[jalex77]

The most simplest way to get this implemented is to slap another new yearly tax on all premium diesel vehicles. Let the price of Diesel be as it is. When the new tax makes it virtually pointless to buy a Diesel Barge to save money, People will look at petrols or even smaller cars instead. Subsidising Diesel for a few and then making it available at market prices for others will only lead to bigger issues with fair distribution.

[architect]

I seem to have drawn quite a few reactions!

Originally Posted by MileCruncher

How the heck did I miss such an engrossing debate. Damn!

Der Aaye, Durust Aaye The more the merrier.

Originally Posted by blackbeast

We all know that in the present times, technology in diesel engines have replaced the petrols in terms of FE... If you price the petrol and diesel same, the very purpose of saving the money for someone who commutes 60km+ a day defeats.

blackbeast, diesels have superior FE as well as almost comparable power to petrol. Add to it the superior torque which makes them suitable for heavier vehicles. The suitability of diesel engines was never being debated here. It was the pricing.

In many EU nations, diesel is more expensive then petrol, but people still buy diesels. Why? Because of efficiency and (now) lesser pollution.

Originally Posted by tsk1979

So many people get subsidies, so under what criteria should I not get a subsidy.

Both you and I drive diesel vehicles, Tanveer, and enjoy the subsidy. The point is *IF* it is withdrawn and a suitable alternative provided, then would we buy it at market price?

Originally Posted by shankar.balan

Boss - Railways should simply be "electrified" the way they are the world over.

Apart from substantial infrastructural costs in electrifying the entire Railways, will it actually reduce pollution or consumption of fossil fuels? Since Milecruncher just mentioned this:

Originally Posted by MileCruncher

The pollution of electricity may not be visible but thermal power generation has a much higher carbon foot print than diesel engines.

Originally Posted by shankar.balan

And if we now plan to start a debate on Power Generation, I think some of my hard earned and paid Tax Money needs to go into creating Thermo-Nuclear/Nuclear Power Plants to serve our country's ever increasing demand for electricity.

Originally Posted by MileCruncher

And as you said Nuclear Power is the way to go!

Nuclear Power is hardly the perfect solution. An interesting debate on this is here: Debate: Does the world need nuclear energy? | Video on TED.com

Originally Posted by shankar.balan

but we dont even have proper roads, proper street lights, proper safety for citizens, decent law and order and bah! the list is endless as no doubt you would have surmised by now!

Absolutely and totally agree with you. But there are so many things wrong in our country. I wonder if it will help at all to not try and take an initiative to support something that is right (if at all).

Originally Posted by amitoj

Industries generate employment at a large scale, that is why they get tax breaks.

Similarly, public transport operates at huge economy of scale. Railways need subsidised diesel. State transport buses (and private interstate transport buses too) deserve subsidised diesel. At the risk of sounding like a broken record, a bus transports 50-100 persons at 3 kpl of diesel, while an SUV transports 7 persons at 12 kpl. Isn't that reason enough to subsidise such a frugal fossil-fuel burning solution? CNG pricing is an excellent example. Despite the queues, would a CNG taxi / auto-wallah switch to diesel? Never, as long as the pricing structure remains the same?

Originally Posted by smrsraja

Why are diesel cars more expensive than their petrol counter parts?
Is that just because of the technology? Or because the tax charged by the govt for using the subsidized fuel?

Both reasons partly. Higher taxes by government for buyers, as well as higher initial costs for a more complex engine, I believe. However, I suspect the auto manufacturers add too much premium for the second reason. Once diesel is no longer cheap, we may see a correction in the difference, because of a reduction in demand for diesel.
In 2004, the Octavia 1.9TDI and the 2.0 petrol cost the same right down to the rupee. No longer, though.

Originally Posted by Sn1p3r

For high mileage Diesel is economic due to subsidy if that is gone it will make no sense for many. Cheers!

I think the diesel will still be economical after market pricing because a diesel will be at least 30% more efficient for an SUV than a petrol which should almost cover the additional maintenance costs.

