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Old 16th September 2012, 18:54   #901
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by vikrantj View Post
Oil is heavily taxed at the central and state levels, and rightly so. If the purpose of taxing oil products is to ensure that we minimise our dependence on these dwindling resources, then why not adopt a revenue-neutral policy that penalises high use of finite resources and incentivises those willing to reduce their consumption.
Quiet right. The high tax on oil isn't turning anybody away. People view this as 'sunk cost', go ahead with their consumption.

As an alternative to increasing fuel prices, Govt can provide ethanol and bio diesel, which can work in existing engines. This might reduce the price by about Rs 10 per litre, without reducing any tax or duty. Last heard, Govt is 'still working' on policy for bio fuels.

PS: Current bio fuels require land, fertilizer for crop. Research is going on grow bio fuel in sea. In case, if Arctic, Antarctica or Himalayas melt and land is submerged, we will still have sea to generate fuel.
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Old 17th September 2012, 01:09   #902
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by msdivy View Post
PS: Current bio fuels require land, fertilizer for crop. Research is going on grow bio fuel in sea. In case, if Arctic, Antarctica or Himalayas melt and land is submerged, we will still have sea to generate fuel.
I hope this will never happen. Because even we get sea to generate fuel, we won't have the land to drive our cars.
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Old 17th September 2012, 07:18   #903
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The government should be made to move 75 % of all the tax that they have collected on Petrol and Diesel to build public transportation infrastructure for us.
Decent roads, proper Metro trains, buses etc.
They need to speed up the Metro work across all cities and increase the high quality bus fleet too.
Particularly they need to ensure last mile connectivity for the public and encourage things like ' park and ride'.
If these things were available most of us, would opt to use the same, especially because it takes the majority of the stress out of commuting!

For heavens sake, one cannot even attempt to cycle to work in a city like Bangalore on account of the dangers on the road! Walking is near impossible, on account of the completely broken down pavements and pedestrian areas!

In India, one simply cannot manage without one's own personal vehicle, on account of the sheer rubbish roads and infrastructure that we are forced to live with.
Trying to smash down on Diesel car owners and increase fuel prices to very high levels etc are only short term measures which are completely useless.

Bt since when have our idiots in government ever been able to think long term except when it comes to taking bribes and being corrupt!
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Old 17th September 2012, 07:56   #904
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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
The government should be made to move 75 % of all the tax that they have collected on Petrol and Diesel to build public high levels etc are only short term measures which are completely useless.

Bt since when have our idiots in government ever been able to think long term except when it comes to taking bribes and being corrupt!
Amen!

You have hit the crux of the issue. Personal transportation is a compulsion rather than a choice in India,be it in the urban areas or semi-urban forget about the rural. Fix this problem and in this time of high energy prices - which are likely to rise even more , a lot of folks would convert their daily commute to public transport rather than shell out huge sums of money on fuel bills.
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Old 17th September 2012, 11:12   #905
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by vina View Post
That is the whole problem - your point is a whole lot broader than most knee-jerk intellectual-pretends here will understand.
You could not convince people with the strength of your arguments, so you resort to calling them names. "Knee jerk intellectual pretends" Where did you come up with that? Would love to know what you were smoking.
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Old 17th September 2012, 11:41   #906
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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
The government should be made to move 75 % of all the tax that they have collected on Petrol and Diesel to build public transportation infrastructure for us.
Decent roads, proper Metro trains, buses etc.
They need to speed up the Metro work across all cities and increase the high quality bus fleet too.
Particularly they need to ensure last mile connectivity for the public and encourage things like ' park and ride'.
If these things were available most of us, would opt to use the same, especially because it takes the majority of the stress out of commuting!
+1. Spot on. Public transport is being neglected all over India. I can vouch for this specially in Kolkata, which has seen a deterioration over the years.
There used to be a really good public transportation system, run by the state government and like any civilized city buses used to ply from 4.00 am to midnight. Weakening of the government sector transport and leaving things to private operators had resulted in more chaos on the roads. The private operators resort to stopping anywhere in the streets, thereby clogging the already scarce roads.
And no proper taxi stands anywhere in the city, resulting in the cab operators roaming around the city mindlessly, without passenger on board, clogging the roads further! Why is no one bothered about the diesel wastage, leave aside the resultant pollution?
Also look at the running of the metro line, which is the first one in India. The first train at 8 a.m. and the last train at 9.40 p.m. And Sundays, you begin your service at 4 p.m.? Will you call Kolkata a city or a mufassil town?

