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Old 14th February 2013, 16:36   #1156
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

With election year round the corner this is bound to happen. Increase in diesel price will help in reducing the burden on subsidy and use this money to roll out a n number of new schemes (this yojana, that vikas nigam.. and all) :-)
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Old 17th February 2013, 09:57   #1157
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

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Originally Posted by amitk26 View Post
Check this figure based on numbers from Government.
I will say they are still quite lower then ground reality but the trend is what I predicted, Inflation of food items is much higher then inflation of fuel.
Jacking up prices based on prevaling conditions and sentiments is exactly what is called inflation
Prices on 16-Feb-2013 at Reliance Mart, Bangalore:

1. Sugar (Loose) - Rs. 35 (no increase in the last 1 year).
2. Sona Masoori (Loose) - Rs. 52. There is also Reliance Value brand Sona Masoori at Rs 39 but only 25kg bag.
3. Toor Dal (Loose) - Rs. 71 (no increase in the last 1 year).


Tomato - Rs. 8 (of course, it is seasonal and should be ignored)

Milk prices have risen atrociously over the last week as is well known.

The hike is Sona Masoori prices have more to do with the failure of monsoon in TN.

Other than milk prices, I don't see a strong correlation between diesel prices and food prices, as yet.
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Old 27th February 2013, 17:54   #1158
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Read the article on TOI:

http://timesofindia.indiatimes.com/b...w/18710266.cms

Economic survey backing the removal of subsidy from diesel and LPG
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Old 27th February 2013, 18:24   #1159
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

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Originally Posted by MotoNanu View Post
Economic survey backing the removal of subsidy from diesel and LPG
Hello,

This is not something new. Almost all Indian & International Economists have suggested the subsequent governments to reduce the subsidy burden.

But nothing has happened so far. Lucikily, the recent hike of Diesel prices is one such move in this direction.

Actually even the Finance ministry know this facts but cannot do much due to votebank politics. Farm subsidies are another major drain on the Indian economy. Just search on internet on Farm subsidy in India & the figures will astonish you. I do not mean that other countries do not give subsidies, but even after spending so much money on subsidies in India, nothing has changed on ground, as most of the money is pocketed by middlemen.

Coming back to Diesel & LPG prices, diesel prices are already partially freed & I also read that LPG subsidy will now (I dont know from when) be cash subsidy in form of direct transfer to bank account mapped to your Aadhar Card. On my recent visit to LPG dealer in Mumbai, I saw large number of people queing up to update the details of their Aadhar Card.

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Old 27th February 2013, 18:35   #1160
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by Jignesh View Post
Hello,

This is not something new. Almost all Indian & International Economists have suggested the subsequent governments to reduce the subsidy burden.

But nothing has happened so far. Lucikily, the recent hike of Diesel prices is one such move in this direction.

Actually even the Finance ministry know this facts but cannot do much due to votebank politics. Farm subsidies are another major drain on the Indian economy. Just search on internet on Farm subsidy in India & the figures will astonish you. I do not mean that other countries do not give subsidies, but even after spending so much money on subsidies in India, nothing has changed on ground, as most of the money is pocketed by middlemen.

Coming back to Diesel & LPG prices, diesel prices are already partially freed & I also read that LPG subsidy will now (I dont know from when) be cash subsidy in form of direct transfer to bank account mapped to your Aadhar Card. On my recent visit to LPG dealer in Mumbai, I saw large number of people queing up to update the details of their Aadhar Card.

Thanks,
The problem with subsidy in India is that it is not helping the people who actually should get subsidy. Take for example the people categorized as BPL. Daily wage workers who should get the subsidy don't have a address proof, which restricts them from getting AADHAR. Now if the government uses AADHAR then these people are left out. Instead the middle class and the rich will be making more use of this subsidy! I have personally seen people who work as maids/ daily wage workers at construction getting the cylinder in private shops paying a huge amount! I am not sure how to actually restrict the subsidy to only the needy and avoid exploitation from unintended users.
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Old 2nd March 2013, 10:25   #1161
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by wildsdi5530 View Post
State transport, Railways, defense, power and mining get bulk rates which is Rs. 10/- cheaper than dealer rate. This is going to be removed.
Quote:
Originally Posted by romeomidhun View Post
It is not only KSRTC, all state transport companies will have to pay increased amount, while private transport vehicles are getting the fuel at reduced cost. So, in essence, state governments have to suffer losses, while private transport companies enjoy the benefit!
I am really confused with this bulk buying thing. Is the bulk rate more than at the pump or almost equal to it? Say diesel available at the pump costs 51/-, then at what rate does the bulk diesel sells for? All this time, I had been thinking otherwise, that the bulk rates were cheaper by 10/- and this has now been removed. With the common logic that anything when bought bulk will be got at reduced price.

