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Old 16th March 2020, 15:12   #31
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Originally Posted by Stribog View Post
However you spin it, the true common man by virtue of his sheer backwardness (unfortunately) is disconnected from fuel prices for the most part. The real common man in India lives like his counterpart in EUrope or America from a century ago.
While all your points are correct, but I do not agree with the fact that the common man is not affected by the excise duty increase. Sure they are not affected now as the fuel prices are the same even after the excise duty increase.

But this COVID situation is temporary the global economy will bounce back in a year or so and the crude oil prices will sharply go up again. At that time prices of all of the things (public transport, common commodities, vegetables, etc) will increase sharply. For the 2% people who own the cars will not be affected that much as they will see their salary increase in same proportion, but not the poor and middle class. They will find it harder to meet their requirements, even if they are earning more than before (as their salary will not increase in similar proportion). This is what creates are pay parity and increases the gap between the poor and rich people, it has been like this for ages. Crude oil is a very essential commodity and it plays a very important role for everyone even if they are not direct consumers. Governments use it as a tool to decrease the fiscal deficit and forget about the long term effects it brings to people's lives.
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Old 16th March 2020, 15:13   #32
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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On the topic: Though hard to digest, as other members have pointed out, Govt has no option to look at taxing fuel since direct tax collection is going down quarter after quarter and there are fixed expenses to pay. We need to be content that prices are not going up.
While this may sound like a direct argument favouring tax increase, it doesn't sound good when you look at macro economics. Most likely, reduction in fuel purchase will negate the gain from tax.

What should function most at this hour?
1. Hospitals.
2. More importantly, transportation and logistics, so that the supplies could reach the people.

Why we should have cut the price?
1. A price cut, at this point could have reduced transportation cost, thus helping logistics to keep working, which is on the edge at the moment.
2. Without corona around, a price cut would have made more liquidity in the market, hence more money spend leading to better growth.

Net-net, there are always indirect ways to boost economy and hence the taxes. Of course, since the finance minister herself refused to answer the question on the rationale for excise raise, what can we discuss.
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Old 16th March 2020, 15:29   #33
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Why we should have cut the price?
1. A price cut, at this point could have reduced transportation cost, thus helping logistics to keep working, which is on the edge at the moment.
2. Without corona around, a price cut would have made more liquidity in the market, hence more money spend leading to better growth.

Net-net, there are always indirect ways to boost economy and hence the taxes. Of course, since the finance minister herself refused to answer the question on the rationale for excise raise, what can we discuss.
Incorrect, especially in India's context!

When was the last time a means of transport reduced it's fares because oil prices fell?

Majority of the poorer populace rely on public transportation. None of these firms, govt. or private are willing to reduce fares because their fuel costs have fallen. A family of 3 taking an auto-rickshaw still pays the same fare, or a daily wager catching a bus to work! SO who exactly benefits?

Secondly the country has to cap it's consumption of imported crude, increase in demand due to lower prices has a negative effect on the India's economy.

The government has to look at alternative energy sources for transportation on a war footing. This is the only solution, not cheaper hydrocarbons.
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Old 16th March 2020, 17:15   #34
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

2017

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Originally Posted by dZired View Post
Petrol and diesel prices will be revised daily from May 1, 2017. This will be done as part of a pilot project in five cities...

The price revisions will be based on the international crude oil price fluctuations and the INR-USD exchange rates.

Most of the advanced markets across the globe have already adopted daily revision for fuel prices. As a result, it is technically possible to do so in India as well.
2019

Crude oil prices crashed and the Government increased excise duty.

So I guess this is how it looks based on some of the ridiculous explanations supporting this practice,
Cost of Petrol/Diesel in India: About 60% of the cost is for nation-building and the remaining consists of other smaller elements that include what people call as crude oil.

Also, people shouldn't complain because this nation-building tax is paid only by 2% of Indians?

This is a cruel joke. I really feel bad for the sensible Indian.
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Old 16th March 2020, 18:29   #35
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

Not to be derogtory to folks back in India, but petrol prices here in Toronto are at their lowest since i moved here in 2015. I filled up 44 litres of petrol yesterday in my Corolla for approx $34. That come to nearly Rs.40 per litre!

In my opinion, the current increase in taxes on fuel is definitely not warranted in India no matter the excuse, as fuel is already taxed enough. But as said earlier, there's not much people can do about it except resign themselves to the fact that this is been the norm since 2014.

