[sourav9385]

Another plot by the central govt to fool the masses. Hike prices, public makes noise, reduce prices just to show that they are considering the condition of the mango man.

Total b.s says me. They've been stealing all our money, taxing the living daylighting out of our salaries, and giving us a big fat nothing in return.

Oh when will this bloody govt go away for good! I'm just sick and tired of listening to these so called bureaucrats harp on about how they can't run the country on common sentiment. Yes, I'm talking to you! Mr so-called Finance Minister.

[sgiitk]

Again the lame excuse. Fall in crude prices, today Brent is under $100, was about $110 a yearago. It is the total mismanagement of economy which has lead to a 20% drop in the rupee. Of couse they are never mentioning that a Yen is today under 79 per dollar, and was 80+ a year ago. So the dollar rising is also part of a hoax.

[kap04]

Originally Posted by libranof1987

Petrol price cut by Rs. 2 effective tonight!

So, actual cut will be more, right (considering taxes will be cut too)?

State-owned oil firms will reduce petrol price by Rs 1.68 per litre, excluding taxes. After including 20 per cent VAT, the cut in Delhi comes to Rs 2 per litre, industry sources said

[Ford5]

Pricing of petrol in India is considering brent crude price in the singapore bulk market (why not china, malaysia or some other country) + average fluctuation of the rupee against the US $. Majority of the crude is from Saudi arabia, then why include some other (developed) regions buying pattern into our pricing of petrol products? Why can't we pay directly in $ to OPEC countries.

This is the most absurd logic I have ever seen. Nobody spoke about rupee fluctuation or brent prices before the per lire price crossed 60 bucks.

So tomorrow if uncle sam declares singapore an offender hiding unseen WMD's and attacks them, our petrol prices will well... explode having an effect worse than WMD's

[Hayek]

Originally Posted by Ford5

Pricing of petrol in India is considering brent crude price in the singapore bulk market (why not china, malaysia or some other country) + average fluctuation of the rupee against the US $. Majority of the crude is from Saudi arabia, then why include some other (developed) regions buying pattern into our pricing of petrol products? Why can't we pay directly in $ to OPEC countries.

Singapore is the biggest refining centre in the world and the biggest trading centre in Asia for refined petroleum products. The other major centre is Dubai. The market for refined products is efficient, there is virtually no arbitrage opportunity. Crude prices are not perfectly correlated with petrol prices - there is no obligation for Indian refineries to sell in India, they can always export at Singapore prices. However, please note that this dichotomy mostly works in favor of petroleum product users, as refining is a lousy business that almost never recovers cost of capital. The right solution to fuel pricing in India is to get the government out of the way - reduce customs duties to zero, decide on a moderate level of specific central and state VAT (fixed as Rs. Per liter instead of percentage of selling price, can vary by state), be clear that the government owned OMCs will never receive any subsidies from either the GOI or upstream oil producers, let private sector companies market fuel products, and wait for the benefits of competition to set in. Fuel prices will vary every day like prices of tomatoes or onions, there will be times when prices are too high, but the premium to crude will be driven by efficient private sector cost structures than by opaque PSU under recovery calculations. My suspicion is that the PSU OMCs will be reduced to irrelevant players like Air India, BSNL and DD. and you will never see a day when prices rise by Rs. 7 per litre. And you would have certainty on the petrol / diesel differential.

[libranof1987]

Further good news for those in Delhi :

Petrol price down Rs 2 a litre, another Re 0.92 cut next week - The Times of India

Reduction of VAT to come into force next week.

[sgiitk]

Actual ex-refinery cut is Rs.1.68. The media thinks that Delhi is India!

[Bazinga]

Petrol is still 77 per liter in Pune. 6 rupees higher than Delhi.
Govt still contemplating hike in Diesel prices. Don't know what happened to segregating Diesel prices for commercial and non-commercial vehicles.

[drmohitg]

The govt has become so predictable. Everytime its the same old story. We all knew from the very start that the rise would be lowered down to 5 rs and thats exactly what they have done and in the process tried to paint a "aam aadmi" friendly picture too.

My simple question: If in the next 2 months the Rupee gains back to its earlier position ie around 45 Rs for a $ then can we see a rollback of all the recent price hikes?

[andromeda]

Originally Posted by Hayek

Government regulation creates a false perception of stability in inherently unstable systems, and provides opportunities for the connected and the influential to create and exploit arbitrage opportunities. Increasing government interference hurts the ordinary Joe the most. If the oil subsidies in India are not scrapped and soon (and please don't tell me that the government should not tax fuels - it would need to reduce other expenses or raise other taxes in that case), India is heading head-long into a 1991 style crisis. Please remember that your net worth measured in USD terms has probably fallen 20% in the last 12 months (unless you are an industrialist who has moved the majority of your net worth outside India through acquisitions etc.). Free markets are not perfect and are inherently unstable. But there is ample empirical evidence to show that the instability created by governments is greater than that created by markets, and with the added disadvantage that governments can be and usually are bought by vested interests.

