[thanixravindran]

Hope this tax cut is not intended to provide cushion for OMCs to effect the actual retail price increase to offset price increase of crude and USD-INR play. If so, then within 10 days the retail price will be back to same level as of today.

[Joelinf]

Originally Posted by thanixravindran

Hope this tax cut is not intended to provide cushion for OMCs to effect the actual retail price increase to offset price increase of crude and USD-INR play. If so, then within 10 days the retail price will be back to same level as of today.

And in that case I will have to run to the pump to fill the fuel tomorrow morning first thing.

[MT_Hyderabad]

Thanks to the govt for reducing the excise duty.
Please do something similar for aviation fuel.

I had to shell out 45k for 4 pax return ticket from Hyderabad to Lucknow recently.
The same trip costed 24K six months back.
Airfare has skyrocketed in recent months, and unfortunately no one takes up this in TV debates.
I sometimes ponder that govt is making more money from aviation fuel than LMVs.

[romeomidhun]

Praying for an election in every month in one or other state in India. (But actually, the govt was thinking to conduct the general and state elections at the same time.)

Think about this: brent oil rate is still hovering around $110. INR is falling. Even then a cut in fuel price! So, either they agree that the hike was unjustifiable, or we should understand that the cut is temporary.

[batish]

They did because of inflation. No matter how much RBI tries, they alone cannot control it until F Ministry decides to cut fuel taxes. WPI is in two digits since a long time. CPI is almost 2% more than RBIs target. IIRC, even RBI had told govt long time back to cut taxes on fuel. But govt didn't pay heed.

Even now, diesel would be 90 in Delhi. In anyway, it is not cheap. Hope in a year or two when world moves to electric (especially Europe) OPEC would start producing more to cushion the prices and then the govt passes on the benefit. (Just a hunch - Wishful thinking!) I could be totally wrong though.

[hrman]

The reduction is welcome, but it has come too late in my view. The inflation rate is already in dreaded territory.
And with this reduction in fuel prices, I don't expect commodity prices to come down anytime soon.
The businesses will say they had kept prices suppressed and had disproportionately increased prices despite the high fuel price since the pandemic started. They will be in no mood to bring down prices.

Meanwhile, the humble tomato is now available at a regal price of Rs.115 per kg in Bengaluru. I don't recall the last time this was the case. Just last month, farmers in Maharashtra were not able to get more than Rs.2, Rs.3. per kg tomato crop which was inadequate to meet even the minimum cost of transportation or production costs.
Cant believe the world we are living in.

https://www.hindustantimes.com/citie...773495192.html

[mvadg]

Originally Posted by batish

when world moves to electric (especially Europe) OPEC would start producing more to cushion the prices and then the govt passes on the benefit. (Just a hunch - Wishful thinking!) I could be totally wrong though.

No. When you control the supply, you can do whatever you want, it's not like you can order a supply of petrol from Aliexpress (we fixed that, didn't we? ). It is highway robbery - there really is no one to hold the government accountable. Be thankful that we didn't get into a war (though the government is creating a controlled war like situation where the elite don't suffer, but the targeted "ordinary" people do) like Ukraine...

I would be more concerned about the price of tomatoes now and how to grow them inside our apartments and may be in the many potholes on the roads. [separate thread may be?]

[Siddarth_Ramani]

Reduction is more than welcome but I don't think it will help much to reduce inflation.
Reasons
1). Businesses have lost quite a lot in the past two years.
2). Increase in input costs has eaten into margins.
3). Living costs have gone up as well.

So whatever the small benefits to small businesses, they are unlikely to pass it down.

[volkman10]

Some states reduce VAT on fuel.

Kerala cut taxes on petrol by Rs 2.41 and diesel Rs 1.36 per litre while the Maharashtra state government reduced VAT on petrol by Rs 2.08 and diesel by Rs 1.44 per litre. Rajasthan too cut down VAT on petrol by Rs 2.48 per litre and diesel by Rs 1.16 per litre. Odisha brought down VAT on petrol by Rs 2.23 and diesel by Rs 1.36 a litre.

Link

[samuelv]

Thankfully Karnataka is not the highest in terms of petrol and diesel prices, i visited neighbouring tamilnadu to find that the cost of diesel was costlier by 7rs. Previously while traveling to Tamilnadu we used to full up to reach hosur and tank up at hosur. Now it's quite the opposite.

