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Originally Posted by mxx Please, when you say common man, dont just take into account people with cars. As I said in my previous post, in my view, cooking fuels are more important as these are used by more people, even the people who cannot afford cars. The fact is that LPG and kerosene prices also go up, so the govt has to put in more money to subsidise it. If the tax keeps on reducing as fuel prices go up, ultimately the govt will be spending more in subsidies than it earns through taxes. |
Arre, nahin yaar, when I said common man, I also meant people without cars. Agreed kerosene and LPG needs to be much more affordable, but at what cost? The LPG and kerosene being borught to us are transported in trucks, which use diesel. An increase in diesel prices mean that the transportation prices go up, which the companies can't show (since LPG/kerosene price cap is regulated) , which are accounted for as losses, that are claimed as refunds. Same case with petrol and diesel. These are transported by tankers too, which run on diesel. So you see, the rise in the costs of fuels are affecting all, not just those with cars.
Let me describe how the cycle is going. As the costs of the fuel increases, (mostly due to tax; global rate increases are acceptable, but we pay the HIGHEST taxes on most commodities anywhere in the world, taking into account rupee value and purchasing power in terms of per capita income; i.e, for example, in the U.S, one of the higher taxed countries, the highest rate of income tax is 35%. Ours is 40% (corporate figures, both). Their avg. per capita income is $1000. Ours is about $250.) the transportation costs go up. As the transportation costs go up, the prices and indexes of the commodities go up. Inflation rate increases. Eventually, the salaries of the people have to be increased to meet the living standards. And how do the companies make up? By charging their clients/customers more. The govt., in return, taxes them more. The value of rupee goes down. The prices start increasing again.
This is the SIMPLEST chain that can be shown to describe the vicious circle that is going on. Although this is the same everywhere, developing countries and developed countries take care not to affect the purchasing power of their currency, to a large extent.
I'm all pro-govt. and all that, but please, do not believe all the cockamimey crap that the govt. is feeding you. The petroleum industry and govt. corruption go hand in hand. Has anybody been reading the E.T carefully? Nobody explains HOW these companies arrive at their staggering loss figures. In one page, the losses are given, and in the very next page, a report on the profits of these companies are shown. What the hell...? It's not that I cannot comprehend their stats, it's just that when companies are giving unbelievably large sums as the losses that they're incurring on a YoY basis (which means that the losses that the petro companies are putting up, are the profit figures that they're losing, or the money they potentially SHOULD have made. They're not ACTUALLY losing any money; business sense, you see), you just can't help it.
Another thing, why should kerosene be subsidised generally for all? Why can't it be subsidised just for poor people? That way, at least a lot of the adulteration can be brought into check, and some weight of the subsidy bill could be lifted.
And another thing. Why allow the dollar rates to go high and let the rupee weaken by allowing mass inflows as FII? The govt should bar FII's and promote FDI's instead. More liquidity, stability, better value of rupee, and cheaper imports. Although exports will get more competition and become tougher, the fuel costs would reduce in effect, since crude is imported. And since selling locally would be more profitable, petro-companies would start selling their products here. And yeah, the stock markets and the F&O would get stabilised too.
So you see, all this bull about the absolute necessity to increase prices is all crap. The Mah. govt (Mr. Deshmukh) allowed to forego the state taxes on the price increase. A small step, but has resulted in a positive price reduction of a rupee for petrol, and 65 paise for diesel.
There are ways to work around the existing system. But nobody wants to go there. Nobody is looking at the bigger picture here. Everybody wants the easy way out. Saying the fuel price increase is justified is like supporting the govt.'s decision to increase SC/ST quota to 50% in proffessional courses. It's all bull.....
Of course, since I'm not working for the govt, and this is all a layman's view, I cannot state the intricacies, but what I'm suggesting here is that the current outlook should change. In net, the prices being increased are not good for us in the long term. That's it.