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Old 19th February 2021, 16:23   #61
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Default Re: Regular petrol hits a century for the first-ever time in India

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Originally Posted by ramzsys View Post
Road mannerism of vehicles still remains the same. No riding sedately or switching off their bikes in the signal.

It's either the income levels have far surpassed the expenses or that the slow increase didn't give the necessary impetus for people to protest.
The income and employment levels are stagnant for most of them, it's the lack of will to protest as we all know what are the outcomes if anyone protests. There are live example in the recent news which I will not comment on.

They(you all know who) know that during Covid times hardly people might turn out to protest and since social distancing is important these days, people will prefer private transport, Ah then pay more tax for travelling in your own vehicle.

Sly and smart I say

I hope all of us can file a RTI or a position to rationalize the fuel prices, as citizens, we do have that right

Last edited by jithin23 : 19th February 2021 at 16:24.
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Old 19th February 2021, 16:56   #62
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Default Re: Regular petrol hits a century for the first-ever time in India

What if petrol /diesel prices were Rs 1000 per litre? Would it solve all of the problems the government has? (not considering the fall in tax revenue due to lower sales).

The only other way the government can make money is by saving. On salaries and benefits paid out to government employees and expenditure.
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Old 19th February 2021, 16:58   #63
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Default Re: Regular petrol hits a century for the first-ever time in India

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Originally Posted by giri1.8 View Post
a) Contribution is something we do with our own will, not forceful.
There are only two options really:
#1 Everyone pays more for fuel and contributes, or
#2 Once again tax and surcharge is increased for the honest salaried tax payer only.

Only 1.46 Cr. people pay income tax and out of these also around 1 Cr have less than 10 lakh income. So only 46 Lakh people are making disproportionately high contribution to direct IT. How long does anyone think we can run a country of 130-150 Cr on the contribution of these 46 lakhs?

Many of my friends have already left for US/Canada/Europe and those like me who stayed back because our parents can not/will not move want our kids to go and settle abroad. When you pay 50-60% of your income in direct and indirect taxes and get nothing in return, it sucks. What happens when the country has driven away their best?
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Old 19th February 2021, 17:09   #64
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Default Re: Regular petrol hits a century for the first-ever time in India

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There are other ways also but for that we need strong economist like Dr. Manmohan Singh.
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Originally Posted by anoop cheeran View Post
prior governments have handled $120 a barrel
Have you guys not heard of Oil bonds or making a one sided argument deliberately? Previous govt issued Oil bonds of 15-20 year tenure worth more than 1.5 Lakh crores. PSU banks and OMCs were asked to absorb a similar amount in losses as fuel subsidies. Being great economists, they also made it such that interest payments on these bonds will come due in 2021 only and the accrued interest payments were never included in fiscal deficit at their time. This is not great economics, its just great financial engineering whose bill will come due very soon.

PS: Also those who compare USD price of Oil and INR pice of pump, please also add exchange rate in your calculations.
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Old 19th February 2021, 17:56   #65
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Default Re: Regular petrol hits a century for the first-ever time in India

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Previous govt issued Oil bonds of 15-20 year tenure worth more than 1.5 Lakh crores. PSU banks and OMCs were asked to absorb a similar amount in losses as fuel subsidies. Being great economists, they also made it such that interest payments on these bonds will come due in 2021 only and the accrued interest payments were never included in fiscal deficit at their time. This is not great economics, its just great financial engineering whose bill will come due very soon.
We pay Rs 18 as road infrastructure cess for every litre of petrol & diesel we purchase. Rs.18 per litre is a huge amount. Then we pay toll for the same roads. What is the need of the toll if we pay such a massive amount as road infrastructure cess ? Either toll plazas across this nation should be stopped or road infrastructure cess should be withdrawn.

Last edited by anb : 19th February 2021 at 17:57.
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Old 19th February 2021, 18:24   #66
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Have you guys not heard of Oil bonds or making a one sided argument deliberately?
PS: Also those who compare USD price of Oil and INR pice of pump, please also add exchange rate in your calculations.
Since this is addressed to me too - so what do you reckon the current guys will do if oil price was to touch $120 like it did then? Remember, it's just $60, still. Raise prices to 200 per liter or issue bonds? And just FYI, oil reached $140 for quite some time, those days.

Regarding exchange rates - say what? It is crude per barrel rate, that I was referring to. If you're alluding to price comparisons others have brought in, sure, let's look at exchange rates etc. Also then, do look at what we get for our tax money in US/NL viz a viz here, so the play area is level.
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Old 19th February 2021, 19:19   #67
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Default Re: Regular petrol hits a century for the first-ever time in India

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Originally Posted by pkk077 View Post
Have you guys not heard of Oil bonds or making a one sided argument deliberately? Previous govt issued Oil bonds of 15-20 year tenure worth more than 1.5 Lakh crores. PSU banks and OMCs were asked to absorb a similar amount in losses as fuel subsidies. Being great economists, they also made it such that interest payments on these bonds will come due in 2021 only and the accrued interest payments were never included in fiscal deficit at their time. This is not great economics, its just great financial engineering whose bill will come due very soon.