At the risk of getting flamed for changing my initial statement, let me add that apart from setting up the appropriate distribution system, the high initial taxation on diesels should be removed before expecting anyone to pay market price for diesel.

I also strongly believe that the automobile lobby will be able to influence the government to remove the high initial taxes on diesel vehicles if fuel subsidy is removed. However, let me also add that I strongly think that the same automobile lobby are a major reason why the diesel subsidy is still being enjoyed by many of us today.

Originally Posted by blackbeast

Why is there a debate for something which can never happen in india.

That's the whole idea of a forum like this, I think. Without such forums, I wouldn't even have guessed SO MANY people are willing to pay the market price for diesel (and so many are not!).

[gostel]

I easily voted yes for diesel at market price as I drive on petrol (hehe). Of course I have presumed that:
1. We are paying market price for petrol.
2. Market price for diesel will remain lower than for petrol.
3. Diesel subsidies were in principle meant for farming and industrial applications.
4. SUV drivers push and honk me aside in traffic as if the whole road belongs to them; so they might as well do so without subsidy

When there are partial subsidies doled out there are guys who will go to lengths to get the out of turn subsidy if they are not willing to pay the market price. We usually call this as corruption, and there is no special arrangement required to encourage it. Sorry if I am trying to be humorous. Actually, what I really care for is that the petrol price ought to go down; they have shot in another increase of Rs.3 just when I was drawing up my plans for long drives! Boo-hoo.

[bj96]

Interesting article on the topic In India's growing SUV market, few takers for Ramesh's stand

[aaggoswami]

My personal opinion is that SUV owners must not be made to pay more.

1) The crux of the matter is taxes of government on all fuels sold to us. Why so much taxes ? When the pertol price was Rs. 50/- per litre, I read an article that out of that Rs. 35/- would go to government. I am not sure what is percentage of tax, but lets say that in current Rs. 60/- per litre era, if Rs. 30/- were taxes, how about those taxes reduced to around Rs 15/-. Straight away Rs. 15/- less from Rs. 60/-.

2) If diesel at subsidized rates is NOT to be provided to diesel SUV, why only SUVs ? All the passenger cars with diesel engines must pay the non subsidized price for diesel.

On a very serious note, the cost of living is going very high which will eventually do damage. Government should try its best for better distribution of wealth and more privatization must be done, for example of IOC, ONGC, BPCL, etc. The government could force in law that in event of war all the private players will supply fuel to Indian Armed Forces. Tax must be reduced on fuel + privatization. Corruption in IOC, ONGC, etc. is present at a very big level and that is eventually tax payer's money.

If the corruption factor is reduced, then also the companies wont go in loss. Some drastic steps need to be taken to take care of rising fuel costs.

Its not that I am in favor of SUV. If we have better roads and driving conditions, I am sure quite a few will prefer sedans rather than SUV. And we need more compact MPV's and crossovers too. But simply charging more to SUV owners is a very cheap thing to do IMO.

[dadu]

Originally Posted by aaggoswami

My personal opinion is that SUV owners must not be made to pay more.

1) The crux of the matter is taxes of government on all fuels sold to us. Why so much taxes ? When the pertol price was Rs. 50/- per litre, I read an article that out of that Rs. 35/- would go to government. I am not sure what is percentage of tax, but lets say that in current Rs. 60/- per litre era, if Rs. 30/- were taxes, how about those taxes reduced to around Rs 15/-. Straight away Rs. 15/- less from Rs. 60/-.

2) If diesel at subsidized rates is NOT to be provided to diesel SUV, why only SUVs ? All the passenger cars with diesel engines must pay the non subsidized price for diesel.

+1 to what Goswami has said above. All diesel vehicles should pay the same rates.

[Gansan]

As a not so OT, what do you guys think will happen if everyone starts buying diesel cars and petrol car sales become insignificant?

