[dreadknight5]

Originally Posted by sarthakgupta

Actually, if you see the breakup, there actually is subsidy on cost price of diesel along with lower taxes. Roughly the breakup is as follows:

Petrol:
Cost Price: Rs 47.20
Central Excise : Rs 9.48
State VAT : Rs. 12.35
Total : Rs. 74.10 (includes dealer commission et al.)

Diesel:
Cost Price: Rs 51.00 (cost price of diesel is more than petrol)
Subsidy: Rs. 10.22
Central Excise : Rs 3.56
State VAT : Rs. 5.96
Total : Rs. 51.40 (includes dealer commission et al.)

Source: From IOCL website
Diesel breakup : Attachment 1133699
Petrol Breakup : Attachment 1133700

The inflation problem is due to the fact that we are borrowing money to pay for the diesel and other petro products subsidy (Think of a situation where you are paying your monthly bills using loaned money). When govt. itself takes such huge amount of money from the market to pay for unproductive subsidies, it leaves lesser money in market (in form of increased cost of capital - i.e. interest that we pay for money that we borrow gets increased) for private players (for their investment needs) and also lesser money for govt to spent productively, leading to higher costs for goods and services coming from private companies (fueling inflation) and lower investments from Govt. (lowering growth). This leads to "stagflation".

Also lower availability of money in Indian market (i.e. higher interest costs) makes private companies to borrow from overseas market. These loans are dollar denominated. And when rupee depreciates (due to variety of economic factors apart from unabridged subsidy spending), it makes these loans costlier leading further loss of investments and growth as now most of the revenue that these private players generate goes towards servicing these loans instead of further investments.

I would like to quote the following link
http://www.team-bhp.com/forum/indian...-analysis.html

For argument sake the cost of Diesel is 51 and it is being sold for 51.40 now ? So where is the loss ? The loss , like I explained earlier is in the government making "LESS PROFIT" . It was in the region of INR 10 few months ago, but with the current devaluation of Rupee, its likely to have gone down substantially.

You are still harping on the Diesel Subsidy factor. Even after they remove the so called subsidy, nothing will change. We will continue to pay more for Fuel cost, the cost of day to day products will go up, the cost of transportation will go up etc. Price of Petrol will not come down, more money will be wasted and stashed in Swiss accounts. And once this is all said and done, we will end up scratching our heads wondering what else can be done.

[girimajiananth]

Originally Posted by sgiitk

Do not regulate inflation and see,all the ones you mention will go up, and the only thing which will go down is the RUPEE, and our savings. The worst hurt will be the retirees whose nest eggs will 'vanish'.

So are you suggesting deregulate fuel prices ? Wont that affect retirees ? I am not sure I understood what you said .

[sgiitk]

Originally Posted by girimajiananth

So are you suggesting deregulate fuel prices ? Wont that affect retirees ? I am not sure I understood what you said .

Yes it will. With the economy in shambles, we all have to pay for it. You get the government you deserve (or at least vote for).

However, then we will be in the real world, with no subsidies distorting prices. We are paying Rs.80+ for petrol, and living with it. I should know since I retired in under a year.

I think Germany with a totally monetarist system has been doing reasonable well for well over fifty years.

[jacs]

I drive on diesel and would be more than happy to get fuel for cheaper price. However in the given economy scenario, doesn't it make sense to introduce some permit system for diesel supply to private vehicles with subsidy. Say 20-30L per month on subsidy and rest without subsidy. Shouldnt it suffice for a family weekend drive etc? Let the yellow badges still get the benefit of subsidy so that general public will not get huge impact in terms of commodity price hike etc.

This will make us more cautious and start utilizing public transport where ever possible especially while there is a need to drive alone. Or avoid some not so important drives etc. I know all SUV lovers will pool in money to shoot me, but just my thought

[sgiitk]

Originally Posted by jacs

However in the given economy scenario, doesn't it make sense to introduce some permit system for diesel supply to private vehicles with subsidy. Say 20-30L per month on subsidy and rest without subsidy. Shouldnt it suffice for a family weekend drive etc?

Why not for petrol vehicles.

Have the full price based on the calorific content and remove all distortions. Diesel engines are more fuel efficient and they still sell very well in Europe.

I have no sympathy for anyone buying a vehicle just for subsidies!!

[jacs]

Originally Posted by sgiitk

Why not for petrol vehicles.

Have the full price based on the calorific content and remove all distortions. Diesel engines are more fuel efficient and they still sell very well in Europe.

