Team-BHP (https://www.team-bhp.com/forum/)

-   The Indian Car Scene (https://www.team-bhp.com/forum/indian-car-scene/)

-   -   Macroeconomic viewpoint Vs Microeconomic viewpoint - A story of fuel prices in India. (https://www.team-bhp.com/forum/indian-car-scene/83201-macroeconomic-viewpoint-vs-microeconomic-viewpoint-story-fuel-prices-india-4.html)

I wonder how much trust you are willing to put in the words of billionaires (Though I think Tata is one of the better businessmen around). You know where the US is right now.

About giving differentially-abled people their chance - Do you really suppose they could compete in a market driven economy. What about those who are going to suffer abuse just to get food for the night.

I know Kottayam is rather less oppressive. But I've been brought up in the capital of this country and that's where my experience comes from.

An obvious experience I'll share with you. I'm watching T.V. with my cousin (whose neither dark or fair skinned), and suddenly the infamous Fair & Lovely ad comes on the screen. I kept looking at her to judge her reaction. Initially she kept watching but then grew a frown and switched channels.

This is obvious oppression against colored people. LIKE in a free market, the government has let the company show what it wishes in the ad. So you see, a company is quite willing to make use of people's prejudices passed on from the past, to better it's own financial standing.

A rather comic take on this by the webcomic Fly You Fools.

One cannot call one's misconceptions about oneself as oppression by the public. If your cousin switched channels, maybe she was not interested in watching advertisements. A lot of people change channels during advertisements. If your cousin really has a complex about being dark, severe enough to change channels, and is being oppressed, giving her a free colour TV (TN govt. gives free colour TV to BPL people) would drive her past the edge.
Your example very clearly illustrates the fact that so called oppression is an expression of insecurity.
A BPL family does not need a Colour TV to distract it from small scale industry which it can do to weeping over TV serials.
School children do not need free laptops to play computer games rather than a football to grow healthy.
We do not want substandard ration rice which is sold to richer people to feed their pets.
And you telling 'Do you really suppose they could compete in a market driven economy. What about those who are going to suffer abuse just to get food for the night.' now that's oppression. Assuming that someone is inferior to you just because of some misfortune is oppression.
And not the words of billionaires, but the truth in them. I understand that only if a person with initiative and ambition strives to achieve success and earn riches, he can spawn a whole community working for mutual betterment. If no one wanted to be a billionaire, we would be no better than non living objects. I for one want to be a millionaire. I would be proud if i am able to establish hospitals and schools and provide meaningful employment to a lot of people.

#1. Definitely yes. They should be caught and hanged for treason.

#2. These are employers and investors in business. If they hire 100 people and each of the 100 pay 10k as tax, they are indirectly paying 1cr as tax. If the business owners are taxed heavily, everyone's salary would come down and it would be difficult to afford anything. Also there would be not much motivation to start business resulting in lack of jobs.

Echo you live upto your name in #2.
My point exactly. Couldn't have put it better.

• Diesel is being used for transport industry, so the discriminative taxing in favour of it. But thanks to CRDi technology, diesel is now the new petrol. Targeted subsidizing is the solution. But how?

• The solution is easy. The implementation it is. Give them fuel subsidy coupons- you can find them up for sale around the corner. Merc and Beemers too will be seen using them* and we post those pictures in this forum and loathe. And the one caught in camera will snap a finger at me shamelessly that he will sue me in the court. Not to mention the counterfeiting industry or the scene of every truck becoming highway fuel station. Since there is no better system to implement, the current fiasco is continued.
• Too huge a country this is to administer. People are wantonly illiterate even after their proper education. They drive like one. In this country, everything needs a precedence. Not the application of mind. Ad-hoc decisions prevail over far-sighted planning. Schemes and infrastructure of western countries wont work optimally for the densely populated Indian country. Improving Public transportation is more important than competing to welcome auto industry. I hate it that the Koreans set up plant here and export. Prominent loss of country's natural resources for a peanut size of benefit in return.
• None complains when a politician comes in an imported SUV. When 31 crores are spent on Kasab's custody everyone go gaga over that**.
• Fuel sells for double the cost price. Everyone complains, but nevertheless he/she never shy away from using it. If fuel prices were indeed really higher, there will be a high supply less demand situation. But it never happens.
• I've seen people come in Swifts(with 15 inch alloys) to get the free TV given by a government. So i need not be shy to carry home the tv in a rickety fiat. Well i gave the tv to my farm workman- ironically he didn't get one!!!
• There's a park nearby my home, and people even at a distance of 1-2 km away come with their 2-wheelers till the entrance. Then they take a leisure walk.
• Fuel wastage in idling and traffic snarls do pile up to a significant percent of actual consumption-while the government pats on its back that it is indeed smart with 1.2 litre and 4 metre restrictions.
• We all are splurging now on borrowed future. It is slow, but it is sure. Common men like you and me can only sit watching oil peaking and climate change just like we watch Steven Spielberg movies while our leaders busy choosing the next exotic venue for climate change talks.

