think you are right there but it's still a good start. The way diesel cars are flying off the shelf this will prevent people from unnecessarily lining up to buy one. In the long run even this will help with the huge oil subsidy bill.
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Old 23rd June 2011, 16:34   #64
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

i agree with sgiitk, that seems to be the way forward.

@selfdrive, seems like you are out for revenge. . joking.

de regularisation of the prices would increase commodity prices, which will again hit all of us. one time tax for pvt registered diesel vehicles can work.
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Old 23rd June 2011, 16:50   #65
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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I think you are right there but it's still a good start. The way diesel cars are flying off the shelf this will prevent people from unnecessarily lining up to buy one. In the long run even this will help with the huge oil subsidy bill.
Thats is correct. However, when we take so much time to discuss/ debate/ implement a policy, should we not ensure that we get it correct at the first shot?

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@selfdrive, seems like you are out for revenge. . joking.

de regularisation of the prices would increase commodity prices, which will again hit all of us. one time tax for pvt registered diesel vehicles can work.
I dont really mind it, in fact that sounds better to my ears!

jokes apart, just the fact that the tax I pay is being used for the benefit of somebody who can well afford to do without it, does not make sense. Who needs the subsidy more and who can afford to live without it?
A diesel car owner or a poor user (agriculture)
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Old 23rd June 2011, 17:11   #66
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

I agree with you. but getting to do something about the vehicles already sold, apart from increasing the fuel prices or as suggested dual pricing for fuel may not workout.

getting a higher tax for pvt registered vehicles from now can offset that.

while we are in this, there are lots that the govt can do. slashing import duties on a hybrid / electric vehicles can reduce fuel consumption and save the enviornment. why arent they doing that? people who buy SUV/luxury cars can still have the same and not use the fuel.

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Old 23rd June 2011, 17:14   #67
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by sgiitk View Post
@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.
Disagreed - A one time tax is discriminatory in its very nature since it is trying to accomodate subsidies derived from another source. Such taxes only complicate the whole issue further, especially considering the fluid nature of oil policy in India. By imposing a one time tax, the government will have its hands tied against freeing up diesel prices in the future since buyers have already paid the tax and will then have a legitimate right to demand diesel at cheaper prices - which is not a good sign.

Also, I dont agree about "petrol car owners" feeling marginalized in this debate. This debate is not about petrol car owners vs diesel car owners at all but rather about subsidies. By this time we all have to agree on a few points :
1. Pollution is bad for the economy
2. Excessive imports of any commodity is bad for a country's economy.

It is also known and an accepted fact that the newer generation of diesel engines produce lesser/comparable pollution to a petrol engine, and they are always more efficient - thus requiring lesser import of oil from abroad. So in terms of both point 1. and point 2. Petrol car owners are damaging the economic prospects of India, perhaps even more than diesel car owners - Since this seems to be the only defense of the petrolhead.

Its better not to make this an emotional debate about how diesel cars are robbing the Indian economy and petrol cars are not. Rather better to concentrate on the subsidies overall on diesel and LPG among others.

Last edited by PuntoMania : 23rd June 2011 at 17:15.
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Old 23rd June 2011, 17:54   #68
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by PuntoMania View Post
Disagreed - A one time tax is discriminatory in its very nature since it is trying to accomodate subsidies derived from another source. Such taxes only complicate the whole issue further, especially considering the fluid nature of oil policy in India. By imposing a one time tax, the government will have its hands tied against freeing up diesel prices in the future since buyers have already paid the tax and will then have a legitimate right to demand diesel at cheaper prices - which is not a good sign.
What other source are you talking about? A private diesel vehicle uses subsidized fuel and that subsidy is what should be recovered through a possible one time tax. It's not the best solution but it's the most practical one (dual pricing won't work, complete de-regulation will cause inflation to spiral out of control).

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Originally Posted by PuntoMania View Post
Also, I dont agree about "petrol car owners" feeling marginalized in this debate. This debate is not about petrol car owners vs diesel car owners at all but rather about subsidies. By this time we all have to agree on a few points :
1. Pollution is bad for the economy
2. Excessive imports of any commodity is bad for a country's economy.

