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Old 12th September 2012, 11:57   #2746
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Re: The Official Fuel Prices Thread

Any idea on why Govt does this subsidy thing?

Govt pays oil companies subsidy to help common people.
Govt takes extra money as taxes from the same people, on sale of the same commodity!

In this vicious cycle, who is helping whom and who is actually losing?

Why is not possible to withdraw subsidy altogether, and thereby the Govt helps itself and oil companies as well because they are free to own the prices.
Then, remove taxes, as Govt donot have the burden of providing subsidy, so that common people also benefit.

I know, in real world economics, the above statements might sound childish, but then, this is all what it all looks like.
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Old 12th September 2012, 14:58   #2747
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Re: The Official Fuel Prices Thread

Quote:
Originally Posted by sarathlal View Post
Any idea on why Govt does this subsidy thing?

Govt pays oil companies subsidy to help common people.
Govt takes extra money as taxes from the same people, on sale of the same commodity!

In this vicious cycle, who is helping whom and who is actually losing?

Why is not possible to withdraw subsidy altogether, and thereby the Govt helps itself and oil companies as well because they are free to own the prices.
Then, remove taxes, as Govt donot have the burden of providing subsidy, so that common people also benefit.

I know, in real world economics, the above statements might sound childish, but then, this is all what it all looks like.

Initial idea on subsidies was floated in mid sixties when govt wanted to wean people away from using wood fires for cooking, considering the fast depleting forests. So LPG/cooking gas and kerosene were subsidized to encourage people to change over to kerosene and cooking gas. Diesel was initially subsidized to encourage farmers to give up bullocks and manual ploughs and adopt the tractor and give a boost to the green revolution.
In the earlier poverty stricken and drought stuck famine and food scarce India these subsidies meant difference between life and death.

What the govt was losing in terms of subsidies, it was gaining in terms of higher taxes on luxury fuel i.e. petrol, aviation fuel and high taxes on cars/bikes and the likes. This entire happy planning went for a toss in the last decade due to rapid growth and increasing in spending power.

With every second Indian either buying a car or a bike and every 10th Indian travelling by air, the subsidy burden far outweighs the revenues earned on avgas or petrol. Hence there is a growing defcit in the govt budget and if this same trend continues we will soon do a Greece.

Taxes are not controlled by the central govt. States fund their own budgets by state taxes and govt has no control in terms of telling them how much to tax. If govt declares fuel as a declared good, then they will have to fork the difference in loss of revenue to each state govt. Very difficult!!
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Old 13th September 2012, 20:11   #2748
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Re: Rationalising diesel prices

News Flash on news channels-Diesel prices raised by 5Rs. per liter.Increase was expected but the real shock is LPG cylinders,only 6 cylinders to be given at subsidised rates!

Last edited by BoneCollector : 13th September 2012 at 20:13.
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Old 13th September 2012, 20:12   #2749
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Diesel prices increased by Rs 5. Just saw it on the news. Lets wait if the govt is able to hold on to this or give a roll back after opposition from various political corners.
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Old 13th September 2012, 20:14   #2750
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Re: Rationalising diesel prices

And so it begins finally!

Link

Edit: I wonder how long before Didi & others start calling out to roll-back this hike!
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Old 13th September 2012, 20:15   #2751
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Re: The Official Fuel Prices Thread

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Originally Posted by drmohitg View Post
Diesel prices increased by Rs 5. Just saw it on the news. Lets wait if the govt is able to hold on to this or give a roll back after opposition from various political corners.
Hiked by 5 so that it can be later on rolled back to 3.

Also LPG subsidy restricted to 6 cylinders a year.
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Old 13th September 2012, 20:19   #2752
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Re: The Official Fuel Prices Thread

Finally, diesel prices go up by Rs. 5/-. If I am not mistaken, this is the highest increase ever in diesel prices. Correct me if I am wrong.

Source

Last edited by moralfibre : 13th September 2012 at 20:20.
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Old 13th September 2012, 20:20   #2753
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Quote:
Originally Posted by carbookie
Hiked by 5 so that it can be later on rolled back to rs 3.
Well given the current levels of complacency prevalent in the govt, I would say even a 3 Rs hike is quite a bold step. But a step in the right direction.
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Old 13th September 2012, 20:27   #2754
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Re: The Official Fuel Prices Thread

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Originally Posted by drmohitg View Post
Diesel prices increased by Rs 5. Just saw it on the news. Lets wait if the govt is able to hold on to this or give a roll back after opposition from various political corners.
Well, Just 2 days ago , there was a decision in Congress core committee that they would not be rising the price of diesel now. . Now we can expect a rise of all commodities.

My neighbor just rushed out with his car to the nearest bunk. No idea how long the queue would be.
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Old 13th September 2012, 20:28   #2755
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At long last, a tiny step in the right direction. Lets hope they stuck to it. So oil cos lose just Rs 15 per litre. The LPG move is also long overdue.
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Old 13th September 2012, 20:50   #2756
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Re: The Official Fuel Prices Thread

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Originally Posted by nettooran View Post
My neighbor just rushed out with his car to the nearest bunk. No idea how long the queue would be.

When he returns, do show him this thread.

I am ok with the Rs. 5/- hike in diesel prices.
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Old 13th September 2012, 20:52   #2757
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Re: The Official Fuel Prices Thread

I wonder what the quantum of rollback (which I think is a dead cert) is going to be.
My guess is that being the 'slog overs' if one may call this final phase of this government, one may see some more politically difficult decisions.
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Old 13th September 2012, 21:04   #2758
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Re: The Official Fuel Prices Thread

The same joke continues, albeit this time for diesel. Raise by Rs.5 and then partial rollback after 2 days. And that settles the dust then!!!
I can understand when economists say that its a step in the direction. But with the scams of gigantic proportions that are happening on one side and govt. lamenting the bad economy as reason for these hikes , I feel a sentiment of getting robbed.
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Old 13th September 2012, 21:04   #2759
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Re: The Official Fuel Prices Thread

I think Its a very stupid move by the so called UPA government. This hike will effect each and every commodity. They should have raised it slowly.

A roll back would immediate action needed before the truck unions start a strike
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Old 13th September 2012, 21:05   #2760
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Re: The Official Fuel Prices Thread

Aha! And now our members have started saying 'Finally some sense" and "I am ok with this fuel hike". Friends it not just a hike of Rs 5/liter which you fill in your tanks. This Rs 5 hike means a hike in everything you and I pay for. Wait and watch! See how transport, food, vegetables, goods, resturants, cab services, water tanker services etc etc will flash hike their rates. I estimate about a 15-20% immediate increase in monthy household budgets. With an expected hike of approx 10% on an average, every Indian will pay 10% more to just exist.

Wonderful government and wonderful policies!!! Are these people actually brainless morons or have they become so smug thinking that no matter what, common man will not react!!

PS: On a personal level, this fuel hike doesnot impact me. However I refuse to pay more on all related/unrelated services (almost an extortion) because or esteemed government is powerless to stop this price rise.
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