[DWind]

Originally Posted by thoma

- Will a liter of diesel and petrol cost the same if there were no regulations at all? If not, what could be the difference in price with no regulations?

There will still be a difference as the taxes for Diesel and Petrol are different.

[rajshenoy]

Finally heard about a bold move by this UPA govt in last 8-9yrs. I still feel diesel will be regulated by the govt. compared to petrol where they are making profits currently

Those who have invested in Oil stocks must be partying tonight. I too happen to own a few in IOC but not so much profit to compensate my fuel bills

Coming to so called inflation, Even with this stagnant diesel price inflation was always high, be it food,real estate or any other luxury !!

To avoid any last min(read election) bombs, i am sure 2013 will see many such desperatedly needed economy boost. praying for the same.

[LithiumSunset]

Here is a bizarre fact. CNG costs a whopping 62.90 per Kg in Moradabad. This is the most for the so called people's fuel I have paid ever. It beats Gujarat prices by 10 Rupees! There was a small sticker explaining the break up. Basic price is 48, add 14.xx% excise and 14% VAT. So if the principal fuels get de-regulated, what happens to alternative fuels? It's a stupid question isn't it?

[sameerg001]

Originally Posted by LithiumSunset

Here is a bizarre fact. CNG costs a whopping 62.90 per Kg in Moradabad. This is the most for the so called people's fuel I have paid ever. It beats Gujarat prices by 10 Rupees! There was a small sticker explaining the break up. Basic price is 48, add 14.xx% excise and 14% VAT. So if the principal fuels get de-regulated, what happens to alternative fuels? It's a stupid question isn't it?

I paid 61.87 last sunday there, Went to rudrapur for a family function. Even after being priced closed to petrol, I get it just because, It gives me whooping mileage of around 30-32 km/kg on highway.

It was around 50/-rs when pump started operating there, Then went to 54, then 58 and now 61.87.

Even in mathura and merrut, price is around 60/- per kg. Whereas in agra, its cheaper around 45.

[LithiumSunset]

Originally Posted by sameerg001

I paid 61.87 last sunday there, Went to rudrapur for a family function. Even after being priced closed to petrol, I get it just because, It gives me whooping mileage of around 30-32 km/kg on highway.

It was around 50/-rs when pump started operating there, Then went to 54, then 58 and now 61.87.

Even in mathura and merrut, price is around 60/- per kg. Whereas in agra, its cheaper around 45.

Yeah but at a 60-65k premium one pays for a co. fitted kit the economics don't really work out. No wonder there were no queues there, quite unlike the scenes in Delhi. I did wonder why there are such wide difference in the price within the same state. In Noida- Gr. Noida, which is still UP, it sells for 40 odd rupees. I saw similar differences in Gujarat and Maharashtra too.

[sameerg001]

Originally Posted by LithiumSunset

Yeah but at a 60-65k premium one pays for a co. fitted kit the economics don't really work out. No wonder there were no queues there, quite unlike the scenes in Delhi. I did wonder why there are such wide difference in the price within the same state. In Noida- Gr. Noida, which is still UP, it sells for 40 odd rupees. I saw similar differences in Gujarat and Maharashtra too.

According to the guy filling gas at moradabad station, CNG used to come from Delhi in trucks, that's why cost is high. He added, We are getting pipeline from bareilly, which will bring down the cost.

But few months back, they got the pipeline from bareilly, but price kept on increasing

Don't know, why there is huge difference between prices.

[Hayek]

Can't agree with all those who are either criticising the GOI's diesel price move as placing a burden on consumers, or praising it as a "bold move". All that the government has promised is to let oil marketing companies raise prices by up to 50 paise per month. This is an increase of just 1% per month - and will barely compensate for INR depreciation against the USD if inflation differentials between India and the US remain at current levels. Assuming even a 3% pa INR depreciation and 2% pa diesel price rise in USD terms, it will take 3 years to bridge the gap that exists today. The fact that we are lauding or even commenting on such a non move just tells us how far we have sunk.