From the country perspective, India just cannot reduce/eliminate the taxes on fuels (excise, customs, VAT, etc.) simply because of the country's affordability factor. Note that the fuel is priced in USD and is decided by 3 main Wall Street (speculators), US government (power and clout of the largest consumer) and Saudi (OPEC's largest member). So all others including Europe are pretty powerless when it comes to this. Hence the only way out for any non-US oil consuming country is to reduce it's consumption by levying taxes and providing alternate public transport to their citizens (the Europe way).

Now India does heap on various taxes on fuels to ensure that the private consumption is restricted. But what it does with that tax money (instead of improving infrastructure, public transport, etc.) is an open secret. Neither am I going to dwell on how much the government is taxing versus how much it should. India neither has the infrastructure (to support a private automobile driven transport industry like US) nor can muster the will to create it (like China) to cater to any sudden spurt in car sales.

There can be only 2 scenarios where the India can follow US to being an transportation industry driven by private vehicles.

1. Increase in oil availability - Going forward, if the US consumption reduces substantially when it's vehicles switching to locally available abundantly Natural gas here and good shale gas finds of late). This will free up substantial oil for other consumer countries and hopefully reduce the number of speculators. Till then, the only way out for any non-US/non-oil producing country is to tax the fuel heavily so that it acts as a deterrent for it's citizen from buying/using private vehicles. Hopefully the public transport like Metros will improve in the coming years.

2. Domestic oil/gas find - Decent oil/gas find in offshore/onshore fields that can ensure that the public and goods transport country wide can switch to natural gas or locally found oil. This will save precious foreign exchange and also bring down the oil prices in the international market (since India's import of oil reduces). Hopefully then the country's subsidy bill will come down and the fuel taxes can be used to improve infrastructure

[sgiitk]

Now another Re.0.92 cut likely on the 15th. Rangarajan is raising noise about diesel, LPG and K-oil prises. Is it on his own or prompted, I do not know.

Saw a silly discussion on Fuel Subsidies last night on NDTV. As expected Sunita Narain was on about banning Diesel cars, the politicos about the normal issue of support for the aam admi. Mani Shanker trying to defend his Gods - Gandhi family. I was surprised that nobody raised the point the Diesel cars are more efficient than Petrol cars, and in Europe Diesel cars outsold petrols for the first time in 2010. There Petrol costs about the same as Diesel (afaik France is the only exception).

[samarjitdhar]

Originally Posted by sgiitk

Now another Re.0.92 cut likely on the 15th. Rangarajan is raising noise about diesel, LPG and K-oil prises. Is it on his own or prompted, I do not know.

Saw a silly discussion on Fuel Subsidies last night on NDTV. As expected Sunita Narain was on about banning Diesel cars, the politicos about the normal issue of support for the aam admi. Mani Shanker trying to defend his Gods - Gandhi family. I was surprised that nobody raised the point the Diesel cars are more efficient than Petrol cars, and in Europe Diesel cars outsold petrols for the first time in 2010. There Petrol costs about the same as Diesel (afaik France is the only exception).

Truth to power. And even if the so called diesel subsidies were completely done away with, it will still be far cheaper than petrol. I think at that point not satisfied with the enormous amount of taxation I suffer in return of getting almost nothing in terms of government services, Sunita Narain might expect me to be skinned alive for using a diesel car.

I am keeping in suspended animation even the thought of segregating the sale of lower and higher priced diesel without adequate corruption and some more money made by our politician turned "business-men" . I think this whole talk of differential pricing of diesel is an opportunity being looked for by our politicos to create another black market like that of kerosene. Why not screw the entire country to death now since it is already in a downward spiral. Heavens save us. Sorry for sounding so downbeat, its Monday .

[sgiitk]

@samarjithdar; You left out LPG. If prices were the same then LPG will be off the shelf, as it was in the NDA days. Those days there sere ads by dealerships asking people to get LPG connections. Obviously this will go against the motives as so ably listed by you.

Heard the news about Mme G's rant that opposition states are not cooperating. What about UPA states like WB!

[samarjitdhar]

Originally Posted by sgiitk

Heard the news about Mme G's rant that opposition states are not cooperating. What about UPA states like WB!

Here Didi is asking for a moratorium on interest payments the size of which I think is equal to the annual budget of WB. Our PM will book his ticket to hell if he suggested anything such as foregoing of taxes on petrol to our venerable Didi. Even Congress ruled states have only foregone only the tax component resulting from the increased prices not the entire tax amount. It is like not having that extra samosa for free in your evening snacks .

In other news, just found on Reuters that Brent crude is below $97 Brent crude drops to 16-month low on bleak economic data | Reuters and there is talk again about additional excise on diesel cars FinMin examining raising excise duty on diesel cars: CBEC Chairman S K Goel - The Economic Times after Maruti announced its mega plant in Gujarat . Talk of policy limbo, this government passes with flying colors. Actually in my view, these folks are beholden to too many vested interests who are now working against each other on account of the bribes received from everybody possible.

[bluevolt]

So CNG prices will remain same in Delhi due to the rollback of increased VAT.

PS - There is huge difference between petrol and CNG prices. Petrol is 70 per liter whereas CNG is just 35 per KG, Nearely 50% savings with CNG vehicle.