However our government in Karnataka takes all the money through road tax ( karnataka road tax is one of the highest in the country) at the time of vehicle purchase. Hopefully the next round of elections will bring down some prices

[ganeshk4]

Originally Posted by volkman10

Some states reduce VAT on fuel.

I believe, these are just cascading effects of reduced fuel prices. State governments vat is a percentage based amount, If price of fuel increases vat amount increases, if price decreases vat amount decreases.

[Fuldagap]

Saw this news piece on BS. I'm really not sure what to make of this.

India will probably borrow the entire 1 trillion rupees ($12.9 billion) that the government will forgo as revenues due to a cut in gasoline and diesel levies, according to people familiar with the matter.

Higher collections from the goods and services tax as well as personal income taxes will be neutralized by additional spending on food and fertilizer subsidies that the government is giving to the poor and farmers, said the people, who declined to be identified as the discussions are private.


The loss to the exchequer due to the recent excise duty cuts will therefore have to be borne through additional market borrowings, the people said. Calls made to a finance ministry spokesman were unanswered outside of business hours in New Delhi.

The mounting debt load will probably spook India’s bond market, where yields on benchmark 10-year notes have surged over the past month. The Reserve Bank of India, which is already managing a record borrowing plan, surprised investors with an off-cycle increase in interest rates this month.

Over the weekend, the federal government cut levies on pump prices of gasoline and diesel, waived import tax on coking coal and increased payouts on fertilizers as well as cooking gas for the poor. It lowered excise duty on diesel by 6 rupees ($0.077) a liter and gasoline by 8 rupees, according to a tweet from Finance Minister Nirmala Sitharaman.

The revenue loss comes at a time when investors are staring at a record borrowing program from the government, surging price pressures as reflected in the wholesale and consumer price index, and the prospect of sharp interest rate increases by the central bank.

India budgets to raise about 14.3 trillion rupees through debt issuances in this financial year through March 2023. The entire borrowings are in local currency, with banks and insurance companies the biggest buyers of sovereign debt.

Analysts like Barclays Plc’s Chief India Economist Rahul Bajoria are raising their budget deficit estimates. Bajoria expects India’s budget gap to be at 6.9% for fiscal year 2022-23, up from New Delhi’s forecast of 6.4% of gross domestic product.

Source: https://www.business-standard.com/ar...2200401_1.html

[romeomidhun]

Originally Posted by volkman10

Some states reduce VAT on fuel.

I don't think they have reduced anything explicitly. The state VAT (avg 25%) is calculated as a percentage of the base price. So, when the base price is reduced by Rs 8 and 6 respectively for Petrol and Diesel, the VAT amount (around Rs 2 for Petrol and 1.5 for Diesel)) gets reduced automatically.

The best way to add tax on fuel is to add a fixed amount per litre, not as a percentage of the base price. In this way, whether the crud oil rate is increased or decreased, the central and state govts will get their share in a fixed manner.

On the other hand, if it is calculated as a percentage, if the crude oil price increases, the income for govt from fuel will get increased considerably, and the agony of the customers will get multiplied. And, if the crude price reduces, the govt will keep increasing the tax percentage to compensate for the losses (and won't reduce when the crude goes higher ).

Originally Posted by Fuldagap

Saw this news piece on BS. I'm really not sure what to make of this.

Another proof that things are going in a trial and error mode. There are numerous examples in the past, from demonetization to fuel taxes to automobile policies to income tax rules.

[anandhsub]

Originally Posted by Fuldagap

Saw this news piece on BS. I'm really not sure what to make of this.

Attachment 2311937


Source: https://www.business-standard.com/ar...2200401_1.html

I believe what they mean is they wont consider increasing other taxes in order to offset this.

Otherwise, I am fairly certain they wouldnt have considered reducing the excise duty unless they were to a large extent offset by higher GST collections.

The only good thing about inflation is that the tax collection automatically surges.

I would say the additional borrowing would be at max 50K crores, and even that would mostly be bought by the RBI.

[Gansan]

Are petrol prices reduced or not? Today I saw a rate of Rs102.xx while crossing a petrol bunk. Last week I paid 103.xx. Didn't they say prices will go down by Rs 8.00 per litre? From when?