We need drastic action - complete withdrawal of the GOI from controlling fuel prices (barring imposing taxes), and an elimination of wasteful subsidies. We can't have a situation where a mere 400,000 Indians (who declare incomes of over Rs. 2 million p.a. and pay 65% of all personal income taxes) bear the cost of taking care of 1.2 billion people. See this for further inputs (http://gimt.edu.in/clientFiles/FILE_...253840/206.pdf)

[mjothi]

Originally Posted by Hayek

We need drastic action - complete withdrawal of the GOI from controlling fuel prices (barring imposing taxes), and an elimination of wasteful subsidies. We can't have a situation where a mere 400,000 Indians (who declare incomes of over Rs. 2 million p.a. and pay 65% of all personal income taxes) bear the cost of taking care of 1.2 billion people. See this for further inputs (http://gimt.edu.in/clientFiles/FILE_...253840/206.pdf)

Thanks for the PDF. Really nice analysis. With just 1.3% of tax payers above 20L pa slab, now Finance ministry is looking for putting a new slab on this with 50% tax percentage. I wonder why? This is on top of the fact that these very 1.3% pays 63% of tax collection NOW. So, is the target is to make this slab pay upto 100% of tax collection?

A bigger hit awaits those earning more than Rs20 lakh a year. The ministry is considering a new income tax slab for this segment — accordingly, income above Rs20 lakh is to be charged tax at 50%.

Source http://www.dnaindia.com/money/report...heques_1788413

[sgiitk]

@mjothi; Remember in the heyday of Socialism the top tax slab was effectively 97%. What happened, people just stopped declaring incomes!

I see that diesel is up 0.45 with up to 0.50 pm to follow. Also,

1. Institutional/bulk buyers (railways, Mobile towers, Malls, Generators in factories, etc) pay the full price.
2. LPG hike in subsidised cylinders will only add up to about 50% of 1 above.
3. With diesel increasing by Re.0.50 pm there is expected to be a reduction in Diesel subsidy by about 19000 crores.

I expect an impact on inflation of about 0.1% mostly due to 1 above.

Smart move Mr PC.

I expect the rupee to start improving reducing the effective crude prices.

In six months I expect Reliance (and others who shut down) to reopen, and within a year to be laughing all the way to the bank.

[sukiwa]

Originally Posted by sgiitk

In six months I expect Reliance (and others who shut down) to reopen, and within a year to be laughing all the way to the bank.

Would private retailers(Reliance, Essar, Shell) turn away from 'being in Red' so soon, more so Reliance?

[viggienomad]

Railways & State Transport Operators has to pay Rs.11 more per litre than cars! Why?

Originally Posted by sgiitk

...
3. With diesel increasing by Re.0.50 pm there is expected to be a reduction in Diesel subsidy by about 19000 crores.
...

With so much savings in subsidy, will the Govt reduce other taxes now that they don't need all those mega crores?!

[sgiitk]

Originally Posted by viggienomad

1. Railways & State Transport Operators has to pay Rs.11 more per litre than cars! Why?
2. With so much savings in subsidy, will the Govt reduce other taxes now that they don't need all those mega crores?!

1. It is also a signal that there will be no rollback. I think the differential is more like 8.60 plus VAT etc. Let me sk, why not. The sectors you have named are probably the most inefficient. Also, Railways cannot hike freight charges as they are already losing traffic.

2. Our deficit is still monumental, so more likely little or no additional taxes. In the long term as the rupee appreciates if should have a positive impact on prices.

Would private retailers(Reliance, Essar, Shell) turn away from 'being in Red' so soon, more so Reliance?

Shell is only a marketing company in India. Essar has never stopped selling diesel. Reliance's cost of production must be at least Rs.3-5 per litre lower. So they should break even in six-nine months. I am assuming some lead up time to the restart, and a constant crude price. Rupee appreciation will also help. It has already breached 54.

The good thing is that the stampede into diesel vehicles will reduce.

[mjothi]

Originally Posted by sgiitk

I expect an impact on inflation of about 0.1% mostly due to 1 above.

Sorry i could not get this one. If you don't mind, can you clarify please?

I thought increase in Diesel price will have an impact (direct & indirect) on the food, transport etc. Add to this, the price rise with the excuse from vendors that Diesel is hiked. So, if price goes up, spending is reduced. If spending reduces, will it not add to the inflation? What is it I am missing here?

[sgiitk]

Easy, the last Rs.5 added 0.2%, so for 0.50 one can say 0.02% - but not quite. The impact of the bulk buyers price hike will have to be vectored in. This is my guess.

[viggienomad]

Originally Posted by sgiitk

... The sectors (Railways & State Transports) you have named are probably the most inefficient. Also, Railways cannot hike freight charges as they are already losing traffic...

I think the inefficients will simply charge more from the public. Railways being the single largest customer of diesel, may simply ask for more funds from Govt. They have to redirect much of any subsidy savings to Railways then.

Strange logic that volume buyers has to pay more than retail price.