[reverse_gear]

Thank God for that. It's a positive decision by the government and oil cos, though still nominal. I hope they continue it if the global prices remain moderate.

[drmohitg]

Originally Posted by mukeshgoel

Petrol price cut by Rs 2.42 per litre and diesel by Rs 2.25 a litre.

So benefits shared 33% each by Govt, consumers, Oil companies.

How is that? The customer will hardly get any benefit right since excise has been increased at the same time. Or are these figures after taking account the excise hike?

[sandsun7]

Originally Posted by drmohitg

How is that? The customer will hardly get any benefit right since excise has been increased at the same time. Or are these figures after taking account the excise hike?

The reduction seems to be after taking into account the increased excise duty. So what should have been a 4.25 Rs reduction is now only 2.25 with Government pocketing the rest.

[saurabhkum]

What I could understand is that there has been increase of 2 Rs on account of excise duty and oil marketing companies have reduced rate by 2.42 Rs per liter so net effect of 42 paise ......What a Joke .... and top of it Petroleum Ministry had the guts to comment that price revision is a task of Oil Marketing companies and Ministry doesn't have any role to play on it. They really think that we all are fools or don't know what's happening?

[drmohitg]

Originally Posted by sandsun7

The reduction seems to be after taking into account the increased excise duty. So what should have been a 4.25 Rs reduction is now only 2.25 with Government pocketing the rest.

The news channels (reference NDTV) is still unclear on this. They just mention that oil companies have reduced prices by this amount and govt has increased excise by this.

[wildsdi5530]

It's funny that people have noticed this just now. It has been happening for the last few times that price cuts have been made. Excise has increase by ₹6-8 in the last few months. No wonder that though crude oil prices which is used for oil pricing in India has fallen from 110 to 45, petrol has fallen from 72 to 67 instead of 30.

[Chetan_Rao]

According to ToI, the cut is exclusive of the excise hike:

The reduction would have been almost double but for the government also raising excise duty by Rs 2 per litre on both petrol and diesel today.

Link to news article:

http://timesofindia.indiatimes.com/b...w/45912839.cms

[Cowardly Lion]

The decrease in Petroleum price is more than what this new government could have wished for. It has afforded them an excellent opportunity to shore up some revenues and set their balance sheet in order (somewhat) while at the same time offering some succor to the final consumers.
What I am unable to understand is why CNG remains unaffected?
Also why are the airlines still charging an arm and a leg as their fuel surcharge?

[sgiitk]

The odd figure of 2.42 and 2.25 cannot be Excise rise alone. So they have cut by ₹4 each and the amount of ₹2 absorbed in Excise, and we are getting ₹2 plus VAT.

[hrman]

New price of Diesel at Shell in Bangalore is Rs.52.40 after reduction. Petrol was in the region of 64.6X
I think the price of petrol has gone down to 2011 levels as of now. More scope for reduction, if the govt. keeps excise duty increase out.

[sgiitk]

Originally Posted by hrman

New price of Diesel at Shell in Bangalore is Rs.52.40 after reduction. Petrol was in the region of 64.6X
I think the price of petrol has gone down to 2011 levels as of now. More scope for reduction, if the govt. keeps excise duty increase out.

and the State Government do not huike VAT. Here it is used to pay for Saifai Mahotsav, and (just came out today) Mulayam's Birthday Bash amongst other things.

[GrammarNazi]

So the Rs.2.42/- cut as AFTER the OMC's absorbed the 2Rs Excise hike.

I'd wait a while before criticising the move by Govt. Since IMO there is a small yet significant advantage of moderated Fuel price cuts. Volatility in the price of such a commodity can have varied effects in markets. Maybe large businesses can afford it or deal with it, but SME mostly can't.

For instance, if an SME buys raw material (whose price is sensitive to fuel prices) for use in production for the near future, then by the time the production cycle ends, the market value of the product could've dropped because of other capitalists (who've better machinery / resources with shorter production cycle) delivering faster.

SME's could get adversely affected due to sudden large price drops, thus resulting to the economy becoming quite abit unstable in certain areas (including the massive unorganised sector).

[RSR]

Originally Posted by sgiitk

And the State Government do not hike VAT. Here it is used to pay for Saifai Mahotsav, and (just came out today) Mulayam's Birthday Bash amongst other things.

Professor, not all state governments went on a VAT hiking spree when the prices fell. Only some states hiked the VAT to pocket the money instead of passing on the benefit to the citizens. Even the Goa government can be left out of this bunch, although they also technically hiked the VAT - instead of almost 0% earlier, they introduced a relatively small component. Goa is the only state in India with a fair difference (almost as it is internationally) between petrol & diesel prices at the moment now.

In any case, the blame should go where it belongs. If some state governments hiked VAT to add to their coffers, then only those deserve to get criticised.

Since it is the central government that has hiked excise to pocket the money instead of passing on the benefit, it is the one which deserves to be blamed (i.e. held accountable for its actions) by citizens throughout the country in this case.

To the common citizen, it makes no difference whether the state government or central government or oil PSU cartel is pocketing the difference. But giving with the right hand and immediately grabbing it back with the left hand does not deserve to be called giving in the first place (same with the supposed "deregulation").

[sgiitk]

@RSR; I agree Goa should not be blamed, and have said so at many places. However, many states did hike.

As for Excise if it goes towards roads which were eaten by the Bhalu and others, I have no issues. We all know the pathetic state of road building, and the fact that the builders are not considered credit worthy any more, something had to be done. In addition to the hungry Bhalu (we all know the full form of DMK!) there was also the Ministry of Environment and Forests which kept on procrastinating forever. Too much activism may not always be good.

[RSR]

Professor, I think the central government would do well to declare its intentions clearly. They can either let the market completely decide the retail prices of petrol and diesel (based on international crude prices) by breaking the PSU cartel, or they can declare relative price stability to be their aim (by continually tinkering with excise & import duty) and let the retail price move up/down within a fixed desired range, somewhat similar to the rupee exchange rate.

They are playing a little game at the moment. Or there are different economic voices within the government (free market advocates vs. "socialists", "minimum government" favourers vs. election watchers) pulling in different directions, with none having a decisive say.

The biggest disappointment is the deregulation of cooking fuels. It looks like there is no interest in this very vote-sensitive issue. The fall in international crude prices presents a golden opportunity to gradually raise the retail prices of kerosene and domestic LPG (by say, Re.1 and Rs.10 a month respectively) and eventually deregulate the two. Direct cash transfers can replace these so-called subsidies completely.

There is a deafening silence on cooking fuels - understandable, with the excise bonanza being possibly used to meet the (constantly reducing) under-recoveries on kerosene and domestic LPG. Punishing the commuter to reward the cook.