But, there had been some writing which says that bulk rate is 10/- more than the rate at the petrol pump. If that is the case, why should bulk be paid higher? Or did I read anything wrong?

OT: Today also, the local news channels quoted the Minister for KeSRTC saying that the KeSRTC is going to be doomed by the diesel price increase. Is that all that he can say when he is wielding the power to correct any wrong?
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Old 2nd March 2013, 12:01   #1162
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by thoma View Post
I am really confused with this bulk buying thing. Is the bulk rate more than at the pump or almost equal to it? Say diesel available at the pump costs 51/-, then at what rate does the bulk diesel sells for? All this time, I had been thinking otherwise, that the bulk rates were cheaper by 10/- and this has now been removed. With the common logic that anything when bought bulk will be got at reduced price.

But, there had been some writing which says that bulk rate is 10/- more than the rate at the petrol pump. If that is the case, why should bulk be paid higher? Or did I read anything wrong?

OT: Today also, the local news channels quoted the Minister for KeSRTC saying that the KeSRTC is going to be doomed by the diesel price increase. Is that all that he can say when he is wielding the power to correct any wrong?
For discussion, let’s say diesel is 51/- at pumps.
the market/actual rate of diesel is 61/- and hence the diesel available at pumps is 10/- less than the market rate
This difference of 10/- is borne by the government.

Why does the Government bear 10/-?
Because it wants to help farmers and truckers who are important for the economy.
Now the Government wants to restrict this subsidy only to farmers and truckers and not other people/organisations. Forget passenger cars for the moment

Instead of bulk buyers you should consider KSRTC and other organisations as consumers of a sizeable share.
So the common logic of anything bought at bulk doesn't apply here.
Since the subsidy wasn't meant for them, the Government wants to remove it for them to increase the country's income.
So they fixed diesel rate for bulk buyers like KSRTC and others at 61/- from the earlier 51/-.

I don't know about Kerala, but after this removal of subsidy, KSRTC buses in Karnataka are also queuing at petrol pumps to beat this 10/- increase.
If government thought they had an idea, KRSTC have a better one.

Now the bigger question will the Government deregulate diesel and fix the diesel price for everyone at 61/- and give subsidy to the required segment of people is some other ways? (Aadhaar refund /tax rebates etc.)
With elections coming up next year...the answer is a sure NO

Last edited by hemanth.anand : 2nd March 2013 at 12:11.
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Old 15th March 2013, 09:52   #1163
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Question Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Hi,

I'm a bit confused as to how the monthly 45 to 50p increase will actually help the government eventually recover or even reduce the subsidy.

From what I've read, it's a monthly hike in diesel prices, not a monthly reduction in subsidy. Is that correct? This means, if the international rates of diesel increase then we will still only have the monthly 50p increase which will have no effect in reducing the subsidy.

http://www.mypetrolprice.com/petrol-price-chart.aspx

Now if we look at the rise in petrol prices then we can see that petrol has increased by Rs. 40 over 11 years ~ 3.6 Rs per year.

However if we look at the charts since 2010 then we can see a Rs 8 increase in petrol prices per year. Diesel prices can only increase by Rs 6 at most in a year which is still 25% less than the petrol hike rates.

So where's the reduction in subsidy?
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Old 22nd March 2013, 19:48   #1164
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Diesel price hiked by 45 paisa per litre, excluding VAT, with effect from midnight tonight.

Source: TOI
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Old 28th March 2013, 21:36   #1165
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Default

How to stop undesirable diesel subsidy to certain classes of cars? - http://www.moneylife.in/article/how-...s%20Exclusives

This may not be a perfect solution. But discussions can lead us to one.

The present setup of hiking the cost by 45p every month may stop during elections. There is no guarantee that it will be taken to its logical conclusion.
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Old 28th March 2013, 22:17   #1166
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by sa_kiran View Post
How to stop undesirable diesel subsidy to certain classes of cars? - http://www.moneylife.in/article/how-...s%20Exclusives

This may not be a perfect solution. But discussions can lead us to one.
Not a bad suggestion - much better than many others.
One problem is that it may lead to rampant odometer tampering.
2nd things is why a sliding scale - let all private vehicle owners pay the same extra per km.