I have no sympathy for anyone buying a vehicle just for subsidies!!

Yes sir, I am with you on this thought. All non-commercial vehicles are to be treated the same way. The subsidy levels can be brought down eventually though not 10 rupees hike in one shot.

But in a country like ours, not sure whether our government is bold enough to take such sudden measures. Permit system is like slow poisoning , recollect how they reduced the kerosine permit in monthly rations.

[thoma]

Has this thread turned out more of bashing from the petrol engine owner towards the diesel engine owner? I just don't understand such people who has saved a good lakh of rupee over their diesel counterpart while buying and still blame diesel owners for availing subsidy.

If equal cost of ownership is the issue, it already is, unless the running is very high for a diesel. One should not forget that even now, the diesel car is not economical unless you got heavy running; even then, the maintenance costs are more for the diesel, especially as the mileage on the odometer increases.

Originally Posted by sgiitk

Diesel engines are more fuel efficient

But not efficient in terms of structural materials used, which translates to inefficient initial and maintenance cost of the vehicle. If diesel fuel is priced based on fuel efficiency (!), and the overheads for buying and maintaining the car remaining more, I doubt how many will buy a diesel car. We have to accept the fact that diesels cars in our country has made popularity more because diesel fuel was cheap.

Also note that I'm not telling that just because a diesel engine costs more than a petrol engine, the diesel fuel should be priced less than the petrol fuel. I'm only telling that there is not too much difference in owning and running cost of a petrol car vs a diesel car. So do we really have to ask a question of "Why not for petrol vehicles"?

[teknophobia]

We're paying 16+ Rupees in taxes on every litre of Diesel here in Ahmedabad even at the current price. The so called "under recovery" is around 11 Rupees. That still works out to a net profit of 5 Rupees to the Government for every litre of Diesel sold.

I have only one thing to say to all the holier than thou petrol vehicle owners: Stop with this subsidy hogwash, you're not fooling anyone.

There are several reasons why people prefer diesels in bigger and heavier cars, get off your soapboxes and look them up. Not everyone buys a diesel to get the benefit of these so called subsidies.

For the record, I would buy a diesel vehicle even if diesel was priced the same as petrol, in fact, if it was in my hands, I would free diesel prices, artificial distortions are never good news for an economy.

[AbhishekB86]

Originally Posted by teknophobia

I have only one thing to say to all the holier than thou petrol vehicle owners: Stop with this subsidy hogwash, you're not fooling anyone.

There are several reasons why people prefer diesels in bigger and heavier cars, get off your soapboxes and look them up. Not everyone buys a diesel to get the benefit of these so called subsidies.

How many out of all diesel owners buy diesel cars for reasons other than the fuel savings? Would you be able to explain since the biggest question every prospective car owner has 'kitna deti he?'

[dreadknight5]

Originally Posted by AbhishekB86

How many out of all diesel owners buy diesel cars for reasons other than the fuel savings? Would you be able to explain since the biggest question every prospective car owner has 'kitna deti he?'

Do you realize that Private Diesel vehicles don't consume more than 15-20% of the Diesel sold ?

The main consumers are
1) Diesel Gen-sets
2) Public transport

A typical person will probably travel 30 kms a day at max. According to the people who claim that diesel engines are fuel efficient, it comes to say 2 litres a day.

Diesel gen-sets consume anything between 20-40 litres of diesel per hour. You would be surprised to know that majority of the gen-sets is being used by the telecom companies for their towers.

I mean really, you have to be kidding me if you are under the impression that somehow Petrol prices will reduce if Diesel prices are increased. Or that Diesel enjoys " Actual SUBSIDY" . Why not cry to have the petrol price reduced in terms of taxes ? This is the problem with us Indians. We are like crabs who want to pull everyone around down to same level.

Why is it that a Failed country like Pakistan has fuel price like 40% cheaper than us. Other places like Thailand has fuel prices cheaper as well. Don't you think the problem is some place else ? Why should the government have to make a profit on common man's needs ? Aren't they taxing us with Income tax in the first place ? Why don't people think on those terms ? People seem to feel content when they see others suffering along with them. They don't seem to look for ways to end their suffering.

[rajshenoy]

Originally Posted by dreadknight5

Do you realize that Private Diesel vehicles don't consume more than 15-20% of the Diesel sold ?

The main consumers are
1) Diesel Gen-sets
2) Public transport

A typical person will probably travel 30 kms a day at max. According to the people who claim that diesel engines are fuel efficient, it comes to say 2 litres a day.