[Dr.Abhi]

IMO it shouldn't be SUV or van or Estate. Like SMALL CARS in India are taxed less at the time of new purchase, similarly only Small CARS should be allowed to use subsidised fuel be it petrol/diesel/lpg.
Now comes the point of commercial vehicles. When govt doesnt allow domestic gas cylinder usage for commercial purpose, then why is it allowing people to use subsidised diesel to earn money? You say just to curb already inflating inflation.
But deregularising diesel prices will be one time event, and it will prevent the misuse of subsidised fuel in a millionaire,s car engine.(for transporting goods one can use goods train which is very economical as compared to road transport)
(note to mods- I went off topic in the post but I think all these things are linked and need mention to recognise and solve problems)

[shankar.balan]

I just went on a trip in my Scorpio. 850kms. 66 litres of Diesel used. FE = 12.88 kmpl. @ 42.34 Rs per litre this works out to expenditure of Rs 2794.50/-

With Petrol at Rs 62 per litre (give or take) and calculating it at a similar FE I would have spent Rs 4092/-

Why should I un-necessarily spend more of my hard earned money on the more expensive Petrol/ less subsidized Fuel when I have the advantage at the moment, of driving around on subsidized high speed diesel?

I submit that most of us would prefer to save our money rather than spend it un-necessarily and anyone who states otherwise can go ahead and kindly put his/her money where his/ her mouth is!

As for me, I will happily continue to use subsidized fuel to fill in my big, fat, spacious, tough, enjoyable SUV and to h*ll with Jairam Ramesh and everyone else who doesn't like it!

On the carbon footprint reduction side, amongst other environmentally good practices, I have indeed sold off one car and as a family we manage quite happily with one vehicle. We drive less, especially for frivolous reasons and instead, bicycle where we can or walk wherever possible. We pay our taxes and try to behave like responsible citizens.

Talking of which - if Uncle Jai and his cohorts are so keen on reducing the carbon footprint then let them take one more step and remove the super-convoys that perforce accompany any and all politicians - those vehicles also use subsidized diesel OR petrol which the country's exchequer pays for, not the users! What's sauce for the goose had better be sauce for the gander - no double standards!

But where there is a perfectly legal, fair advantage to be had, I have no hesitation in taking it and saving some cash - in this case subsidized Diesel.

[Rach]

I have voted for "I am not Sure", as there is no Subsidy given on Diesel as you all think. It is all hog wash. Even if you take todays crude price of $92 ($91.28 to be exact) per barrel (approx 158 Liters), it comes to Rs 26 (92 X 45 div 158 )per liter of crude. Now, every liter of Crude, when refined gives out approximately the following percentage of products.

Petrol (Gasoline) - 35%
Diesel - 22%
Kerosene (also used as Jet Fuel in Aircrafts) - 24%
Naptha, LPG - 10%
Others (Tar, Grease, Lubes, Wax etc) - 10%

The percentages of petrol, kerosene and diesel can be altered by 5-10% based on refinery and demand in country. For now, let us assume Naptha, LPG and others are accounted for the cost of transport and refining. So 1 liter of crude give to 800ml (80%) of petrol, diesel and Jet fuel. If all three are priced same, Petrol, Diesel and Jet Fuel (Kerosene) should cost roughly (Rs 26 div 0.8) = Rs 32-33 at pump (excluding central and state taxes). So based on in which state you live, the difference of actual price at your pump and Rs 33 is going towards product differential pricing, Central Tax (Excise) and State Taxes (VAT, etc). And crude is $92 per barrel today. For better part of this year it was between $65 to $80 per barrel.

