[Carpainter]

What I understand is that the government has increased the excise instead of reducing the price. I know that for a country like India, the price of fuel will never be completely dependent on global market price no matter how much the government claims it to be. They have raised the duties to meet short term trade deficit and all. But all I hope is that they reduce this duty in future once the crude settles at somewhere around 80-85 per barrel in the international market so that people don't have to pay that extra tax once the price goes back to normal again.

[sa_kiran]

Goldilocks solution: FM gets oil pricing formula just right, with good politics and good economics - http://firstbiz.firstpost.com/econom...cs-111445.html

First, diesel prices were deregulated and consumer prices cut – along with that of petrol – in October. This was good politics. But as oil prices fell further, Jaitley raised excise on petrol and diesel not once, but twice. This is sound economics - as I will explain later. The excise increases will get Jaitley Rs 20,000 crore in a full year - a good source of budgetary moolah in a year in which other tax revenues are sluggish.

[longhorn]

Originally Posted by sa_kiran

Goldilocks solution: FM gets oil pricing formula just right, with good politics and good economics - http://firstbiz.firstpost.com/econom...cs-111445.html

That article seems to be written by some fanboy who has no idea what deregulation means. To deregulate means to stop regulating. What the govt is currently doing is exactly the opposite of this. Controls - be it for upward or downward revision of prices, is not good for the economy in the long run. Period. Why don't you just let the market decide the equilibrium? In the west, fuel prices change everyday. Strictly speaking, that is what true deregulation means. Here the govt has a 15 day period for price revisions - that's fine. What's not fine is that the govt uses those 15 days to FIX prices.

Deregulation = no more meddling with fuel prices. You have a fixed amount as excise duty / sales tax / cess added to the per litre price of fuel - end of story. Take your taxes and stop poking your nose in fuel pricing.

EDIT : The author says the FM is doing this to keep the fuel prices stable. That is a load of bull crap. He's doing it to increase the govt's revenue - not for anything else. What is the guarantee that the increased excise duty will be reduced once crude hits 80 dollars? That's just wishful thinking.

[sa_kiran]

Originally Posted by longhorn

That article seems to be written by some fanboy who has no idea what deregulation means.

It says a combination good politics and economics. Read the whole article, it is very easy to brand anybody fanboy. He is not here to defend, probably he does not care either!

[pgsagar]

Originally Posted by longhorn

Take your taxes and stop poking your nose in fuel pricing

Most sensible sentence in the entire thread. Make the excise duty specific ( in central excise parlance fixed rate of duty is called specific), repeat, specific, as it was in 80s. Which means irrespective of where the fuel price stands, collect Rs.X per litre and leave the prices to market forces. When the oil price falls, consumption automatically increases and GOI nets more revenue, more multiples of Rs.x. And a few years down the road if they think Rs.x is not enough, let them make it Rs.y, but specific rate again. Will they ever do that? Naaaw. Tax on fuel is a milch cow for GOI, and they will milk it for all its worth.

[longhorn]

Originally Posted by sa_kiran

It says a combination good politics and economics. Read the whole article, it is very easy to brand anybody fanboy. He is not here to defend, probably he does not care either!

It may be good politics, but its definitely not good economics. Is it good for the govt - yes of course - he'll earn 4000 crores doing nothing. Is it good for the economy - no way. When fuel prices go up you pay more, when fuel prices go down, you still pay more. Where else in the world does 45% of fuel cost consist of taxes?

[poloman]

Originally Posted by longhorn

It may be good politics, but its definitely not good economics. Is it good for the govt - yes of course - he'll earn 4000 crores doing nothing. Is it good for the economy - no way. When fuel prices go up you pay more, when fuel prices go down, you still pay more. Where else in the world does 45% of fuel cost consist of taxes?

Who is Govt? Is it a monster? It represents you and me. This money is going to exchequer only. Which country in the world, where you have less than 3% pay income tax? In some Western countries personal income tax is as high as 60%. Also check on gas prices in European countries?
What other income the Govt have in India? If the price is fully de regulated, some dudes will cry in full voice Ambani and Adani looting us.
Govt had requested rich people to surrender subsidies in LPG voluntarily, has anyone who is advocating full deregulation did that?

[saurabhkum]

Originally Posted by longhorn

That article seems to be written by some fanboy who has no idea what deregulation means. To deregulate means to stop regulating. What the govt is currently doing is exactly the opposite of this. Controls - be it for upward or downward revision of prices, is not good for the economy in the long run. Period. Why don't you just let the market decide the equilibrium? In the west, fuel prices change everyday. Strictly speaking, that is what true deregulation means. Here the govt has a 15 day period for price revisions - that's fine. What's not fine is that the govt uses those 15 days to FIX prices.

Deregulation = no more meddling with fuel prices. You have a fixed amount as excise duty / sales tax / cess added to the per litre price of fuel - end of story. Take your taxes and stop poking your nose in fuel pricing.

EDIT : The author says the FM is doing this to keep the fuel prices stable. That is a load of bull crap. He's doing it to increase the govt's revenue - not for anything else. What is the guarantee that the increased excise duty will be reduced once crude hits 80 dollars? That's just wishful thinking.

