[anb]

Originally Posted by Mohitkumaar

In my opinion govt should do away with excise completely. The faster things are brought under a uniform tax regime, the more it will boost the economy.

I see nothing wrong in reducing corporate taxes. We need more corporates because we need jobs.

.

The steep reduction has achieved none of its stated objectives – but has left the government poorer by Rs 1.45 lakh crore.


https://scroll.in/article/961662/why...porate-tax-cut


The excise duty on diesel was 3.86 in May 2014. Now it is 31.46 per litre. A massive 820 % increase per litre .

Petrol excise duty was 9.20 in May 2014. Now it is 32.98. An increase of 258 %. Reduce the excise duties to 2014 levels & with draw 20000 crore projects like central vista. We can buy the petrol and diesel for less than 60 rupees per litre.

[VKumar]

Gentlemen

Let's not make it political, it's a violation of the forum rule no. 13

Instead of talking about who did what. We can instead share our observations with the experts and seek their comments on the same.

Another Point I seek the Opinion of Experts On:
"Eating is good for health, over eating isn't", these words are said to me by a person who is well versed with the Indian economy and all, that too yesterday evening itself.

The gentleman asked me to simply open the economic survey, and look for fiscal developments.

Revenue Expenditure: The annual expenditure government does for running the day to day operations. Interest payment on capital expenditure is also a part of it. And stood at ₹ 26.3 lac crore last year

Capital Expenditure: The money you spend on infrastructure and other long term projects. It stood at ₹ 4.12 lakh crore

Interest Payments: Mainly they are for capital expenditure done in past, and are long term, and make a part of Revenue Expenditure. Which stood at ₹ 7.08 lac crore last year. and happened to be the biggest single expense incurred by the Government. All this, when the funds from divestment also went into the capital expenditure only. It's really interesting that how our interest burden has increased at an exponential rate from 2015 to today. In other words, we paid more interest then what we paid for the projects development itself!

The table for reference (Page 22, Chapter 2, Volume 2, Economic survey 2020-21; attached for reference):

Quoting the gentleman himself:
"Instead of spending a lot suddenly, it is always better to spend less but in a very uniform manner. That doesn't build immense interest pressure on you. And this interest pressure is the biggest unavoidable expense for the Government today, which is actually causing a massive shortage of funds with them, and hence causing this fiscal pressure"

In other words, just to prove that we are building a wrestler, a malnourished child has been raised - thanks to severe over eating in past, that the cardio has to be done today. Not by the powers to be, they got the child malnourished; but by the common man, who was appreciating the increasing tummy size of the child a year back

@Mohit, I would like to seek your opinion on these numbers mentioned in the Economic Survey, let's forget Google for a few hours and discuss what has gone wrong, and we could have saved it from going this way.

Economic Survey Volume 2, Chapter 2 "Fiscal Developments" attached for your reference.
Chapter 2 Economic Survey.pdf

[Chetan_Rao]

Note from Support:

While some discussion on relevant fiscal policy is inevitable, please stay away from political debates.

All political posts have been deleted. Further derailing the thread will necessitate infractions.

Thanks.

[vharihar]

Originally Posted by Red Liner

I have a feeling the Central Government is increasing prices and arm twisting the state governments to bend to public pressure and get the fuels under GST. I really do think this is the overall game plan. This is one of the few big revenue generators still not under GST.

This is exactly what I surmised some months ago, see: https://www.team-bhp.com/forum/india...ml#post5006395 (The Official Fuel Prices Thread)

If that's not it, then I sure hope the justification for the super high fuel taxes is the govt wanting to rake in large tax revenue despite low consumption volumes due to lockdowns. In which case, I sure hope there are big fuel tax cuts once the virus and lockdowns go away.

(and I do know that the govt is utilizing tax revenues in a fruitful manner that will bear fruit in the days to come, spending tons on infra works like Delhi Mumbai Expwy, DFC, Mopa-Goa Intl Airport, etc: Itemized list at: https://www.team-bhp.com/forum/india...ml#post4990557 (The Official Fuel Prices Thread))

[norhog]

The majority here are sad with the hike and understandably so.
We all love cars and bikes here and are enthusiasts.

But from a broader perspective, just take a step back and think. It is not so bad. This will save unnecessary travel with the options available for doing most things on line.
I think this is a move to push the middle class more and more towards public transport.

Most cities in India now have METRO railways. Either fully functioning or soon to start. This will definitely make the middle class person use public transport for regular transportation and private vehicles only for occasions.

