[Gansan]

Originally Posted by amitk26

Having said that I would say whole subsidy farce should go , Price them at market rate

I suppose you are referring to fuel here. Removing subsidy from everything will be opening a pandora's box and no government will dare to do it.

I will give one example from farm inputs. The selling price of a ton of urea fertilizer is ~ Rs 5000.00 all over India. Guess the subsidy the govt pays per ton? It is roughly Rs 25000.00. Guess what will happen to the price of food grains if this is removed?

A committee had recommended to gradually increase the selling price of urea (a controlled commodity) in every budget and simultaneously cut down on subsidy, over a period of 10 - 15 years. That was about 15 years ago and successive governments have shied away from it!

[amitk26]

Originally Posted by Gansan

I suppose you are referring to fuel here. Removing subsidy from everything will be opening a pandora's box and no government will dare to do it.

I was talking of "so called" fuel subsidy actually there is no subsidy in real terms, If the government does not subsidise and also rationalize the tax in line with any other commodity then fuel prices will actually come down.

As of now the irrationally high taxes on fuel is funding budget deficit and thus government inefficiency . Refining costs are lowest in India ,Dealer margins and operational costs are one of the lowest in the world.
Some 25% of crude is obtained from indigenous sources ( ONGC , Reliance) still we have retail fuel prices in line with developed economies of Europe. This is because of Central Excise and State VAT per liter which is irrationally high and similar to levy on alcohol and tobacco instead of the tax levied on other commodities derived from natural resources such as coal , steel , sulphur ,gypsum, cement etc.

[pjbiju]

The central government and the state governments will be laughing their way to the bank since the taxes are a percentage of the cost of the fuel. So it works to their advantage if the fuel prices increase and hence decontrol of fuel pricing.

As far diesel is concerened, I think all private vehicles should pay the market price for diesel. But then it would be very difficult to implement such a thing. The trucks with 400/500 litre tanks would fill up and sell diesel in black to private vehicles. I think it would be better to levy a one time diesel subsidy tax on private diesel vehicles. That would be easier to implement.

[jigbarai]

Not just SUV owners, all private diesel vehicles should pay market D price and not subsidized rates.

[amitk26]

Originally Posted by pjbiju

I think it would be better to levy a one time diesel subsidy tax on private diesel vehicles. That would be easier to implement.

FYI Diesel cars cost almost 1 Lakh more then same model petrol car due to precisely this reason.

I think we need to focus on real issues for long term solutions. Even if we raise initail tax on Diesel car by 2 Lakh more it won't solve the real problem that is no accountability for the high tax money collected for fuel.

For the tax money collected in last 15 years for fuel alone government could have provided mass rapid transport in all major cities reducing need of the car driving and fuel consumption a lot.

In Bangalore 1 rupees cess per liter of petrol and diesel is being collected since 1996 for urban transport system after 14 years what we have is an under-construction metro which after completion will not connect to major urban hubs such as Whitefield and Electronics city and will not impact the number of car commuters.

[pjbiju]

Originally Posted by amitk26

FYI Diesel cars cost almost 1 Lakh more then same model petrol car due to precisely this reason.

I do not think it is the taxes that is raising the cost of the diesel cars. I think the tax structure is the same for diesel and petrol cars (over 4m long/Petrol engine bigger than 1.2l/diesel engine bigger than 1.5l). The increased cost is by the manufacturer. So there is no diesel subsidy kind of tax collected as of now.

I think we need to focus on real issues for long term solutions. Even if we raise initail tax on Diesel car by 2 Lakh more it won't solve the real problem that is no accountability for the high tax money collected for fuel.

For the tax money collected in last 15 years for fuel alone government could have provided mass rapid transport in all major cities reducing need of the car driving and fuel consumption a lot.

In Bangalore 1 rupees cess per liter of petrol and diesel is being collected since 1996 for urban transport system after 14 years what we have is an under-construction metro which after completion will not connect to major urban hubs such as Whitefield and Electronics city and will not impact the number of car commuters.

What government does with the taxes collected is a different issue altogether. The question is why should diesel vehicle owners get diesel at a discounted price, in particular private vehicles.

[amitk26]

Originally Posted by pjbiju

What government does with the taxes collected is a different issue altogether. The question is why should diesel vehicle owners get diesel at a discounted price, in particular private vehicles.

As I have said enough number of times I find this argument farce because when Tax collected is more then double of subsidy offered it is more like taking from left hand giving small change from right and not really a subsidy / discount.

Also Tax matters can not be isolated when it comes to public policy , we do need to know how exactly after running in to loss of thousands of crores as per the statements of OMCs they are able to declare dividends ?
If you do a little search on highest dividend yielding stocks for last few years they are invariably PSU oil giants. Where all the money for promotion of conserving petroleum goes is a concern for consumers.

[alpha1]

Originally Posted by Gansan

I suppose you are referring to fuel here. Removing subsidy from everything will be opening a pandora's box and no government will dare to do it.

I will give one example from farm inputs. The selling price of a ton of urea fertilizer is ~ Rs 5000.00 all over India. Guess the subsidy the govt pays per ton? It is roughly Rs 25000.00. Guess what will happen to the price of food grains if this is removed?