Last edited by subratasenn : 17th September 2012 at 11:42.
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Old 17th September 2012, 14:36   #907
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

Quote:
Originally Posted by shankar.balan View Post
The government should be made to move 75 % of all the tax that they have collected on Petrol and Diesel to build public transportation infrastructure for us.
Decent roads, proper Metro trains, buses etc.
They need to speed up the Metro work across all cities and increase the high quality bus fleet too.
The lion's share of taxes on fuel is imposed by states currently in the case of diesel and of course by both center and state for petrol. But let's look at diesel for now. I had done this calculation some time back so I updated the revenue figures with the new rates.

Rationalising diesel prices. *Update: Now Deregulated*-statewiserevenuev2.jpg

The larger states earn anywhere between 3000-4000 crores annually in diesel taxes. Now we need to know why such a huge tax component. There are lots of state subjects where the states need to spend money like healthcare, roads, education, transportation, etc. I doubt how much the center really contributes to the states economy apart from making a huge show of building highways which by the way currently is in a pathetic state of affairs. Maybe somebody else can correct me in what ways the center helps out the states.

Now from this extract from the latest union budget we can the states share of revenue is about 30% in total for all the states cumulative. The figures are in crores.

Rationalising diesel prices. *Update: Now Deregulated*-taxesshare.jpg
The last line in the above image is what the center retains for itself from the total tax collections.

I was trying to look for figures for individual states but my quick searches only located a budget document from 2001-2002 here http://indiabudget.nic.in/ub2001-02/rb/annex1.pdf which only mentions that the states share of taxes are derived from service taxes and duties and most importantly not from income taxes. Also a point to note that is the %age share of individual states has not changed by much in the last 10 years. If all the income taxes collected are appropriated by the center then the states are left very little to play with. As a result almost all our states are running huge deficits and are borrowing from the market for their day to day expenses. Something is fundamentally wrong in this system I think. So the easy way out for the states is to tax petrol and diesel to bridge the gap as much as possible. Some of the states have now started making noises by asking the center to release a larger share of the central taxes so that they can take a shot of reducing taxes on diesel and petrol. Given how our center operates I doubt that would happen.

Quote:
Originally Posted by shankar.balan View Post
Trying to smash down on Diesel car owners and increase fuel prices to very high levels etc are only short term measures which are completely useless.

Bt since when have our idiots in government ever been able to think long term except when it comes to taking bribes and being corrupt!
Which is exactly the point. How far can you do this? How much of the deficit has been bridged by this price rise? Its not that the rating agencies decided to upgrade India the next day. Remember this is the same government who announced farm loan waivers of Rs 50000 crores I think just before the last elections. There was no concern for the deficit then of course. Corruption is the bane of India. If you compare with other developed nations, there is still at least a certain level of individual honesty through which government functions. But it seems in our nation we are now totally okay with the free for all and me first attitude. So much so that we publicly ridicule and belittle people who try to organize against corruption by getting into an analysis paralysis of how they dress, which aircraft class they flew. Sorry for going slightly OT. Imagine the amount of loot that has been done in the name of 2G and now Coalgate and the amount of revenue generation that would have happened to bridge this deficit which I agree is for real and dangerous. Even the argument that giving away the nation's resources for almost free fell flat to the ground after the Jindals were caught with their hand in the piggy bank. Had we more transparency and accountability in public life, we not only would have met our fuel bills but also taken care of the deficit. Even if we increase the diesel price all the way to rhetorically sacrifice the common citizen we will still be far away from bridging the deficit. What would we do then, harvest human organs of the common citizen?