I don't know why Government is trying to defend itself by saying they are increasing taxes to stabilise prices. What will happen if the prices drop? How will it hurt them? Crude as a commodity is in a downward trend then why aren't they allowing the correction in fuel prices? They should start accepting that this year was a failure from their side in planning the budget. Accept the fact that you couldn't manage the revenue and expenditure neither were able to work on fisical deficit. If you accept probably we all will agree to work out a way together with you, but if you try to fool the public then it will be a different story all together. And let's be honest, drop in cruise prices had helped India in controlling the dollar outflow which indeed is a very positive thing.

[gsurya]

Originally Posted by poloman

Who is Govt? Is it a monster? It represents you and me. This money is going to exchequer only. Which country in the world, where you have less than 3% pay income tax? In some Western countries personal income tax is as high as 60%. Also check on gas prices in European countries?

What other income the Govt have in India? If the price is fully de regulated, some dudes will cry in full voice Ambani and Adani looting us.

Then why did this same guys in Govt today carry out two Bharat Bandhs on the issue of fuel price hike? That money was also going to exchequer only.

And that was when crude had peaked to 118$, previous Govt had reduced customs duty to 0% & reduced excise duty by 5% too.

The least the Govt can do is to explain its stand in the past & now and reconcile their hypocrisy.

Nobody would grudge Adani or Ambani making money if we aam businessmen could get similar benefits from Govt & the system without 'contacts'!

[poloman]

Originally Posted by gsurya

Then why did this same guys in Govt today carry out two Bharat Bandhs on the issue of fuel price hike? That money was also going to exchequer only.

And that was when crude had peaked to 118$, previous Govt had reduced customs duty to 0% & reduced excise duty by 5% too.

The least the Govt can do is to explain its stand in the past & now and reconcile their hypocrisy.

Nobody would grudge Adani or Ambani making money if we aam businessmen could get similar benefits from Govt & the system without 'contacts'!

How will that money go to exchequer? That money was going to some Arab country for buying crude at $120. We are not in a price increase cycle currently, when that happens obviously Govt has to cut excise or VAT. Govt can manage the deficit in other ways like,cutting schemes like MGNREGA Food security, JNURM etc. Who will suffer then? The poorest of poor.
Petrol prices in China for your reference
http://www.globalpetrolprices.com/Ch...soline_prices/
Is the communist Govt there also looting people?
If true deregulation is implemented, India will see astronomical fuel prices like Europe mainly due to private sector collusion and shady business practices. So in every third world country the prices will be in some way choreographed by the Govt.

[ramzsys]

Even at record high prices, bicycles were gradually disappearing from the rural roads. If government enables price reduction that is reflecting the current crude oil price levels, then even rural roads will see dense traffic!

It is good that this country is developing, but at what cost? Why aren't we talking about the environmental costs that we will have to pay(if at all it is payable) if fuel price is at rock bottom?

I am saddened that the government is not doing enough to mitigate fuel usage and to persuade citizens to use public transport.

Something related: http://www.outlookindia.com/article/...an-Work/292647

[civic-sense]

Originally Posted by sa_kiran

It says a combination good politics and economics. Read the whole article, it is very easy to brand anybody fanboy. He is not here to defend, probably he does not care either!

I sort of agree with the author even though he is unmistakably a fanboy which is evident from his previous articles. But that is aside the point because the pertinent point is not whether he is a fanboy. I like the economics part of it because I think fossil fuels should be taxed high. But as much as a liberal I am, or not, I do not see why a conservative government is pursuing liberal policies. And it is hypocritical for them to practice just the opposite of what they preached when they were without responsibilities.

Originally Posted by poloman

How will that money go to exchequer? That money was going to some Arab country for buying crude at $120.

Wait a minute. You anyway had to pay the Arabs if you wanted the stuff. Did organizing Bharat bandhs got them to drop the crude prices? When crude prices were high, if the govt did not increase consumer prices, they would have been digging deep into the govt coffers to pay off the Arabs. So you either pass the burden to the buyers, or pass the burden to the tax payers. Which one would you choose?

As with Jagannathan, logic is thrown out of the window when fanboys speak.

[adimicra]

Originally Posted by gsurya

Then why did this same guys in Govt today carry out two Bharat Bandhs on the issue of fuel price hike? That money was also going to exchequer only.

And that was when crude had peaked to 118$, previous Govt had reduced customs duty to 0% & reduced excise duty by 5% too.

The least the Govt can do is to explain its stand in the past & now and reconcile their hypocrisy.

Nobody would grudge Adani or Ambani making money if we aam businessmen could get similar benefits from Govt & the system without 'contacts'!

Yes, this govt. should learn from the wonderful financial management of the previous Govt..agreed!
The previous govt. did some great work which people didn't understand and appreciate and the new govt. is making a mess of things.

[sachinayak]

Originally Posted by adimicra

Yes, this govt. should learn from the wonderful financial management of the previous Govt..agreed!
The previous govt. did some great work which people didn't understand and appreciate and the new govt. is making a mess of things.

The problem is when people start looking at things with a political inclination.

Raising fuel prices when global fuel prices are shooting up is a CRIME.

Raising fuel prices (or not reducing them appropriately) when global fuel prices are falling drastically is JUSTIFIED?

WOW !

Not a fan of either governments but why try to justify when something is so visibly flawed?

[sdp1975]

Despite mopping up close to Rs 11,000 crore through two rounds of increase in excise duty on petrol and diesel, the government is staring at a Rs 60,000-65,000 crore shortfall in indirect tax collection

Source : http://economictimes.indiatimes.com/...ntenttarget=no