* Just for exaggeration
** money circulating within the country is much better than that which goes out for buying that SUV.

I guess this thread has been hijacked a bit.
Back to the issue, How to make fuel profitable to all parties concerned-PSU, private companies, Govt., transport organizations including railways, rich, middle class, poor and BPL people.

I support a price hike.

anyday consumers should pay rather than taxpayers.

there are gadzillion businessmen in delhi who dont pay an iota of tax on income. Why subsidize their consumption as well!!

Since this topic has gone crazy, I shall ask my leave until it comes back with facts and not beliefs (maybe i'm guilty of this myself).

This clearly needs to be thought from a much broader perspective.

What needs to be implemented has to be foolproof to some extent. Almost every document or voucher can be duplicated - this includes paper money. If a centralized system is made where every BPL family is verified and registered and given a corresponding account in the local post office (since it has largest spread), subsidy amount can be directly deposited in the account. Although this will give direct money into hands of non utilizers of the product in question, it will surely give subsidy to the right people who really need it. If that stops 10 people from going anti-establishment, we won't have to hire 10 more jawans and 10 more western weapons to fight them from our tax money.

In this manner, the prices of kerosene and LPG can be brought up to market rates. The lower/middle class who are above BPL will be affected by LPG increase. This can be stemmed by providing them with some incentive in terms of reducing taxes on low cost fmcg goods (those that are not usually consumed by middle/rich), such that their monthly expense remains the same, even with LPG being brought up to market rate.

The side effect will be no pilferage of domestic LPG (hotels, pumping into cars) because domestic LPG will cost the same as commercial LPG, and since the single cylinder is that much more expensive, even though their monthly expense has remained the same, families will be a bit more conservant in its usage, resulting in maybe 2-3 extra days that the cylinder lasts. Collectively that will be a huge benefit.

Easy solution. Single tax slab. Tax everything at a nominal charge. No Hidden charges like state tax, central tax, octroi, cess, congestion tax, etc. Single tax for everything from tomatoes to BMWs. This tax pays for civil services.
Govt. makes money by charging for services provided. Transportation, industry, and other govt. owned industries operated at a profit makes money for the govt. to function-neta's travel, sitting charges at rajya and lok shaba, etc.
Leave subsidizing/compensating/etc. to insurance companies.

i agree with you when you say billionaires create employment, but i disagree with Tata when he says about the Rs.1000

The assets of Tata group as of 09' is $51billion. If equally divided among each of the 3,63,000 employess each one gets 67.5lakhs INR.

:OT
A couple of years back one of India's biggest advertising company with a revenue of more than 500 crore/year was sold fully to an MNC, which previously had a minority stake. And the Indian chairman distributed a large chunk of the money among all his employess . Some got as high as 25Lakhs depending on the number of years they had spent with the company, and they didn't shut down or send their employees into compulsary retirement.

@Daewood, This was not Ratan, but JRD. Sometime soon after independence. When the country was not sure whether to follow communist principles or capitalist principles. Unfortunately we have adopted neither and are still trying to decide after 63 years.

The view that increasing the fuel price to prevent GoI losing money, is total baloney. As already mentioned in this thread, more than 50% of the money we pay for petrol is towards taxes; it is about 40% or so for diesel.