The sad functioning of Indian politics and bureaucracy makes me very happy that I am no longer living in India, and don't plan to coming back anytime soon since i recently became a Canadian citizen.
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Old 16th March 2020, 20:40   #36
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Not to be derogtory to folks back in India, but petrol prices here in Toronto are at their lowest since i moved here in 2015. I filled up 44 litres of petrol yesterday in my Corolla for approx $34. That come to nearly Rs.40 per litre!

In my opinion, the current increase in taxes on fuel is definitely not warranted in India no matter the excuse, as fuel is already taxed enough. But as said earlier, there's not much people can do about it except resign themselves to the fact that this is been the norm since 2014.

The sad functioning of Indian politics and bureaucracy makes me very happy that I am no longer living in India, and don't plan to coming back anytime soon since i recently became a Canadian citizen.
With the 5th largest economy in the world, the last example India should follow is Canada which will fall out of the top 10 by next year!

Plus Canada has the world's third largest proven petroleum reserves and is the fourth largest exporter of petroleum. This is mostly made up of poorer grade crude that is sent to the US. So Canada likes cheap gasoline/diesel at pumps which helps demand. India does not as it has to import it's petroleum needs. Oil producers price petroleum products low, whether it's the middle east, Nigeria, Sudan, Iraq etc.....

Heck, Venezuela sells the cheapest petrol anywhere in the world, maybe a citizenship there is in the reckoning? Nothing derogatory intended towards the Canadian passport seekers!
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Old 16th March 2020, 20:45   #37
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

Points to stressed state of government finances that they have to resort to increasing tax vs allowing price benefit to flow to consumers. I guess they are also factoring the likely fall in fuel-consumption, as commuting reduces drastically with self-quarantining / "social distancing". And hoping to make-up for it by increasing the tax per litre.
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Old 16th March 2020, 21:16   #38
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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With the 5th largest economy in the world, the last example India should follow is Canada which will fall out of the top 10 by next year!

Plus Canada has the world's third largest proven petroleum reserves and is the fourth largest exporter of petroleum. This is mostly made up of poorer grade crude that is sent to the US. So Canada likes cheap gasoline/diesel at pumps which helps demand.
About Economics, considering the population India has it will anyday be a larger economy than Canada and most other countries in the world, you're absolutely spot on in that regard.
And you're kidding about the fact that Canada likes cheap gas prices right? Any benefits that we as consumers face in the short term is negated multiple times by the recession and job losses that occur as a result of low prices and low demand, especially in regions like Alberta. So low gas prices are absolutely not preferred in Canada at all, if there is a harm to the economy and the populace. Most people here are wise enough to understand that.

I could go on but I think we are meandering away from the main point, which in this case is petrol price reduction should in most cases should depend on supply/demand, market economics and International crude prices. If sale prices of oil from suppliers are down 40-50% worldwide, don't you think there should be atleast a 10% reduction in pump prices in India? If even that is too much to ask for, than i guess i am happy to be here in Canada
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Old 16th March 2020, 21:49   #39
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Originally Posted by abhinavinc View Post
About Economics, considering the population India has it will anyday be a larger economy than Canada and most other countries in the world, you're absolutely spot on in that regard.
Paksitan has 6 times Canada's population and it makes no difference!


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Originally Posted by abhinavinc View Post
And you're kidding about the fact that Canada likes cheap gas prices right? Any benefits that we as consumers face in the short term is negated multiple times by the recession and job losses that occur as a result of low prices and low demand, especially in regions like Alberta. So low gas prices are absolutely not preferred in Canada at all, if there is a harm to the economy and the populace. Most people here are wise enough to understand that.
Canada or all oil producing countries like retail demand, as that is what drives their business. Taxing the product that they produce the most makes little sense for any country. Taxing petroleum products higher will reduce domestic demand, which Canadian oil companies would not want to see. As for Alberta and Canada's oil industry, well less said the better.

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Originally Posted by abhinavinc View Post
I could go on but I think we are meandering away from the main point, which in this case is petrol price reduction should in most cases should depend on supply/demand, market economics and International crude prices. If sale prices of oil from suppliers are down 40-50% worldwide, don't you think there should be atleast a 10% reduction in pump prices in India? If even that is too much to ask for, than i guess i am happy to be here in Canada
Petroleum prices were never really about supply and demand, ever since OPEC's creation petrol prices have been cartel-driven, Until now!

It's so heartening to see OPEC states roll out the red carpet for India, this is not out of love but simply because it's a buyers market.