PS: Also those who compare USD price of Oil and INR pice of pump, please also add exchange rate in your calculations.
Well this theory has been debunked long time back. Here are related articles which says, Oil bond payment every year is less 5-6% of total excise collected on the fuel.

Infact previous Government was paying more towards Oil Bonds every year. As per Petroleum ministers information this Govt inherited 1.4L cr of Oil Bonds from previous Govt. Excise collection for year stands near or upward of 7L crore every year.

Source 1

Source 2
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Old 19th February 2021, 19:23   #68
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Default Re: Regular petrol hits a century for the first-ever time in India

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Originally Posted by pkk077 View Post
Have you guys not heard of Oil bonds or making a one sided argument deliberately? Previous govt issued Oil bonds of 15-20 year tenure worth more than 1.5 Lakh crores. PSU banks and OMCs were asked to absorb a similar amount in losses as fuel subsidies. Being great economists, they also made it such that interest payments on these bonds will come due in 2021 only and the accrued interest payments were never included in fiscal deficit at their time. This is not great economics, its just great financial engineering whose bill will come due very soon.

PS: Also those who compare USD price of Oil and INR pice of pump, please also add exchange rate in your calculations.
This is the biggest piece of bull that is going around in justification of high fuel prices;
- First of all, India's budget is a deficit budget, which means all governments borrow. Oil bond is one form of borrowing the government resorted to handle high oil prices. It is legal and allowed. Please see this chart - https://www.statista.com/statistics/...debt-of-india/. This shows how India's borrowings is projected to increase steadily. All governments inherit the burden of borrowings by previous governments. But how much governments can borrow is governed by FRBM Act.

- Second is that the present government has not paid off the Oil Bond borrowings of the previous government. I couldnt get current numbers, but according to Scroll (https://scroll.in/article/894559/fac...ing-oil-prices) and thelogicalindian (https://thelogicalindian.com/fact-ch...ent-oil-bonds/) only Rs3,500 crore in principle and Rs40,000/- in interest has been repaid. This is a small fraction of what the government is earning only from excess taxation of petrol and diesel (https://www.businesstoday.in/current...ry/409846.html)
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Old 19th February 2021, 19:34   #69
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Default Re: Regular petrol hits a century for the first-ever time in India

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Well this theory has been debunked long time back.
And what theory is that?

My argument is that previous govt. did not handle high fuel prices well. They just kicked the can further down the road. And that is exactly what is proven by the articles you share.
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Old 19th February 2021, 19:42   #70
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Default Re: Regular petrol hits a century for the first-ever time in India

Stating the facts as I see them and have observed for exactly half a century of newspaper reading. From roughly 1999 to 2016 the Indian economy was cruising along at an average growth of 6.75% to 7.0% almost on auto pilot. It did so under Govt's from both sides. There were bad years such as 2008 and some great years of 8%+ growth but on the whole this trend held. The main reason was a gradual reduction of 'government' in the lives of commerce & industry. This meant the economy was getting decoupled from politics. Both ex-PM's A.B. Vajpayee and Dr. Manmohan Singh and the architect of liberalization PV Narasimha Rao understood that less government and gentle incremental changes are what work best in a large, diverse and fragmented economy that sits atop the world's most diverse nation.

Starting on 8th November 2016 political opportunity was imposed on the economy and our growth has only declined since then. March 2021 will witness the 5th consecutive year of GDP growth rate declining over the previous year. The table below gives the GDP growth figures*. We don't have to get into political leanings and views as the figures speak for themselves. The high taxes on fuel are nothing but a reflection of the Govt's desperate need to extract the revenue it needs from an economy that has slowed down to a crawl. I don't see any relief on these high taxes till the economy gets back to at least a 6% per annum real growth rate.

Till c.1982 we had only two major internal factors in the mix that affected our economic growth- politics and economics. Starting 1982 regional instability of a deep and chronic kind got added to the mix, first Punjab then J&K and finally the Maoist movement in large swathes of Central & Eastern India. Now we have a fourth factor and that is cultural instability. Each new factor pushes that 6% or 7% growth further away. Bear in mind it takes a while to crank up the economic engine. These prices are here to stay not because the Govt dislikes the middle class but because it has no choice. An economy like ours which at nominal GDP is the 5th or 6th largest and at PPP the 3rd largest does not tank immediately with misplaced economic polices and neither does it jump start to 7% with a sweep of new policies. That is why after the shock of DeMo it took 3 years to get down to our erstwhile favourite growth rate of 4%. Similarly the best policies announced tomorrow will take 3 or 4 years to crank back to 7%.