Though we had seen successful economic reforms, somehow we still can not come out of deep rooted socialistic -- rob Paul to pay Peter -- syndrome. I can not fathom why petrol should be priced higher, vis-a-vis diesel. Just think of urban/semi urban areas and how much the local economy depends and sustains on petrol -- 2 wheelers and 3 wheelers and cars. Almost everybody in the neighborhood adjusts the price as and when petrol diesel goes up. It never comes down though, even when we had a situation where prices came down last year. This is why I shudder the thought of increase in price even it is a rupee!

Increasing the petrol/diesel price is the least confrontation or easy path for GoI. For, today the major consumers (not necessarily, in volumes) are middle class, who never would hit the street, nor do they constitute a vote bank. For railways and defense, the price rise does not make much of a difference, since Govt pays in one hand and collects the revenue in other hand! Worst case, Railways can always increase prices.

Now consider the following facts

1. Petro products are out of GST purview; this means that Central and State govts merrily can tax petro products, even after GST would be in place, as and when it gets implemented. Just a perspective: One liter petrol in Bangalore costs Rs 54.26 (BS IV) in PSU outlets. In Delhi at present is it about 48 Rs at present.

2. About losing 2000 Cr INR per day -- this is phoney money. It is something like -- I would have earned a revenue of 12000 Cr, instead I earned only 10000 crore and hence 2000 crore loss.

3. Inspite of all these "losses” we hear, the oil companies have profit to show! Now, these are PSU companies. Can't, rather shouldn’t these profit be ploughed back into support "aam admi" ? Ok, they need to keep some for their future plans; but how much?

4. Jet fuel costs about 32Rs per liter! Not much taxed. Whereas petrol for your and mine bike/car is 54Rs!!! On a lighter note, we should have more road vehicles running on jet fuel! This may bring the living costs down!

5. Re the much talked about subsidy for kerosene: It is a huge waste since most of it goes into vehicles in country side. Huge environmental disaster; just smell the smoke and wastage thru’ inefficient burning! The targeted beneficiaries of subsidized kerosene hardly get to use them!

6. Entirely different thought: It was estimated that before the last general elections (2009) GoI had spent about 35000-40000 crores on NREGA. This had provided about 100 days or so of work for the poor in a year, so that they could live. Noble idea, totally support this. However has anybody considered this? What is the asset created out of this? Shockingly, hardly asset worth mentioning! This was and is a "politically successful" program even now and similar kind of money is being spent even today, without concrete/tangible assets being created. Spare a thought -- if realistic assets appropriate at the level had been created, the positive impact on productivity, economy.... Now good use of such kind of money can also bring down deficit. You don’t have to impose absurd tax on petrol/diesel.

7. Can not agree with the idea that we (Indians) need to reduce consumption of fuel; increasing the price is one way of achieving it. The flaw in this argument is that at present Indian per capita consumption is at about 5% level. Considering the fact that the vehicle penetration is extremely low in the country it is going to go up further. Re the sensible usage of fuel, the mass market is and will be A segment and B/B+ segment vehicles and these have reasonable fuel efficiency. With the mandatory fuel efficiency certification of vehicles, we are on the right direction.


There are so many points we could place on the table, to punch holes on the arguments supporting the increase of fuel prices.

Today when oil costs about 75$/barrel, the Govts in India make more money thru' taxes from petrol/diesel than a year earlier when the oil was costing 40$/barrel. The real reform in the petro products is (a) prune/rationalize the LPG and kerosene subsidy and (b) GoI and State Govts deciding, how much they would like to generate revenue when they sell diesel and petrol, taking into account the subsidy for LPG and kerosene. What is needed is Govts showing self-restraint in its greediness to garner revenue from petro products; the price we pay should reflect the import price and the reasonable tax -- say 20%, 30%,... definitely can't be 120%!!! For, GST rate is only going about 12-16%, when it is implemented. The real reform is moving away from GoI’s “Oil Economy” and finding alternative ways of generating revenue in such a manner that when we pay such taxes, we don’t feel wronged!

Whoa, didn't know that. You mean the 100 days of work produced nada? What kind of self respecting person would take an insult like accepting payment for no work done?
And does the govt. really think it can treat people like beggars and earn votes? Who would vote for a person who offers money for nothing? (Dire Straits song playing in the background)

Mahatma Gandhi National Rural Employment Gurantee Act

Roads, drains and minor construction work are being done in remote villages. These are remote areas that have rarely seen any development. From some sources I know work is getting done, but not sure how much accountability there is.