For Six decades oil importers were at the mercy of OPEC's mood swings! If the Arabs could price their crude oil on the basis of balancing their books why not India? Increasing oil demand hurts India's needs, the country needs to import more and also pay a higher price as demand increases.

I understand for private vehicle owners of all classes, half price oil sounds brilliant. Economically it makes no sense at all. India's fuel prices are nearly on par with China, and much lower than most European countries which are far more developed than say a Canada! Major Asian economic powers like HK, Singapore, S Korea have much higher prices. Curbing oil imports is important for India's economy and environment.
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Old 16th March 2020, 23:11   #40
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Originally Posted by shortbread View Post

I understand for private vehicle owners of all classes, half price oil sounds brilliant. Economically it makes no sense at all. India's fuel prices are nearly on par with China, and much lower than most European countries which are far more developed than say a Canada! Major Asian economic powers like HK, Singapore, S Korea have much higher prices. Curbing oil imports is important for India's economy and environment.
It's ok for developed countries to price fuel higher because their average incomes are much higher than a poor country like our's.

Also considering that our economy has been struggling for the past quarters, wouldn't it be prudent to increase public spending by letting people have some money in hand through fuel saving's ?

You may say India is the 5th largest economy etc, but 1% of the population has 95% of the wealth. With such a huge income disparity , most common people continue to suffer.

You might have started falling for the hype created by this govt that India is paradise, but the real truth is different. This govt has mismanaged all the funds it got in terms of huge windfall in lower crude oil prices during it first term in power. They squandered it all on their publicity campaigns, statues and their own buildings. In short although they spent on certain infrastructure projects like roads, they equally squandered our money on unnecessary things.

They are a monumental disaster when it comes to managing our economy. Case in point Demonetization.

So rather than attacking a person who just said the truth about our country. Let's try to use it constructively to hold this government accountable so that they bring about a positive change.
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Old 16th March 2020, 23:37   #41
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Originally Posted by stanjohn123 View Post
It's ok for developed countries to price fuel higher because their average incomes are much higher than a poor country like our's.
The poorest least benefit from low prices at the pump. The biggest impact is on the middle class. Increasing affordability of personal transportation must come from alternative sources or discourage people altogether by providing better public transport infrastructure. Cheaper prices at the pumps discourage both.

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Originally Posted by stanjohn123 View Post
Also considering that our economy has been struggling for the past quarters, wouldn't it be prudent to increase public spending by letting people have some money in hand through fuel saving's ?
No, because increasing fuel demand will have adverse effects of the economy especially the fiscal deficit.

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Originally Posted by stanjohn123 View Post
You may say India is the 5th largest economy etc, but 1% of the population has 95% of the wealth. With such a huge income disparity , most common people continue to suffer.
Incorrect but I understand your argument. 1% control 58% of India's wealth, vis a vis the world average of 44%.

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Originally Posted by stanjohn123 View Post
You might have started falling for the hype created by this govt that India is paradise, but the real truth is different. This govt has mismanaged all the funds it got in terms of huge windfall in lower crude oil prices during it first term in power. They squandered it all on their publicity campaigns, statues and their own buildings. In short although they spent on certain infrastructure projects like roads, they equally squandered our money on unnecessary things. They are a monumental disaster when it comes to managing our economy. Case in point Demonetization.

So rather than attacking a person who just said the truth about our country. Let's try to use it constructively to hold this government accountable so that they bring about a positive change.
Inefficient governance is not the barometer for taxation. Governments that do not perform should be overthrown by the democratic process. Do not tax me as I dont like your policies does not work! Governments are held accountable at the ballot not by altering taxes!

Plus every single country has uncomfortable truths, Justin Trudeau lost his majority in the recent election due to corruption scandals among others and is surviving by forming a coalition!
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Old 16th March 2020, 23:56   #42
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Originally Posted by kiku007 View Post
2017



2019

Crude oil prices crashed and the Government increased excise duty.

So I guess this is how it looks based on some of the ridiculous explanations supporting this practice,
Cost of Petrol/Diesel in India: About 60% of the cost is for nation-building and the remaining consists of other smaller elements that include what people call as crude oil.

Also, people shouldn't complain because this nation-building tax is paid only by 2% of Indians?

This is a cruel joke. I really feel bad for the sensible Indian.
Not sure how you calculated 2% paying tax on petrol/diesel but I echo the sentiment. Salaried class pays tax through their nose and at the same time, a large population of business community evades taxes enjoying their big SUVs as business expense. Ok, so not an exact description but you get what I am trying to say here.