Also as this lockdown has shown, a vast majority of white collar working force, across the industry spectrum can get most work done from home by using various online platforms, there is simply no need to travel regularly to "place of work".
So with good public transport in cities and metropolitan areas and walk/cycle to work and work from home, this price rise should be OK.

This was personal transportation. Now economics of the household.
Money saved from regular personal transport, by way of work from home and using public transport, basically NOT using private transport, some percentage of it can be used to absorb cost of increase in grocery and food price, owing to increased transport cost.

So in the NET SUM game, it won't be so bad as it is being made out to be.

Also, as our country, INDIA, becomes more affluent and number of middle class persons increase in the population, we do not have the infrastructure to absorb so many private vehicles. Getting people used to public transport at middle class levels will surely help.
If you look at Asian cities like Tokyo, Singapore, vast majority, even presidents and CEOs, use public transport for daily transportation, even though they have nice cars parked in their garages for occasional use for a trip to golf course or out of town.

[dvr08]

Originally Posted by norhog

But from a broader perspective, just take a step back and think. It is not so bad. This will save unnecessary travel with the options available for doing most things on line.
I think this is a move to push the middle class more and more towards public transport.

I would like to respectfully differ with this opinion. If Govt's aim is to push people towards using public transport, there are a 100 other ways to do it.

Govt can think of making it costly to own a personal vehicle, especially cars. To name a few measures..
1. Increased road tax
2. Much higher insurance premiums
3. Costlier vehicle loans
4. Make EV's a lot cheaper

I'm sure a common class families who struggle to meet their family demands, will never choose to buy a personal car.

There should be more focus on improving the public transit options. Rather than building up a new metro line which will be in use effectively 10 years after the first dig on the road, govt should focus on restricting private cars on the road, increase the bus service within city limits, reduce metro fare and so on.

Pushing fuel prices high is a stupid move to make people use public transport. It only pushes the other commodity prices even higher.

WE the people should make the change. Our mindset and attitude should change. We continue to buy fuel even when the price goes exorbitantly high. Unless that changes, this govt will only continue treating us like this!

[greenh0rn]

As a student of economics and taxation, I remember my frequent class discussions about consumption taxes (GST, excise duties etc.), and the link between fuel prices and inflation (a quick and dirty explainer here https://www.investopedia.com/ask/ans...sinflation.asp)

Up until 2018 or so, the government could well afford to raise taxes on fuel and consequently their prices as India had remarkably low inflation then (there are reasons for low inflation, but let's not go there as it'll get political). But now, with wholesale inflation at over 10% and retail at over 5% there is absolutely no justification for the price hike, other than (1) the government has run out of creative and productive ideas to increase tax revenues (2) it doesn't bother with citizens suffering.

Inflation hurts everyone regardless of whether you are a vehicle owner or not. If it remains higher than the FD interest, it will actually wipe out the value of your FDs. Plus I know of friends who drive entry-level cars and are now looking for ways to reduce their car use. A few are postponing their car upgrades only because of fuel prices (thinking bigger car = more fuel consumption).

One point we can all agree on without a debate is high fuel prices are universally harmful - they hurt the economy, they hurt the poor and lower-middle class most, but they also don't spare middle class - who now have to pay higher prices for everything from dal and sabzi to packaged goods on account of rising transportation costs (trucks transport roughly 70% of all goods in India, IIRC).

[jacobsam]

Originally Posted by norhog

The majority here are sad with the hike and understandably so.
We all love cars and bikes here and are enthusiasts.

Most cities in India now have METRO railways. Either fully functioning or soon to start. This will definitely make the middle class person use public transport for regular transportation and private vehicles only for occasions.
So with good public transport in cities and metropolitan areas and walk/cycle to work and work from home, this price rise should be OK.

This was personal transportation. Now economics of the household.
Money saved from regular personal transport, by way of work from home and using public transport, basically NOT using private transport, some percentage of it can be used to absorb cost of increase in grocery and food price, owing to increased transport cost.

Sir, I would like to absolutely differ about the availability of public transport infrastructure in India. Metros, local trains and Buses ( in terms of quality) are only limited to tier 1 and tier 2 cities max. Rest of the India is absolutely lacking the basic quality public infrastructure in India since I belong to such an area.

Secondly I am a direct & indirect tax payer in good numbers but when I look at the returns I should be getting in terms of basic facilities, it is completely inadequate.

[bosem123]

Purely from the monetary perspective, I don't think it makes any sense to own a diesel vehicle anymore. May be it's just a way to discourage people from using diesel, or is it?