So what about the losses that we read in newspapers PUCs like ONGC, IOC and BPCL incurring? It is only a notional loss, because our government has weird system of determining the price of fuel. They fix a base price that they pay to fuel companies and keep taxes component fixed. Example for petrol

Basic Price: Rs 28.93
Excise duty: Rs 14.35
Education Tax: Rs 0.43
Dealer commission: Rs 1.05
VAT (depends on state): Rs 5.5
Crude Oil Custom duty: Rs 1.1
Petrol Custom: Rs 1.54
Transportation Charge: Rs 6.00
------------------------------------
Total price: Rs 58.90

Governments make obscene amount of money on taxes. Nobody is enjoying the subsidy, the barge like SUVs or humble 100 KMPL two wheelers. The awful thing here is taxes paid by Two Wheelers (in percentage of fuel they use) is more than diesel SUVs, which in turn are more than Jets, not considering others like Trucks, farmer Pumpsets etc. .

The only way I see out of this mess is to rationalize and deregulate fuel prices. They can give out direct subsidies to priority sections. Some examples include:

Farmer in Arid regions (not delta, as they don't use pumpsets) gets Rs 2000 per acre for fuel or electricity.

Trucks and Buses can get input subsidy or less excise duty and vat or less road tax.

[mxx]

Voted no because I feel all diesel passenger vehicles should pay market price, not just SUVs.

[civic-sense]

Originally Posted by shankar.balan

Why should I un-necessarily spend more of my hard earned money on the more expensive Petrol/ less subsidized Fuel when I have the advantage at the moment, of driving around on subsidized high speed diesel?

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.

[MileCruncher]

Having lived in the west for whatever little time it may be, I have experienced paying a premium over petrol for diesel.

This way all high users will move to diesel only because of efficiency.

I would not only like subsidies to be removed, but would also like diesel to be higher priced than petrol.

Cheers

[shankar.balan]

Pal - if you've got a problem with this Im sorry, but thats just too bad. Having diligently paid my taxes for over 18 years and then to still see the chaos around me, I figure that I might as well save something from the wreck.
Oh it is fine to be moralistic and holier than thou, like you apparently are striving to be but I am human with standard human faults, selfishness and what have you. I dont have a problem with it at all.

After all, all that I am doing, like a lot of others who drive diesel vehicles, is to take advantage of a cheaper alternative in a perfectly legal way.

I have, mind you spent the premium for the diesel vehicle's acquisition in the first place AND have paid the taxes due on it. All that I, like others, am doing, is to use a freely available fuel for my needs!

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

I dont need to make apologies to you or anyone else for that matter!

Hence kindly refrain from getting personal!

Or instead of sitting on the sidelines and grumbling about "sour grapes" go and buy yourself a diesel vehicle. That, if nothing else, should help you see things in a different light!

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.

[MileCruncher]

Interesting debate and I would like to be part of it.

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.

I agree or rather I think I agree to 60% of your thought process. But I think calling "CRIMINAL" is taking it too far. Atleast he is being open. How many people have you seen to be open and forthright about controversial topics like this. You may not like his P.O.V. but give him his due for being forthright and candid.

Originally Posted by shankar.balan

Pal - if you've got a problem with this Im sorry, but thats just too bad. Having diligently paid my taxes for over 18 years and then to still see the chaos around me, I figure that I might as well save something from the wreck.
Oh it is fine to be moralistic and holier than thou, like you apparently are striving to be but I am human with standard human faults, selfishness and what have you. I dont have a problem with it at all.

After all, all that I am doing, like a lot of others who drive diesel vehicles, is to take advantage of a cheaper alternative in a perfectly legal way.

I have, mind you spent the premium for the diesel vehicle's acquisition in the first place AND have paid the taxes due on it. All that I, like others, am doing, is to use a freely available fuel for my needs!

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

I dont need to make apologies to you or anyone else for that matter!

Hence kindly refrain from getting personal!

Or instead of sitting on the sidelines and grumbling about "sour grapes" go and buy yourself a diesel vehicle. That, if nothing else, should help you see things in a different light!

Shankar, I do agree as well as disagree to lot of points raised by you. I can understand your disgust at the system after having paid taxes and seeing people get away. That is one reason why I DONT LIKE TAX LAWYERS ( One of them is good friend and on the forum)

I would rather suggest that let this thread be a place where we can thrash ideas to have a more equitable solution.


Cheers