Government is gung ho about digital India but does not have a good way to get tax compliance in place to reasonable levels.

I am all for paying tax but for once, the honest tax payer needs much more than a good citizen certificate. Demonetisation was an attempt which I whole heartedly supported, and it’s ok even it failed but what next? I have not seen a clear answer from any government official. Were they trying to cleanup corruption overnight without a follow through?

Sometimes I think why can’t government do away with direct tax completely and just increase the indirect tax rates at points of sale. That way, the dishonest and the honest tax payer (considering the current scenario) are immediately given the same treatment. Obviously this will have it’s flaws, but a rant doesn’t have to be fully logical, no?

Coming to the topic, a member said that government has hiked the excise tax but will conveniently forget to roll it back when prices go up. And that is what the problem is. Despite the market linked price mechanism that was brought in, we essentially get the same old treatment - prices controlled by government on their whims and fancies defeating the entire purpose on why the process had to be changed in the first place.
Essentially, good measures executed half heartedly are no different than bad measures executed with good intention. We are back to where we started from.

Last edited by vb-san : 17th March 2020 at 04:24. Reason: Typo
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Old 17th March 2020, 02:23   #43
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

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Not sure how you calculated 2% paying tax on petrol/diesel but I echo the sentiment.
I didn't and it was from another post in the same thread. Seems only 2% of the population owns cars and only they are impacted.

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We are back to where we started from.
Took me almost 6 years to realise that.

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Originally Posted by abhinavinc View Post
Not to be derogtory to folks back in India, but petrol prices here in Toronto are at their lowest since i moved here in 2015. I filled up 44 litres of petrol yesterday in my Corolla for approx $34. That come to nearly Rs.40 per litre!

In my opinion, the current increase in taxes on fuel is definitely not warranted in India no matter the excuse, as fuel is already taxed enough. But as said earlier, there's not much people can do about it except resign themselves to the fact that this is been the norm since 2014.

The sad functioning of Indian politics and bureaucracy makes me very happy that I am no longer living in India, and don't plan to coming back anytime soon since i recently became a Canadian citizen.
You triggered the notorious, "Nationalism" nerve, my friend. Sooner or later this thread will go off-topic.

I get what you are saying though. The petrol prices in Australia are the lowest since the time I moved here. People have to understand that this thread is not about which country has the lowest-priced petrol but it's asking why hasn't India dropped the price of petrol/diesel when,
1. Fuel prices are supposedly linked to the international crude oil price as per the Government.
2. Other countries have seen a drop in fuel prices at the retail pumps.

There's only so much one can bend a twig and beyond a point, it'll either break or swing back at the person who's trying to bend it. Of course, some people will say that this is for the twig to bend enough to shoot to the moon.
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Old 17th March 2020, 05:17   #44
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

Well, no surprise at all. While I'm not against collecting taxes, I'm concerned about how they are spent. If all the additional duty got me pothole free roads and good reliable public transport to ditch my car for commute, I'd be so happy.

This is going to hit everyone from the richest to the poorest. The wanderlust (and people who drive frequently) will feel the pinch at the pump. The poor will be extremely sensitive to price rices in daily produce and groceries.
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Originally Posted by abhinavinc View Post
Not to be derogatory to folks back in India, but petrol prices here in Toronto are at their lowest since i moved here in 2015.
Public transport is not easy to access out of a few cities, so fuel is taxed only a few cents per gallon in North America (=USA & Canada.) The whole system is built around everyone needing cars, so the prices of gas will fluctuate heavily with global trends.
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wouldn't it be prudent to increase public spending by letting people have some money in hand through fuel saving's ?
With the economy not doing well, I think people will try to save. I can delay the purchase of new furniture or mobile phone, but I can't delay going to office. The food I want will be slightly more expensive, but I can't skip it.
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Old 17th March 2020, 07:33   #45
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Default Re: Crude oil prices crash, but India refuses to slash fuel prices

I think we ought to look at real prices we pay at pumps rather than the crude price and taxes. Diesel price at the pump today (64.41 in Bangalore) is cheaper than what it was a month back. Also let's look at the real economic impact fuel prices make to a working, tax paying indian. A one rupee hike per liter still means an average increase of 200 rupees of monthly expense considering most of us drive say 2000 kms a month. This is cheaper than one coffee in Starbucks, just for comparison.
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