One more way would be to price diesel correctly but give other subsidies for trucks
- reduced/no tax for truck tyres/tubes
- reduced road tax for trucks
- reduced tax on sale of new trucks
- reduction/removal of taxes on other stuff which are very specific to trucks.
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Old 28th March 2013, 22:29   #1167
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Why not have diesel vehicles starting from only 2 or 3 litre engines? This would make diesel cars a minority! It now happens that even a person buying an i10 opts for diesel!
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Old 28th March 2013, 23:16   #1168
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

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Originally Posted by nitinbose View Post
Why not have diesel vehicles starting from only 2 or 3 litre engines? This would make diesel cars a minority! It now happens that even a person buying an i10 opts for diesel!
This will beat the whole logic the govt is putting forward to raise the diesel price.

Govt says, SUVs and luxury car owners are exploiting diesel subsidies.

All luxury cars have a 2 liter diesel motor as a base engine option(320d, C220 and the likes, include Passat too).
SUVs-- Safari--2.2L
Scorpio-- 2.2L etc.

For the majority vote bank will see it as a favour to the rich by offering them cheaper fuel and ripping them by putting a ban on the smaller diesel cars.
Not a good idea IMO.
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Old 29th March 2013, 11:14   #1169
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

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This will beat the whole logic the govt is putting forward to raise the diesel price.
A premium is already paid by the SUV owners at the time of purchase, in terms of taxes, which has infact increased in the current budget. So availing the diesel price difference is a big myth in this case! So a sensible person would buy a petrol version of the same vehicle especially if the usage is less. Take the example of Skoda Superb, there is a price difference of about 5 lakhs between the diesel and petrol versions. A person like me who drives about 35 kms a day would definitely take a while to get a break-even.

While if its petrol, the 500k savings may be utilized for buying petrol!

Lets take the petrol price to be INR 100/- per litre. I would be able to purchase 5000 litres of petrol with this amount and assuming I use about 100 litres a month, I would only exhaust the amount in about 50 months! That's more than 4 years!

Private SUVs are much lesser in comparison than the sub 10lakhs or sub 5 lakhs vehicles which form 90% of the vehicles in India, out of which 65% would be diesel.

The other option is to promote CNG.

Either way, its the common man who suffers!

I'm also getting a feeling that there's actually no subsidy on diesel, except its correctly priced, while petrol is overpriced with the addition of all possible taxes - why? because Cars are still considered as "Luxury" in India.

Diesel is cheaper than petrol in most countries.

I guess we're still supposed to travel on hand pulled rickshaws as back in the post independence!

Its the price of petrol that should be corrected and made more affordable.

I'm sure this would happen if the monopoly is removed.

One more point to be noted is that diesel vehicles would still be cost effective as they give more fuel economy than the equal capacity petrol vehicle.

Last edited by nitinbose : 29th March 2013 at 11:24.
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Old 29th March 2013, 12:08   #1170
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Default Re: Rationalising diesel prices. *Update: 50p rise/month announced*

Quote:
Originally Posted by nitinbose View Post
A premium is already paid by the SUV owners at the time of purchase, in terms of taxes, which has infact increased in the current budget. So availing the diesel price difference is a big myth in this case!
So if I buy a more expensive house, I should get cheaper electricity and water because I paid more taxes on the house than a guy who bought a less expensive house?
Quote:
Originally Posted by nitinbose View Post
So a sensible person would buy a petrol version of the same vehicle especially if the usage is less. Take the example of Skoda Superb, there is a price difference of about 5 lakhs between the diesel and petrol versions. A person like me who drives about 35 kms a day would definitely take a while to get a break-even.
So why did you buy a diesel Skoda?

Quote:
Originally Posted by nitinbose View Post
Private SUVs are much lesser in comparison than the sub 10lakhs or sub 5 lakhs vehicles which form 90% of the vehicles in India, out of which 65% would be diesel.
Likewise, expensive houses are much lesser than the cheap houses. So they should surely get cheaper electricity and water.



Anyway, I think if diesel is priced same as petrol, diesel car owners will stop charging the huge premiums they charge now - people won't pay it. Ergo, the price difference between a petrol and diesel Superb will become less.

Last edited by carboy : 29th March 2013 at 12:10.
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