[headers]

Originally Posted by civic-sense

My intention is not to refute your arguments, but I tried to locate the subsidy payments in the annual results. But could not find any.
For ex, the below for IOC, it shows income from sales and expenses. No sign of subsidy payments.
http://www.iocl.com/download/Indian_...Ltd_280512.pdf

Generally govt companies do not show it on paper to public

[SANSI]

Originally Posted by vina

would the market skew between diesel and petrol cars begin to correct? What do BHPians feel?

There is no direct answer to this. When a lot of public transport depends on diesel(buses, truck, cabs, oil engines, etc.,) it makes sense to continue the diesel price subsidized.

But there is no doubt that the private car owners and companies are increasing explosively to use this loophole. Double price system may not work as it would only encourage the black market. I feel as an option government can levy more taxes on the diesel car price. But how the government is going to usefully utilize the collected tax is going to be a question.

[sgiitk]

Originally Posted by SANSI

There is no direct answer to this. When a lot of public transport depends on diesel(buses, truck, cabs, oil engines, etc.,) it makes sense to continue the diesel price subsidized.

Sorry, I am dead against any subsidies. The most invidious way of taxing the poor.

As I have stated many times I do not expect taxation on Diesel to approach that on Petrol so a price differential will persist.

[RS_DEL]

Originally Posted by ganeshtvpm

heard most of the matured automobile markets run on petrol. An excise duty suggested by Kirti Parekh committee of Rs 80000/- should be implemented with a retrospective effect of atleast 3 years.

This is NOT about revenge!!!

This is about maintaining a taxation regime that is based on rational and sound economic considerations.

I have been probably one of the earliest posters on this board saying energy pricing policy in India especially WRT fuel for automobiles is absolutely senseless.

I also maintain that taxation policy on both the fuels i.e. petrol and diesel should be such that it does not induce any bias in favour of either petrol or diesel. The choice of whether an individual needs to buy a petrol or diesel powered vehicle should be left to the individual's assessment of his/her needs and alternatives available in the market place.

[mayankjha1806]

While this is a step in the right direction, it is relatively too little too late. Companies and commodities need to find cheaper means to move goods around and cannot so heavily depend on Diesel pricing only so-much-so that it starts impacting their business.

Similarly, price of Diesel impacting inflation is a reality and as an economy we need to move away from such heavy dependence. Hopefully this will act as trigger for right folks to start thinking of some sort of alternatives which are less prone to oil price fluctuations.

[mayankk]

Originally Posted by mayankjha1806

Hopefully this will act as trigger for right folks to start thinking of some sort of alternatives which are less prone to oil price fluctuations.

That's the problem. Nobody will kill the gold egg provider so to speak.
As far as governance goes, we don't have any right folks, only folks left.

[SR71A]

Originally Posted by headers

Generally govt companies do not show it on paper to public

Sir, All information is available on Public websites. In this case refer to following link http://www.iocl.com/AboutUs/AnnualRe...tment_2012.pdf.

Refer to page No. 169, Note No 20 Revenue from operations. IOCL has recieved Rs. 47000.00 Crores from Govt in form of Grants & Subsidies in Fiscal Year 2011-12.

Originally Posted by civic-sense

My intention is not to refute your arguments, but I tried to locate the subsidy payments in the annual results. But could not find any.
For ex, the below for IOC, it shows income from sales and expenses. No sign of subsidy payments.
http://www.iocl.com/download/Indian_...Ltd_280512.pdf

Kindly refer to the link above.

Originally Posted by lapsi

One of the best kept secrets in India is the actual cost of petroleum products and the taxes levied on it. The Govt. would like you to believe that petroleum products are subsidized. The fact of the matter is that huge taxes are levied on petroleum products.

Have you noticed that whenever we buy something, if some indirect tax like, Excise, VAT, Service Tax, is levied, that tax amount is shown separately in the bill. Ever wonder why these taxes do not appear in petroleum product bills?

The Govt. likes to use its propaganda machinery to make you believe that there is a subsidy but it never reveals the amount of taxes that are levied on petroleum products. It is up to you to to figure it out for yourself.

Here is a link to a Youtube clip which you give you an idea of the costing of petroleum products. It is a bit dated but the gist of the matter is correct.

The price doesnt appear on the bill as the price at a Retail outlet is fully Tax paid. The Retailer further does not pay any tax on the price of product he sells. However if you are keen, you can send a query for tax structure to nearest oil company office. Or if you need it for a specific location I can give it you through this forum.

