[lurker]

Since posts on this thread are bringing in tremendous clarity to the issue and agenda behind fuel pricing, it would also be pertinent to note that one does not necessarily need to involve politics in it since fuel pricing is a state policy which was/is basically handled mainly by career bureaucrats of finance ministry dept of revenue and dept of hydrocarbons.

Politicians who are elected do not frame policy, because that is the job of a technocrat, who has domain expertise and needs to balance books and knows how many anna, paisa of revenue will help to balance govt finances. Politicians just pretend to make policy by signing off on policies drafted by bureaucrats and then they become public face of that policy. Tell me how many politicians have the technical and domain expertise to analyse the minutae of policy unless they belong to that field ?? How many ministers of oil, hydrocarbons have worked in finance or oil sector ??

Politicians may at max ask bureaucrats doing micro management of fuel to lay off a week or month before elections. And that is the maximum influence that they can knowledgeably wield. Rest of managing requires real expertise in a field which if a minister learns on job, 4-5 years is usually insufficient and more or less they learn not to upset the delicate applecart of corporate interest, greed of oil marketing companies and management of govt deficit and revenue for revenue deficient state govts.

So what are the bureaucrats up to ? Usually our top finmin bureaucrats take inputs from WB, IMF, BIS where they are posted on deputations for a few months, years. These multinational organisations encourage thinking in such bureaucrats to price fuel as high as possible to mop as much tax from public as possible. Since taxed money is dispensible income for a govt that can in turn generate funds for arms imports (mostly western companies in field), consume more debt from IMF, WB and other multilateral agencies and create infrastructure that aids in more commerce. IMF, WB are deeply invested in fixing dollar rates and fuel/electric pricing. Dollar should be as high as possible and fuel/electric pricing should be exhorbitant in their view to discourage rapid econonic expansion and challenge to western economies.

These are global pulls and pressures which our bureaucrats must resist because cheapest energy is vital to economic growth, for each percentage point of increase in cost of energy it will directly impact economic growth and thus it cuts both ways. What do you do with infrastructure if the economy doesn't have the strength to utlize it.

Take Pakistan for instance, 12 IMF bailouts later, it has a very decent highway netowork but has electric energy priced so high, repeated IMF bailouts insisted primarily on increasing cost of electric energy and imported natural gas that the domestic industry eventually failed because products were not able to compete in international markets with products priced at premium as compared to products priced cheaper due to cheaper electric energy input lowering manufacturing costs and consequently lower priced products, and ad such there is no economy of note to take advantage of the highways or civil infra. It is now a failed economy approaching IMF for its 13th bailout.

India should be careful of slipping into trap of high growth on books and high energy costs and anemic volume of trade and revenue generated internally.

Also do keep in mind that politicians are rotated every 5 years but bureaucrats serve for 35-40 years. So who makes policy, the dude who is rotated out every 5 years or the officer who serves as policy drafter for 35 years ? Long termers always have an upper hand when it comes to framing policy and making a real difference. They have the time and ability to dig their tentacles real deep into the system where they are in a position to make a real difference

[deadguy25]

Originally Posted by lurker

Politicians who are elected do not frame policy, because that is the job of a technocrat, who has domain expertise and needs to balance books and knows how many anna, paisa of revenue will help to balance govt finances. Politicians just pretend to make policy by signing off on policies drafted by bureaucrats and then they become public face of that policy. Tell me how many politicians have the technical and domain expertise to analyse the minutae of policy unless they belong to that field ?? How many ministers of oil, hydrocarbons have worked in finance or oil sector ??

Very well written with insights, thank you. In particular, off-late most people have forgotten the term "anna".

[Miyata]

OT -

While I do understand that different people have different apprehensions - tax accountability and undue financial stress on citizens. Out of curiosity, is there a poll on the forum for average monthly fuel consumption for a household?

At our home, we typically spend 9000 - 10,000 a month on fuel for transportation. I could easily bring that down 50% by using a combination of two-wheeler + ride sharing and car-pooling. I don't take the office cab/bus anymore.

[longhorn]

Govt mulling over a Rs 1-2 hike in excise duty.

https://www.financialexpress.com/eco...nning/1396404/

[ksameer1234]

Originally Posted by lurker

These multinational organisations encourage thinking in such bureaucrats to price fuel as high as possible to mop as much tax from public as possible. Since taxed money is dispensible income for a govt that can in turn generate funds for arms imports (mostly western companies in field), consume more debt from IMF, WB and other multilateral agencies and create infrastructure that aids in more commerce.

Thanks for the elaborate post. It makes me wonder if taxes are outright bad and we should have a world where there are no taxes. Though, in absence of taxes, how would government pay for salaries of teachers, police, army, municipal corporation workers etc. These professions and associated institutions need capital expenditure but do not generate any revenue at all. So, there is no benchmark for what the salary for a teacher should be, apart from national wages and international practices.