It is also known and an accepted fact that the newer generation of diesel engines produce lesser/comparable pollution to a petrol engine, and they are always more efficient - thus requiring lesser import of oil from abroad. So in terms of both point 1. and point 2. Petrol car owners are damaging the economic prospects of India, perhaps even more than diesel car owners - Since this seems to be the only defense of the petrolhead.

Its better not to make this an emotional debate about how diesel cars are robbing the Indian economy and petrol cars are not. Rather better to concentrate on the subsidies overall on diesel and LPG among others.
First a question - I know pollution is bad for us but not sure how it's bad for economy? Can you explain?

Now some facts -
- Yes modern diesel engines are at par with petrol as far as pollution is concerned and better if CO2 is concerned. BUT that has got a lot to do with the quality of fuel. Diesel in India has very high sulphur content as compared to western countries. According to TOI, BS4 diesel has 50ppm of sulphur compared 15ppm in western countries. And this is with BS4 quality fuel. BS3 is higher. Petrol has no such problems though it does produce CO2 (which in itself isn't harmful but causes global warming).

- Diesel when it goes inside private cars does rob the economy. It gets emotional when one realizes that it's the tax we are paying which actually partially funds the fuel of a private diesel vehicle owner. Not only that but it's also funding fuel for power backup DG's in affluent societies, cell phone towers of our mobile operators and fuel for those cabs running around for private profit making companies. That's not what I am paying taxes for!

- Not a fact but general observation - private diesel vehicle owners generally seem to have more tendency to drive just for the heck of it as they have a diesel vehicle. To clarify it, if one goes for a drive in a diesel vehicle but wouldn't if it was a petrol, I consider it a "just for the heck of it" drive. There goes the theory of reduced oil import bills.

Sure, LPG/kerosene should be considered too but let's just start with the "luxury" segment first.



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Originally Posted by selfdrive View Post
Thats is correct. However, when we take so much time to discuss/ debate/ implement a policy, should we not ensure that we get it correct at the first shot?
I actually don't know one would tax existing private diesel owners so didn't answer that . Maybe there could be law to make all existing owners to pay a tax and policing of that could happen at petrol pumps.

Last edited by asr245 : 23rd June 2011 at 17:58.
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Old 23rd June 2011, 17:56   #69
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by PuntoMania View Post
Also, I dont agree about "petrol car owners" feeling marginalized in this debate. This debate is not about petrol car owners vs diesel car owners at all but rather about subsidies. By this time we all have to agree on a few points :
1. Pollution is bad for the economy
2. Excessive imports of any commodity is bad for a country's economy.
This isnt about petrol car owners demanding cuts on subsidies for diesel cars. It is about tax payers being unhappy about subsidies in general.
As a petrol car owner, a quick fix would be for me to go buy a diesel car. And this is what almost everyone is doing. But this will not help pur economy as our oil bill is increasing by the day.

The solutions for this have to be long term:
- investing in efficient, reliable, regular & safe public transport
- developing infrastructure and benefits across the country as against specific regions
- investing in rural areas/ agriculture to avoid urban degeneration and mass movement to cities for work

Unfortunately, the malaise of corruption and ineptitude has already eaten away a lot of our resources and affected our ability to perform to potential in terms of nation building. As this will take generations to happen at the current rate of progress (?) the only viable option remains to sell at market rates to the general populace and provide subsidies only to the needy. Now how to identify who is genuinely in need is a different question.
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Old 23rd June 2011, 18:00   #70
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by sgiitk View Post
@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.
Road tax is a state subject (though I wish it was on the Central list, or at least on the concurrent list). I don't think the Central Govt will implement Parik's reccomendation when it does not get even an iota of the booty flowing from additional road tax.

The debate over rationalising diesel prices has been going on for the past 5 years, and nothing seems to be working out. I doubt if they distinguish between an SUV and a truck or tractor while selling diesel, and any attempt to differentiate them would lead to rampant corruption.
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Old 23rd June 2011, 18:13   #71
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Lets debate all we can. Rest assured nothing is going to come out of it. How can the subsidy on diesel be done away when transport sector is dependent on it. Already inflation is killing the middle class man softly.