Originally Posted by blackasta

They never made any loss - the term used is 'under recovery'.
Eg: They calculated that they will make a profit of Rs 100 in a quarter, but could only make a profit of Rs 75. Won't go into the politics part as that is discouraged on TBHP.

Sir,

Please read the newspapers. IOCL has declared a loss of whopping 21000 Crores in 3 months Apr-Jun, 2012. 3 Oil Marketing companies have a combined loss of Rs. 45000 Crores for 1st Quarter. The loss normally gets wiped out at the end of the year after ONGC, OIL and govt pay a shared out subsidy bill.


When an Oil company says "underrecovery", they mean the loss of revenue they are making on the import parity price, which they are allowed in theory to charge. It is not exactly a loss in most products, except in Diesel, Kerosene & LPG, as it costs much less to produce and market other products than the import parity price.

About 75% of the actual losses on HSD, SKO and LPG are repaid. Rest of the losses have to be covered by gains on other products. As an Example IOCL ended up at meager profits of Rs. 3198 Cr on a humungous turnover of Rs. 458964 Cr for Financial Year 2011-12.

78% of the Indian Crude is imported so even if ONGC & OIL supply crude at a capped price of 60$ a Barrel and Nigerian and heavy Saudi (which forms another 50% of our Crude requirement) is available at $10 discount to Brent Sweet Average at $110 a barrel, the Indian Crude Basket stands at $95 a barrel.

It costs around 12-15% of the Crude cost to Refine & Market it. So without going into nitty gritties of individual products, a Barrel of Diesel can be extrapolated to cost around $ 109.

At Rs 55/$ and at 159 Ltrs to a Barrel. One Ltr of Diesel Costs around Rs.37.70 at current rates. This is still an actual Loss of around 50 Ps/ Ltr as Ex Depot rates of Diesel is around Rs.37.20/ Ltr.

This is an underrecovery of around Rs.13/ Ltr as the import parity price of Diesel at Mumbai is around Rs. 50/ Ltr.

I wholeheartedly support Hayek in his argument as how this whole madness of subsidies is actually hurting the economy and thereby the common man

[blackasta]

Understand the math over the subsidies in diesel and people advocating to do away with it. If subsidies are done away with at source, if you are a legit case for using subsidies (say farmers/bus owners/truck drivers), buy fuel at full price & take the receipt to get the subsidy once a month in cash from the nearby PO or bank. The 'aadhar' uid card can be used for this.

[Diesel_convert]

The one thing that always gets my blood boiling is that we know the government is probably the most inefficient and corrupt organisation due to the way it is structured ( the incentives are wrong for officials) , but we keep asking them to handle more and more of our own money in the form of high subsidies and taxes. If we reduce both to the minimum possible there is less chance of our money being misused.

I don't want to sound like an out and out capitalist because that system has failed in the usa, but we are heading towards a system where the government is telling us what to do instead of it being the other way around!

[vina]

Originally Posted by Harbir

I am not going to comment on the substantial portion of your post because I did say that I would start a new topic on the subject of diesel fuel in couple of days, but I will respond to this bit because I feel it is a bit of a personal attack that requires a response.

Firstly, I am not pretending to care about the environment. I care about my health and I care about the health of my fellow citizens. Whether you believe me what I say that or not, I don't particularly care.

That said, this is not about whether I or you or the 10 other people reading this thread do as individuals, but about what policies work for the overall good of everybody.

I drive a diesel Pajero. The incremental damage I do individually is as trivial and insignificant as the incremental good I would do by taking public transport while everybody else continues to increasingly buy diesel vehicles. Unless you intend to force everybody with a personal vehicle into public transportation, the suggestion of creating better quality air conditions by using public transport instead of petrol cars is gratuitous self gratification on your part more than anything.

The question is whether the burgeoning use of diesel fuel in personal vehicles is good for the health of Indians and the economy of India. Attacking me by saying I pretend to care about the environment and should take the bus if I care so much, amounts to an attempt to denigrate and dismiss a serious question about a situation that you find financially beneficial.

Cheers.

I didn't intend to offend you, nor on my repeated re-readings of my post can I see how on earth can the last remark I made be taken as personally referred to you (the word "you" in my post refered to any reader at all)


As for my rest of the post, those are factual matters so if you do disagree then it will be great to know because that will add to our understanding.

And as far as diesel fuel threads are concerned, there are three in existence in "technical forums" (dealing with all sorts of diesel vs. petrol issues, including power, pollution costs, reliability etc. )- frankly you can contribute to those rather than starting a new thread.