Quote:
Originally Posted by Lalvaz View Post
You could not convince people with the strength of your arguments, so you resort to calling them names. "Knee jerk intellectual pretends" Where did you come up with that? Would love to know what you were smoking.
I agree with you completely. The "Knee jerk intellectual pretends" were just attempting to look at the larger picture at how not only the entire deficit can be bridged but also providing opportunities to make the common citizen to lead more prosperous lives. Not apply band aid and hope the cancer will be cured by itself. The problem is as soon as some of us citizens rightly or wrongly accept the justification of bridging the deficit in ways such as these the government will find out ways to squeeze the common citizen in many more ways while continuing their loot of the nation.

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Originally Posted by subratasenn View Post
+1. Spot on. Public transport is being neglected all over India. I can vouch for this specially in Kolkata, which has seen a deterioration over the years.
There used to be a really good public transportation system, run by the state government and like any civilized city buses used to ply from 4.00 am to midnight. Weakening of the government sector transport and leaving things to private operators had resulted in more chaos on the roads. The private operators resort to stopping anywhere in the streets, thereby clogging the already scarce roads.
....
Also look at the running of the metro line, which is the first one in India. The first train at 8 a.m. and the last train at 9.40 p.m. And Sundays, you begin your service at 4 p.m.? Will you call Kolkata a city or a mufassil town?
In the case of West Bengal there were other factors too. Militant trade unionism ensured that industry fled which reduced tax receipts in many ways. The state coffers became virtually empty and the deficit I think stands at 2 lakh crores now. The lame attempt to privatize public transport involved more of politics and corruption rather than any proper regulation. Somewhere I think not only for West Bengal its time all states started demanding a larger share of the taxes collected by the center because the states seem to be providing a lot more services to the citizens than the center does.

Last edited by samarjitdhar : 17th September 2012 at 14:39.
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Old 17th September 2012, 15:01   #908
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by amitk26 View Post
Ideally it will be best if this is kept fully simple , Zero subsidy , tax to the level where market can bear and issue bonds so that market is clear on how much of fiscal deficit is being covered by borrowing rather then moving so 68,000 crore of borrowing to oil sector on account of abnormally high tax and then subsidy through bonds.
This looks the simplest all measures and I was discussing the same with my friends too. But if it is that simple, why has government not thought about it?
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Old 17th September 2012, 15:59   #909
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Originally Posted by samarjitdhar

. But it seems in our nation we are now totally okay with the free for all and me first attitude. . What would we do then, harvest human organs of the common citizen?

In the case of West Bengal there were other factors too. Militant trade unionism ensured that industry fled which reduced tax receipts in many ways. The state coffers became virtually empty and the deficit I think stands at 2 lakh crores now. The lame attempt to privatize public transport involved more of politics and corruption rather than any proper regulation. Somewhere I think not only for West Bengal its time all states started demanding a larger share of the taxes collected by the center because the states seem to be providing a lot more services to the citizens than the center does.
What a post!
Thanks for succinctly recapping the woe-begone state of affairs and weak kneed policies of the Indian Government.

West Bengal probably requires a solid dose of 'Thatcherism' for the next decade or so, till the silly place gets cleaned up. No person in their right minds would want to re locate there and try to go to work there.

It is true at least of some states like TN, where the common people are given access to health care at significantly lower costs. I am not sure if in corruption and caste politics ridden Karnataka, if such a panacea exists for the poor.

Whatever it is, let us not digress. We need these huge tax rupees to be spent on public infrastructure. There is no point in the government screaming hoarse about Silicon Cities and Growth and attracting investment and a whole lot of balderdash, without providing the means for the citizens to perform as basic a job as to commute to and from their work places!
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Old 17th September 2012, 19:20   #910
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by sourabhzen View Post
This looks the simplest all measures and I was discussing the same with my friends too. But if it is that simple, why has government not thought about it?
They have thought and deliberatly kept it this way simplicity is not cheap and needs huge push through corridors of power.