I don't think any nation can function without the support from taxes. That being said, fuel is a fundamental commodity today which is directly/indirectly consumed by everyone. Also, fuel consumption is typically proportional to the income (expensive cars consume more fuel than budget cars). Hence, it kind of makes sense to tax fuel since it brings in parity, there is little opportunity for evasion and its impact generally scales with the income of population.

With all that in mind, do I want fuel to be cheaper? Absolutely yes. Why would I want to spend thousands every month just to commute from home to office? But is it practical to make fuel cheap by way of less taxes? I am not sure if it would be a wise decision considering that nearly all of fuel in India is imported and increasing dependence on imported quantity makes the nation vulnerable to global turmoils.

[saket77]

Originally Posted by longhorn

Govt mulling over a Rs 1-2 hike in excise duty.

https://www.financialexpress.com/eco...nning/1396404/

No wonder if that happens. Petrol is 71.73 here in Ranchi after Rs. 83 just about a month ago. So now for us, who are now comfortable (read: now used to high prices) can surely shell out a couple of more bucks per liter and still be smiling!

Please don't call petroleum prices to be 'deregulated' at least.

[humyum]

Originally Posted by longhorn

Govt mulling over a Rs 1-2 hike in excise duty.

https://www.financialexpress.com/eco...nning/1396404/

They just don't want you to enjoy any benefit of the falling crude at all, first they don't cut the pump price according to the falling crude as they should but while jacking them up, its at the same rate as crude going up, next they hike excise 13 times when the crude was low to burden your shoulders and now they want to get back to their old game of restarting the loot.

With crude below 60, petrol price in mumbai is still 80

[swissknife]

Wouldn't a flat amount towards taxes help in ensuing that there is no revenue deficit when product prices drop and the burden consumer would be only due to the cost of the product? It would also help in the frequent tinkering with the tax rates.

[longhorn]

Originally Posted by swissknife

Wouldn't a flat amount towards taxes help in ensuing that there is no revenue deficit when product prices drop and the burden consumer would be only due to the cost of the product? It would also help in the frequent tinkering with the tax rates.

The excise duty (centre's share) is indeed a flat rate.That is why it is constantly and shamelessly being tinkered with. It was designed that way so that crude oil fluctuations don't mess up the budget. You always have a rough idea of what the annual sales and thus the projected revenue would be. The government is highly dependent on this income to meet its expenditure. Maintaining a flat rate ensures that your budget doesn't take a hit due to crude price volatility. VAT on the other hand goes to the state and is percentage based, so the amount increases with increase in fuel prices and vice versa.

[swissknife]

If the amount that is budgeted is a flat amount, both the centre and state governments, i don't think we would be discussing the prices at this length. A flat amount per litre could be fixed every year during the annual budgets (both centre and state). This would go a long way in ensuring that there is no impact to governments revenue due to lower product prices, and at the same time, the consumer pays in proportion to the ruling product prices.

[hrman]

Originally Posted by saket77

No wonder if that happens. Petrol is 71.73 here in Ranchi after Rs. 83 just about a month ago. So now for us, who are now comfortable (read: now used to high prices) can surely shell out a couple of more bucks per liter and still be smiling!

Please don't call petroleum prices to be 'deregulated' at least.

Is petrol 71.73 in Ranchi? Thats just 3 bucks costlier than Diesel in Bangalore.

BTW, price diff between diesel and petrol is 5 Rs. in Bangalore.
It was Rs.32 in 2012 when I bought my Rapid diesel.

[swissknife]

Originally Posted by hrman

It was Rs.32 in 2012 when I bought my Rapid diesel.

The prices of diesel (and pertol) have risen pretty rapidly since then.

With the current trend, diesel cars may get less preference to petrol or even electric.

[saket77]

Originally Posted by hrman

Is petrol 71.73 in Ranchi? Thats just 3 bucks costlier than Diesel in Bangalore.

BTW, price diff between diesel and petrol is 5 Rs. in Bangalore.
It was Rs.32 in 2012 when I bought my Rapid diesel.

Today its 71.XX In fact, diesel is hardly hardly 69.XX, a difference of Rs. 1.50 at the max. So, diesel here is expensive than b'lore.

Regards.

[ksameer1234]

Petrol price in Pune is 77.42 today! It was such a pleasant surprise to tank up my humble discover for about 750 rupees after a long time. Couple of months ago, fuel prices were breaching 90 here. With winter setting in, this seems to be a great time for those long rides!

[shankar.balan]

I filled my Gypsy with lots of lovely Petrol juice and stuffed in a can of Liquimoly Benzin performance additive too on Sunday morning. Petrol was at the rate of Rs 72.86 per litre at a bunk near Sarjapur village. Upon proceeding a few km towards the TN border I noted the price at another bunk said 73/-. My Dad tells me that in TN proper, prices are Rs 2-3/- higher than Bangalore.