A committee had recommended to gradually increase the selling price of urea (a controlled commodity) in every budget and simultaneously cut down on subsidy, over a period of 10 - 15 years. That was about 15 years ago and successive governments have shied away from it!

One does not use Urea for recreation activities!
Diesel in SUVs is PURELY recreation.

Diesel in trucks and buses is need.

Do you get the difference?

[shankar.balan]

does it really cost that much more for manufacturers to make diesel engines than petrol ones?
what is the real justification in the difference in price?
Is it not reasonable to expect prices to come down a bit owing to increased demand which leads to increased production which in turn should lead to greater economy of scale?
any ideas?

[amitk26]

does it really cost that much more for manufacturers to make diesel engines than petrol ones?
what is the real justification in the difference in price?

Approx 81000Rs is additional excise duty on the Diesel engined car AFAIK.

Originally Posted by alpha1

One does not use Urea for recreation activities!
Diesel in SUVs is PURELY recreation.

Golf course , gardens etc are recreational.

Anyway In case you don't know north India is facing a huge problem of increased PH of soil due to excessive urea usage, While urea is subsidized phosphates are costly , Farmers use urea indiscriminately and this has resulted in loss of productivity and land becoming barren.

Coming back to point why exactly people believe that Diesel is subsidized ?

[pjbiju]

Originally Posted by shankar.balan

does it really cost that much more for manufacturers to make diesel engines than petrol ones?
what is the real justification in the difference in price?
Is it not reasonable to expect prices to come down a bit owing to increased demand which leads to increased production which in turn should lead to greater economy of scale?
any ideas?

Even I have often wondered about this. A diesel engine needs to be built stronger than a petrol engine because of the higher compression ratio. But even then assuming a marginal cost difference, it should not be as much as what the manufactueres are charging. I guess they are taking advantage of the fuel subsidy to increase their prices.

[Gansan]

Originally Posted by alpha1

One does not use Urea for recreation activities!
Diesel in SUVs is PURELY recreation.

Diesel in trucks and buses is need.

Do you get the difference?

I suggest you get the context of my post, before shooting off! That was to reiterate that all subsidies can't be done away with. And SUVs are mostly for transportation, very few are for recreation.

I am of the opinion all private diesel vehicle owners should pay market price for diesel, not just SUV owners.

[sonirohit]

Originally Posted by pjbiju

As far diesel is concerened, I think all private vehicles should pay the market price for diesel. But then it would be very difficult to implement such a thing.

If that happened I'd buy an old truck with multiple diesel tanks and fill them all up - I'm sure would be able to recover my investment in no time.

Grrr - wakey wakey - I was dreaming... this is never going to happen

[civic-sense]

Maybe I am a bit late for the party, but I did not think that this thread would see activity after almost 1 month after I made that post.

Originally Posted by civic-sense

And then we blame the politicians for everything. When people bend every rule in the book to satisfy their selfish interests, how can a nation progress? Utterly disappointed after reading the above post. Being selfish is one thing, but openly proclaiming it and glamourising it is criminal.

Originally Posted by shankar.balan

I take grave objection to your statement about this being criminal. Who the h*ll appointed YOU the judge and the jury anyway?

Originally Posted by MileCruncher

I agree or rather I think I agree to 60% of your thought process. But I think calling "CRIMINAL" is taking it too far.

I did not call him a criminal. I didn't even say that his act of using subsidized diesel is criminal. All I said was that the act of openly proclaiming it and glamorizing it is criminal. I was refering to the act, not the person. You can read that again, above.

Originally Posted by shankar.balan

yes deep inside I appreciate civic_sense's "sense" of what is fair and equitable. He appears to be an idealist. I was too, till not-so-long-ago.

But the rot is so so terribly deep that it appears whatever one does, honestly and fairly, one never seems to be the gainer - if one belongs to the "service class" so to say. That leads to disgust, cynicism and the fostering of an attitude which says - let me at least be smart and take advantage of things that are less expensive, in order to try and save something from the wreck!

We all bend rules to our advantage. We do it because we find that we "gain" something from that. For example, we sometimes jump signals when we think it is convenient, or when we think that nobody would catch us. But I wouldn't go gaga about how many red lights I jumped today. It sends a wrong message to the community, that doing so is cool.

I dont lack the courage to admit I have my foibles because Im not really worried about the world sitting in on judgement on me. I dont wish to be a hypocrite and hence, have openly stated my position.

That's a perspective, and maybe that was all that you intended to convey via your post. But this reader felt otherwisae. Apologies, if it was so.

[tsk1979]

My answer is a no. It would increase price of my trips, and increase my monthly expenses. So I believe SUV owners should continue to enjoy the subsidy(which actually does not exist, its just that taxes on Diesel are lower, and at current prices companies lose around 2rs/liter for both petrol and diesel).
Moreover, I pay taxes which feed the subsidy. So it is my right to get part of the money I pay.
If govt plans to remove subsidy they should lessen my tax burden by similar amount.