On the comments you made in the post above, I don't really have much to say. We can agree to disagree.

[mjothi]

Originally Posted by blackasta

Understand the math over the subsidies in diesel and people advocating to do away with it. If subsidies are done away with at source, if you are a legit case for using subsidies (say farmers/bus owners/truck drivers), buy fuel at full price & take the receipt to get the subsidy once a month in cash from the nearby PO or bank. The 'aadhar' uid card can be used for this.

I would love this to implemented in slightly different way.

Let this be "returned" through tax returns. Most of these guys do not even file the tax. So, its like hitting 2 birds in one stone. Govt. gets revenue, and also provides subsidy only to right people.

[vikram_d]

Originally Posted by blackasta

Understand the math over the subsidies in diesel and people advocating to do away with it. If subsidies are done away with at source, if you are a legit case for using subsidies (say farmers/bus owners/truck drivers), buy fuel at full price & take the receipt to get the subsidy once a month in cash from the nearby PO or bank. The 'aadhar' uid card can be used for this.

Originally Posted by mjothi

I would love this to implemented in slightly different way.

Let this be "returned" through tax returns. Most of these guys do not even file the tax. So, its like hitting 2 birds in one stone. Govt. gets revenue, and also provides subsidy only to right people.

Sadly this will not work. People will start submitting fake bills and it is really easy to get fake bills. Walk into any petrol bunk and pay the attendant Rs.20 and he will happily give you any amount bill that you need.

[mjothi]

Originally Posted by vikram_d

Sadly this will not work. People will start submitting fake bills and it is really easy to get fake bills. Walk into any petrol bunk and pay the attendant Rs.20 and he will happily give you any amount bill that you need.

I am sure it can. What you say was available in the name of medical bills. But I guess its almost getting down, if not completely zero. So, same will happen in this situation too.

Atleast now, he needs to declare his revenue or business, which will surely give a model for IT dept to come up with better ideas and statistics. And Govt. can certainly benefit by taking some tax from these fellow, and bring them inside tax net.

[harishpr]

I'm open to get criticized for my viewppint
Firstly, and take away all subsidies. Don't subsidize fuel products, and let everyone pay market price
Second, reduce the tax on fuel.
Third, find a way to reduce black economy.
Fourth, bring more folks under income tax brackets. How long can the 10 percent of population (tax payers) feed the economy. Fifth, make all purchase/sales of anything above 100 rupees through card. This has to be accounted for. At least introduce this in all capitals to start with.
Sixth, invalidate all unaccounted 1000 and 500 rupee notes. This will immediately reduce black economy.
Seventh, initiate one more round of green revolution and increase agricultural outputs.
Eighth, promote direct sales from farmers to consumers by opening huge number of farmer markets.
Nine, generate employment through infrastructure and agriculture industry.

I know in being too wishful, but couldn't withhold stating these points.

I salute Manmohan once again for taking the tough stance and doing the right thing for the country. It will hurt in short term but we will see the benefits in long run. Remember how the country revolted against his decision in 90s when he liberated the market.

[idofsuresh]

I am against fuel subsidies. For any short fall, money DOES grow on trees for the government. Err..Printing Press. India has printed about 3 lakh Crore just in 2008-2009 financial year. The other years are comparable. However, money printing is inflationary and many fiat currencies have been destroyed in the past.

http://en.wikipedia.org/wiki/Hyperinflation

In an inflationary environment, rich gets richer and and poor gets poorer. But it is so strange the political parties oppose the diesel price hike in the name of poor. If the government does not deal with the deficits properly (i.e. if it deals it by printing) it is the poor and middle class that gets clobbered in the long run.

When the government only cares about being in the power, the people only care about their survival. Hell with others is the general attitude. Example: When power generation is insufficient and even if it is known in advance, the government instead of planning for more generation well in advance resorts to power cuts! Wow, what a quick fix. Basically, I win and you lose attitude instead of playing a win-win game. What does the rich do ? Go buy inverters and waste some power in the storage. But again, I win and you lose attitude. Govt. cuts more power now and higher capacity inverters are sold. Ultimately, the rich is unaffected and it's precisely the poor who has to endure more power cuts.

Same story with Diesels. Not just private cars. The truck that transports BMWs/Mercs and LCD TVs, the guy who takes a sophisticated cab ride to catch his plane, the company buses for the employees of highly profitable IT companies. I can go on with hundred examples where subsidy is a joke. Last but not the least, the car makers suck their share of subsidy by over pricing the diesel cars!