One time tax on diesel vehicle? I am sure some workarounds will be found by "so clever that we cut our own fingers" Indians.

Already diesel cars are priced higher than the petrol ones. So the govt does get more in terms of taxes on sale and all that.

And what came out of so called Petrol price rationalization?
Oil cos are still crying over the money they are losing.

They increase the prices when crude increases but forget to decrease the same when crude price go down. Even if all the subsidies are gone I am sure they will be crying over something else.
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Old 23rd June 2011, 18:22   #72
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

The Govt. is subsidising diesel since this is the fuel that is used by goods carrying vehicles and mass people moving vehicles, railways etc... Petrol is viewed as fuel used by economically stronger section of the society.

Diesel subsidy does not come free, it comes from the taxes we pay as citizens of the country. Govt money is public money. Diesel subsidy was never meant for use in high end cars. Having differential pricing will create another monster for the Govt i.e black marketing and illegal usage. It is because the govt. is helpless and cannot have differential of diesel for cars as against trucks/ buses etc.. that high end luxury car owners are able to enjoy the diesel subsidy. Car makers also are cashing on this weakness of the Govt. and are increasing prices of their diesel versions and enhancing their profits at the cost of the tax payer i.e. you and me.

The car industry is moving rapidly towards being an almost 100% diesel industry with very few going for petrol versions. The time is not far away when the govt. will be forced to impose some type of diesel subsidy cess while registering diesel cars, which seems to be the only solution.
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Old 23rd June 2011, 18:26   #73
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Sooner than later we shall witness excise hikes on diesel powered personal vehicles. The catalyst for this shall in all probability be the next bout of upswing in crude prices. Once the states see the Centre raking in the moolah on diesels they will hike the road tax on diesels.

Justification will be the taxing of the rich to ensure farmers are not deprived of diesel due to the lavish lifestyle of the rich, as the diesel subsidy for the farmers by the government, is crumbling under the greed of the rich!

Crystal ball gazing? Well yes. Now that I have stuck my neck out let us see what happens!
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Old 23rd June 2011, 19:44   #74
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by asr245 View Post
What other source are you talking about? A private diesel vehicle uses subsidized fuel and that subsidy is what should be recovered through a possible one time tax. It's not the best solution but it's the most practical one (dual pricing won't work, complete de-regulation will cause inflation to spiral out of control).
Its not the most practical solution because you are not addressing the root cause of the problem : Diesel subsidy. Taxing vehicles for one time will mean the government has signalled its intention to continue subsidies indefinitely (because they would be taxing car owners harshly one time and thus they will be 'entitled' to enjoy subsidised fuel for life), which is not at all a practical solution - Over a long term, the most economically viable solution is to abolish subsidies as well as taxes on diesel to bring the prices down to somewhat sane levels. I dont understand the dual policy of taxing diesel and then subsidizing it. I know you think de-regulation will cause inflation to spiral out of control, but then the money used for subsidy can be used in a lot of other purposes which will reduce the dependence on diesel in the first place i.e. address the root cause (please see my post on page 4)


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Originally Posted by asr245 View Post
First a question - I know pollution is bad for us but not sure how it's bad for economy? Can you explain?
Pollution has many economic costs one of them is health bills (It is estimated that in California alone $ 25 Billion a year is spent on health problems that are caused by pollution). I dont want to go into detail on this, just do a simple google search you'll get your answers.

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Originally Posted by asr245 View Post
Now some facts -
- Yes modern diesel engines are at par with petrol as far as pollution is concerned and better if CO2 is concerned. BUT that has got a lot to do with the quality of fuel. Diesel in India has very high sulphur content as compared to western countries. According to TOI, BS4 diesel has 50ppm of sulphur compared 15ppm in western countries. And this is with BS4 quality fuel. BS3 is higher. Petrol has no such problems though it does produce CO2 (which in itself isn't harmful but causes global warming).
Not a valid argument as the diesel buyer does not have control over the quality - and neither does the petrol buyer for that matter. We really shouldnt go into stuff like Sulphur content or for that matter petrol/diesel adulteration as that is something none of us can determine here.