They are able to push 20 year bond worth almost 68K Crores down the throat of Oil PSU this way and decrease the amount of borrowings on papar.

In this complex maze everyone has something to gain except perhaps the nation as a whole.

1. Government can drum up how much it cares about poor and hide the borrowings.

2. Oil PSU state they are bleeding but still show huge profits everyyear and there is little pressure on them to perform like any other enterprise.

3. For ONGC actually the upstream subsidy is largey notional as Oil at refinary gate is valued at same C&F price as imported Oil. And it's biggest owner ( government) does demand that way.

In non-notional world they should sell oil at intenational price pay Royalty for the block and worry about the profitability.

Last edited by amitk26 : 17th September 2012 at 19:24.
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Old 18th September 2012, 19:05   #911
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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At least in a state like Kerala which depends almost entirely on food brought from outside, diesel price hike does drive the prices upward. And this is not in proportion with the diesel price hike due to profiteering by middlemen and retailers. Hotels too hike their rates (even room rents) citing the diesel price hike, again arbitrarily.
Taking the example of Tata 207:
Loading capacity: 2000Kg
Mileage: 6KM per litre (usually its 7, lets take 6)
Cost per KM at Rs 45: Rs 7.5
Cost per KM at Rs 50: Rs 8.3 (Re .8 more per KM)
Distance traveled: 500KM (long distance assumed, from produce to consumption)
Additional fuel cost: .8 * 500 = Rs 400
Additional cost per Kg: 400/2000 = Re .20

Whatever the goods carried by the truck, due to hike in diesel price, cost per Kg increase is just 20 paisa. So the whole bundh, protest for diesel hike is all for just 20 paisa per Kg of goods. I guess cost of bundh is more than any savings from diesel price hike reversal.

Note: Bigger vehicle's mileage will be less but its capacity is more. So more or less the figure is same.
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Old 19th September 2012, 00:43   #912
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

So, the final rationalization has come on diesel pricing. Mamata withdrawing the Ministers and the support. :\
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Old 19th September 2012, 00:47   #913
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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Originally Posted by msdivy View Post
Taking the example of Tata 207:
Loading capacity: 2000Kg
Mileage: 6KM per litre (usually its 7, lets take 6)
Cost per KM at Rs 45: Rs 7.5
Cost per KM at Rs 50: Rs 8.3 (Re .8 more per KM)
Distance traveled: 500KM (long distance assumed, from produce to consumption)
Additional fuel cost: .8 * 500 = Rs 400
Additional cost per Kg: 400/2000 = Re .20

Whatever the goods carried by the truck, due to hike in diesel price, cost per Kg increase is just 20 paisa. So the whole bundh, protest for diesel hike is all for just 20 paisa per Kg of goods. I guess cost of bundh is more than any savings from diesel price hike reversal.

Note: Bigger vehicle's mileage will be less but its capacity is more. So more or less the figure is same.

Actually you might find that for bigger vehicles the per-kg cost is even smaller than Rs. 0.20 -> In general bigger vehicles' FE doesn't go down as significantly as thier load capacity goes up.

And yes, a day's strike would cost the poor, in which name the strike would be called, much more than any expenses on account of the above.
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Old 19th September 2012, 11:46   #914
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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So, the final rationalization has come on diesel pricing. Mamata withdrawing the Ministers and the support. :\
Many people may say Good Riddance. I do not understand why the NDA is keen to have the poisoned chalice.

The markets are hardly affected: under 10 points on Nifty, a paisa on the Dollar. Maybe there is something more than what meets the eye.
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Old 19th September 2012, 14:36   #915
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Default re: Rationalising diesel prices*Update: 50p rise/month announced*

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The markets are hardly affected: under 10 points on Nifty, a paisa on the Dollar. Maybe there is something more than what meets the eye.
I fully agree with that.
There is certainly more to it than whats visible; with lot of undercurrent inertia.
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