*Source IMF
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Old 19th February 2021, 19:50   #71
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Default Re: Regular petrol hits a century for the first-ever time in India

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Originally Posted by dragracer567 View Post
To be fair, the average annual wage for the Dutch was $51,313 in 2018 (Source: OECD, not adjusted for purchasing power) while it was $1,875 for India in 2020 (Source: Statistica) . Of course, I understand that the people who can afford to own a car in India earn much more than the average wage but even if its INR 600,000 ($8.2k), itís still less than 1/5th that of the average Dutch income while the fuel prices are just about 60% higher. So, based on your purchasing power, fuel is cheaper for you
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Originally Posted by Jeroen View Post
A bit of international context of petrol prices around the world:

Guess what I am paying? Hint: the third most expensive petrol in the world!

Jeroen
I've made this easier by comparing PPP income and fuel price in USD per litre. The ratio that comes out at the end is enlightening. I've not included the Netherlands but there are a few developed countries in there, to show you how our wallets and fuel tanks are being violated.

Yes Excel is my idea of fun.
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Old 19th February 2021, 19:51   #72
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Default Re: Regular petrol hits a century for the first-ever time in India

As far as international prices are concerned, this is primarily due to OPEC squeezing supply! There is no shortage of oil, in fact there is a massive surplus/oversupply issue.

Demand is nowhere near pre pandemic levels, aviation sector is still limping and will not fully recover for a few years. Consumption is down.

Production, US shale has fallen and is very slowly recovering before harsh winters hit this week. Production should start gaining in a few days and rigs keep getting added on every week. The OPEC cartel is pulling strings for now and they have choked supply to see prices recover at the cost of market share.

The positive news is Iran & USA is back at the negotiating table and if supply starts from that corner crude prices will see a nose dive.

https://www.voanews.com/usa/biden-wi...sanctions-iran

Last edited by shortbread : 19th February 2021 at 19:53.
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Old 19th February 2021, 19:53   #73
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Default Re: Regular petrol hits a century for the first-ever time in India

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My argument is that previous govt. did not handle high fuel prices well. They just kicked the can further down the road. And that is exactly what is proven by the articles you share.
Even if we, for a moment, turn off our brain and assume that this is a deliberate attempt in paying off the debt, here's the biggest problem with all these so called radical solutions proposed or being implemented by this government: They do not come with any guarantee or timeline whatsoever.
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Old 19th February 2021, 20:10   #74
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Default Re: Regular petrol hits a century for the first-ever time in India

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Originally Posted by v1p3r View Post
I've made this easier by comparing PPP income and fuel price in USD per litre. The ratio that comes out at the end is enlightening. I've not included the Netherlands but there are a few developed countries in there, to show you how our wallets and fuel tanks are being violated.
t
Maybe people more familiar with this topic than me can comment. I am not sure how relevant this comparison is.

The issues, from memory, is that PPP takes into account the relative cost of local goods, services and inflation rates of the country. In a country such as India, with very low cost of local goods and service the PPP ends up being low. Also, I seem to recall something about PPP not being tied into real market exchange rate.

Lastly, and it is sort of tied into the above. Using PPP to compare on a single product does not appear to be very relevant. Although the match is probably correct. PPP is a mechanism to get a feel for a defined basket of goods and service, not just a single product.

But I might be wrong, its been a long time since I looked up PPP.

In addition, given the spread of wealth in India, I am not sure how relevant PPP is at all. As I mentioned, cars are a middle class phenomena in just about every society. If you are not part (salary/income wise) of that middle class owing a car is not going to happen, so the price of fuel is irrelevant. to put it differently, you need to define the relevant basket for the middle class and base your PPP on that. At least for this purpose.


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Old 19th February 2021, 20:21   #75
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Default Re: Regular petrol hits a century for the first-ever time in India

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Originally Posted by Born 2 Be Wild View Post
Well dear sir lets see the centre atleast bringing tax levels to state taxes first below a breakup for your refrence for facts! Looking at the share of tax basket no prize for guessing who actually opposes GST on fuel
I mean its all good and fun but people getting into the microscopic details of dollar exchange rates, purchasing power , the gdp oil bonds etc etc
Seriously gents from a layman perspective its simple logic excise on fuel is almost 30/- rs right now 2014 its was less then half of what it is right now , lets call a spade a spade please!

Last edited by Born 2 Be Wild : 19th February 2021 at 20:23.
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