Diesel gen-sets consume anything between 20-40 litres of diesel per hour. You would be surprised to know that majority of the gen-sets is being used by the telecom companies for their towers.

I mean really, you have to be kidding me if you are under the impression that somehow Petrol prices will reduce if Diesel prices are increased. Or that Diesel enjoys " Actual SUBSIDY" . Why not cry to have the petrol price reduced in terms of taxes ? This is the problem with us Indians. We are like crabs who want to pull everyone around down to same level.

Why is it that a Failed country like Pakistan has fuel price like 40% cheaper than us. Other places like Thailand has fuel prices cheaper as well. Don't you think the problem is some place else ? Why should the government have to make a profit on common man's needs ? Aren't they taxing us with Income tax in the first place ? Why don't people think on those terms ? People seem to feel content when they see others suffering along with them. They don't seem to look for ways to end their suffering.

I was under the impression that bulk consumers are already paying market price of the diesel(Public transportation, telecom companies etc) At least they are suppose to do it legally. I have seen govt buses refueling at petrol pumps outside

Another point is that, Most of the factories generate power using Diesel generators because they cannot afford their machinery to go out of power and our Govt does not guarantee power to them. It is also due to the boom in our industry production and the incapability of govt to provide power to them(Coal scam, but no power)

[teknophobia]

To quote myself "get off your soapboxes and look them up". Google is your friend.
The reasons have already been pointed out in several threads, and several times in the present thread.

Diesel vehicles make economic sense only if you travel a lot, I have covered only 11k odd kms on my Linea in 2 years (I use multiple vehicles) and I still wouldn't buy a petrol car. Own and drive a diesel for a year and then come back to me with that question.

[dreadknight5]

Originally Posted by rajshenoy

I was under the impression that bulk consumers are already paying market price of the diesel(Public transportation, telecom companies etc) At least they are suppose to do it legally. I have seen govt buses refueling at petrol pumps outside

Another point is that, Most of the factories generate power using Diesel generators because they cannot afford their machinery to go out of power and our Govt does not guarantee power to them. It is also due to the boom in our industry production and the incapability of govt to provide power to them(Coal scam, but no power)

The government buses use their own pumps, but what about the pvt transportation ? they use from the same pumps as us and their service is to the public. So I count them as means of public transport.

Exactly, thats what I am saying. The bulk of usage is done by Gen-sets etc. And to be honest, if they are given proper power supply etc, they will take that in a heartbeat. Using 20 liters of diesel / hour is really pretty expensive preposition. So any price increase also forces them to increase price of their products and indirectly we end up paying more.

I still don't believe a word of this scam a day government. They have been playing divide and rule game long after the British left. So what ever fuel statistic you see published will have something missing.

[sgiitk]

Originally Posted by dreadknight5

The government buses use their own pumps, but what about the pvt transportation ?

After dual pricing I see Kanpur Transport buses queuing up outside diesel bunks everyday. I do not understand since all local buses are supposed to be CNG!

[AbhishekB86]

Originally Posted by dreadknight5

Do you realize that Private Diesel vehicles don't consume more than 15-20% of the Diesel sold ?





I mean really, you have to be kidding me if you are under the impression that somehow Petrol prices will reduce if Diesel prices are increased. Or that Diesel enjoys " Actual SUBSIDY" . Why not cry to have the petrol price reduced in terms of taxes ? This is the problem with us Indians. We are like crabs who want to pull everyone around down to same level.

Why is it that a Failed country like Pakistan has fuel price like 40% cheaper than us. Other places like Thailand has fuel prices cheaper as well. Don't you think the problem is some place else ? Why should the government have to make a profit on common man's needs ? Aren't they taxing us with Income tax in the first place ? Why don't people think on those terms ? People seem to feel content when they see others suffering along with them. They don't seem to look for ways to end their suffering.

Ouch. You seem to have assumed a little bit too much for your own good. Firstly, noone is crying (atleast I am not) I was questioning the statement in regards to why people buy diesel vehicles in the first place. To own one and all that jazz..we have enough evidence on threads here and people we know in person who buy diesels because of the fuel cost factor. I'm not denying some people have other reasons for buying a diesel vehicle. But it's very obvious why majority of our junta buys it.

Noone is a crab and frankly speaking your usage of words like suffering are amusing to say the least. Talk about not answeing a question and venting against a society that you are a part of.

Before you go into launch mode again keep calm and read my question again.