[Turbohead]

Originally Posted by bosem123

Purely from the monetary perspective, I don't think it makes any sense to own a diesel vehicle anymore. May be it's just a way to discourage people from using diesel, or is it?

No, it's actually making more and more sense again. The price difference between diesel and turbo petrols have become very small whereas the real world mileage offered by diesels especially with enthusiastic driving is much higher.

I won't deny that turbo petrols are more fun though.

[bosem123]

When the difference is so less, wouldn't you want to buy a car that has greater running time in the market? 15 years of petrol vs 10 years of diesel (as per NGT)

[m8002?]

Originally Posted by bosem123

Purely from the monetary perspective, I don't think it makes any sense to own a diesel vehicle anymore. May be it's just a way to discourage people from using diesel, or is it?

It isnt so simple. It still depends on the cost differential in intended kilometers per month. The diesels easily give a 15-20% more mileage for a specific car.

Also, while NA petrols are cheaper than Turbo diesels, the balance shifts if you compare Turbo petrols and Turbo diesels.

[bosem123]

But what about running time then? You only get to use a diesel for 10 yrs as per NGT, but a petrol for 15 yrs. My guess here is that turbo petrol is a wiser investment. Also, how many people can actually afford turbo petrol? Most would purchase variants with base engines.

[Dry Ice]

Originally Posted by norhog

This will save unnecessary travel with the options available for doing most things on line.
I think this is a move to push the middle class more and more towards public transport.

I doubt this reasoning. From what I can see, the Govt has basically run out of ideas to increase its revenue.

Most cities in India now have METRO railways. Either fully functioning or soon to start. This will definitely make the middle class person use public transport for regular transportation and private vehicles only for occasions.

If we are not ready for more vehicles on our roads, we are also not ready for 2X or 3X more people using our public transport. Even before the pandemic, travelling via Delhi metro was a challenge in peak office times.

Also as this lockdown has shown, a vast majority of white collar working force, across the industry spectrum can get most work done from home by using various online platforms, there is simply no need to travel regularly to "place of work".
So with good public transport in cities and metropolitan areas and walk/cycle to work and work from home, this price rise should be OK.

And how do the goods ordered on the online platform make it to your door? They use the same fuel that you are trying to avoid, right?

Here you are probably just thinking of a salaried person, who hasn't lost a job or hasn't seen a pay cut. This section of people can probably tide over the crisis. But do spare a thought to countless others who either lost their jobs or saw their incomes vanish overnight. Then there are the people who run MSMEs, their plight is even worse. We even had a thread on it some days back.

How can this be OK for them? Reducing income but increasing expenses?

This was personal transportation. Now economics of the household.
Money saved from regular personal transport, by way of work from home and using public transport, basically NOT using private transport, some percentage of it can be used to absorb cost of increase in grocery and food price, owing to increased transport cost.

To take it one step further then, why would people bother with having a car at all? If people stop buying, what happens to the manufacturers and all the jobs they provide. And not just cars, when people are apprehensive of the future, they stop spending. So you have demand falling for everything. This will have a far greater negative impact on our economy than anything else.

So in the NET SUM game, it won't be so bad as it is being made out to be.

Also, as our country, INDIA, becomes more affluent and number of middle class persons increase in the population, we do not have the infrastructure to absorb so many private vehicles. Getting people used to public transport at middle class levels will surely help.

Actually we are not adding people to the middle class, we are pushing them out into poverty.

https://www.pewresearch.org/fact-tan...maller-changes

If you look at Asian cities like Tokyo, Singapore, vast majority, even presidents and CEOs, use public transport for daily transportation, even though they have nice cars parked in their garages for occasional use for a trip to golf course or out of town.

There is no point in comparison with developed countries. Right now, our reality is we are behind most of our neighbours when in comes to economic numbers.

[PrasannaDhana]

Originally Posted by GTO

Well, diesel car owners will still be frowning a bit lesser than their petrol counterparts. Reason = depending on the car / segment, diesel engines can give between 40 - 100% higher fuel economy. Even in a heavy vehicle like the Thar, the diesel variant will give 12 kmpl in the city. Petrol will be more like 6 - 7 kmpl.

Totally agree

My 2.2 turbo diesel 2 tonne SUV returns 13 kmpl average inside the city when driven normally. My 1.0 N/A petrol Kwid returns the same 13 kmpl inside the city with the same kind of driving.

I am comparing a turbo diesel with a N/A petrol that's less than half the former's displacement. Now when we compare two engines of same displacement, the turbo diesel is definitely going to be a lot cheaper to run.