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Originally Posted by asr245 View Post
- Diesel when it goes inside private cars does rob the economy. It gets emotional when one realizes that it's the tax we are paying which actually partially funds the fuel of a private diesel vehicle owner. Not only that but it's also funding fuel for power backup DG's in affluent societies, cell phone towers of our mobile operators and fuel for those cabs running around for private profit making companies. That's not what I am paying taxes for!
Agreed. There is no debate about this. Thus its better to abolish diesel subsidies completely.
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Originally Posted by asr245 View Post
- Not a fact but general observation - private diesel vehicle owners generally seem to have more tendency to drive just for the heck of it as they have a diesel vehicle. To clarify it, if one goes for a drive in a diesel vehicle but wouldn't if it was a petrol, I consider it a "just for the heck of it" drive. There goes the theory of reduced oil import bills.

Sure, LPG/kerosene should be considered too but let's just start with the "luxury" segment first.
This is pure demand / supply economics at work. If petrol costed Rs 30 a litre the opposite would have happened. Do you think a person who is able to afford a diesel car + team Bhpians proposed one time tax will not use his car as much ? Think again ! The fact that he / she did shell out even more money for a diesel than before will perhaps make him use the car even more, which once again, let me remind you is the not the objective of these measures in the first place : The objective of any such measure is to reduce the consumption of diesel and still ensure that the automotive sector is not affected adversely.

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Originally Posted by asr245 View Post
I actually don't know one would tax existing private diesel owners so didn't answer that . Maybe there could be law to make all existing owners to pay a tax and policing of that could happen at petrol pumps.
This is not practical to implement at all. The word "policing" and honesty dont quite go hand in hand in India.

Edited to Add an OT point : Lets consider this case. Even if diesel subsidies are completely eliminated, we'll see market forces at work which will reduce the cost of diesel cars significantly (At the moment this market is willing to pay a premium on diesel powered vehicles due to the subsidy), which will bring diesel cars to competitive levels vis-a-vis its petrol rivals, with perhaps a premium of Rs 20,000 - Rs 30,000 considering the higher input costs for a diesel. It still is economically more viable to run a diesel car considering their higher fuel efficiency. Unsubsidised diesel costs something like Rs 57 per litre, compared to unsubsidised petrol which costs around Rs 71 per litre (in Pune). A diesel still gives anywhere between 20 to a whopping 50% more fuel efficiency over petrol. So, which one is more economy friendly again ?

Last edited by PuntoMania : 23rd June 2011 at 19:51.
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Old 23rd June 2011, 21:12   #75
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by PuntoMania View Post
Its not the most practical solution because you are not addressing the root cause of the problem : Diesel subsidy. Taxing vehicles for one time will mean the government has signalled its intention to iesel and then subsidizing it. I know you think de-regulation will cause inflation to spiral out of control, but then the money used for subsidy can be used in a lot of other purposes which will reduce the dependence on diesel in the first place i.e. address the root cause (please see my post on page 4)

?
You are asking the babu class to get off the gravy train! You think it will ever happen?

As anyone who has seen the way India is run, even from outside, will tell you the netas are not half as big as a problem as the babus. Think of the various avenues of enrichment that are available to them when the subsidies are supposed to be dispensed to the intended beneficiaries. You think they are ever going to give up these perquisites of office?

Further with reference to the merits and demerits of subsidies. Like it or not, they are a part of the policy of all major economies including those in the OECD block. There is no way they are going to be given up by our country.

Since in all likelihood [1] subsidies are not going away and [2] diesel vehicles are going to sell in increasing numbers due to the current fuel pricing scenario, whats the solution? Curb diesel vehicle sales for the personal transport segment. The proclaimed benefits shall most likely be [1] diesel subsidy for agriculture and transport sector is protected and [2] unjust enrichment of auto manfacturers selling disel vehicles is curbed and money collected to fill the coffers of the state.

Last edited by RS_DEL : 23rd June 2011 at 21:14.
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