[Chetan_Rao]

Originally Posted by vrprabhu

...

He he he - you have to read it in Kannada / Konkani (for those who are unable to follow, the word implies respect to an elder person. It's my way of expressing my respect to his views )

There should be a facepalm emoticon so the likes of me can stop embarrassing ourselves.

Back on topic, economic theory doesn't work in isolation, esp. with humans introducing variables ad-hoc, so one needs to 'swalpa adjust maadi'.

[carboy]

Originally Posted by vrprabhu

Exactly. That's the point - when the prices go up, tax collection go up proportionately.

The gross tax amount on fuel obviously goes up when the price of fuel goes up. But that's not the only thing. The percentage of taxes on fuel has also gone up in the last 6 years which is unrelated to price of fuel.

[DigitalOne]

Originally Posted by vrprabhu

Whichever way you look at it - Economics doesn't make a sense here. Especially, when these kind of price rise keep happening at frequent intervals.....

On the contrary, it is fully explained by economics. Onion prices as you have rightly pointed out have risen due to adverse rains in October in Maharashtra, leading to supply constraints. Consequently many farmers have planted onion for quick profits. A friend of mine who has 4 acres of land in Karnataka tells me they have now planted second crop of onions for this season and it is expected to be harvested this week. He has already made windfall profits as their first crop was not affected. Already because of such increasing supply wholesale onion prices have crashed this week.

On international oil prices, despite Iran sanctions, a devastating terror attack on Saudi Aramco, and Opec supply cuts for past two years international prices have been steady at 60-65$ per barrel. Why? Purely because there is reduced demand because of global economic slowdown.

Both very good examples demand-supply economics.

[vrprabhu]

Err, my point was not about the international oil prices.

It was about how diesel / petrol is priced in India when it is sold to the end consumer.

[DigitalOne]

Originally Posted by vrprabhu

Petrol has crossed 78 Rupees a litre (Oil prices are moving around USD 60 a barrel) - production is cut to keep the prices at this level?

Originally Posted by vrprabhu

Err, my point was not about the international oil prices.

It was about how diesel / petrol is priced in India when it is sold to the end consumer.

Oil prices have been hovering between 61$-64$ for past month. See chart below. [Source]



Your original post said "production is cut". Since India is not a oil-producing country (in any significant manner), I inferred it as OPEC production cut, which is a fact.

Did you find a price correlation discrepancy between international and Indian prices? If not, your original post is just idle kite-flying.

[ds.raikkonen]

Originally Posted by vrprabhu

Err, my point was not about the international oil prices.

It was about how diesel / petrol is priced in India when it is sold to the end consumer.

Here's the price build-up:

https://www.iocl.com/uploads/priceBu..._1dec-2019.pdf

https://www.iocl.com/uploads/priceBu..._1dec-2019.pdf

[vrprabhu]

Yes, I meant OPEC production cut only - (i.e. manage supply to manage prices).

But I also read elsewhere that OMCs in India are unable cut down refining (of crude), and hence are now exporting diesel (so just a thought, what could be price realised on exported diesel vis-a-vis domestic prices).

As regard price co-relation, I am under the impression that crude prices paid by us is basket linked (comprising of imports from various oil producing countries, of which Brent crude is one). USD / INR exchange rates also play a significant role in the landing cost of crude.

What I noticed was - the petrol price was Rs. 76.04 (that I paid on 09.11.2019) going up to Rs. 78.21 (that I paid on 01.12.2019); during which period Rupee has appreciated against the dollar (by about a Rupee?). Was the price rise significant or is it that creeping price rise doesn't attract attention (unlike the hue and cry during periodic revisions earlier before daily adjustment of prices). And, hence, comparison to onion price shooting up and attracting attention across the country.

[hangover]

We the people need a detailed break up of how our fuel taxes are used. By the state and center.

It’s not used for new roads. Because they are all toll roads. The public has and had not asked for it.

So where is the tax money of the last 80 years since independence? Who took it?

CAG has to answer this ASAP.

By the way it’s not correct that we are an huge oil importing nation.

As per Wikipedia we get 20% of our oil stuff and 45% gas within our borders.

Therefore international fluctuations must have 40% less impact on our prices.

Else there is some creative accounting going on.

[V.Narayan]

RBI says inflation for the quarter gone by is at 7.35%, the highest in 5 years. Ministry of Finance's early estimates for the year 2019-20 indicate nominal GDP growth of 7.5% pa , the lowest in 42 years. The Govt says real GDP is 5%. Something doesn't add up here even after allowing for the inflation being for the OND quarter while the nominal GDP figure is for the full 12 months ending March 2020 . My uneducated goes is that real GDP growth is closer to some number below 3%pa for the current year and for the current quarter it is probably trending to zero growth. Can the experts please share their views.

[carboy]

Originally Posted by V.Narayan

RBI says inflation for the quarter gone by is at 7.35%, the highest in 5 years. Ministry of Finance's early estimates for the year 2019-20 indicate nominal GDP growth of 7.5% pa , the lowest in 42 years. The Govt says real GDP is 5%. Something doesn't add up here even after allowing for the inflation being for the OND quarter while the nominal GDP figure is for the full 12 months ending March 2020 . My uneducated goes is that real GDP growth is closer to some number below 3%pa for the current year and for the current quarter it is probably trending to zero growth. Can the experts please share their views.

Arvind Subramaniam (former Chief Economic Advisor to this Govt) said the GDP growth is overestimated by 2.5%. Subramanian Swamy said the GDP growth is only 1.5%

[Samurai]

Originally Posted by Samurai

Careful... using economics to analyse is one thing, but using it to predict the future is something else.

Understanding of economics is used to craft monetary/fiscal policies after studying the economy of a country or industry. It is basically a planning activity, and the plans can get derailed due to political/business uncertainties and events. Economists should be analyzing and planning, not predicting. But people keep asking/demanding economists to do predictions. When you ask for BS, you will get it.

A Nobel prize winner in Economics agrees with me on this.

https://www.youtube.com/watch?v=Ndja2v3urV4

[Samurai]

This is for people who quote Milton Friedman from the 70s. He highly influenced Reagan, Thatcher and plenty of business leaders in 70s and 80s. He finally admitted he was wrong before he died.

https://www.theguardian.com/business...economicpolicy

[AZT]

Originally Posted by pganapathy

Social Security is a great concept in theory. The problem is in practice, all it really does is encourage laziness.

This is a grossly incorrect and simplistic understanding of social security. Our country in particular has an excess of man power leading to many people being under employed or unemployed. Most developed countries do have a social security net and looking at the median income of our country we definitely need this. Average farmer income for eg is in the range of 6k a month and that’s the sector which employs most people in our country.

[Samurai]

Originally Posted by SmartCat

I wouldn't hold my breath. He has been saying this from the past 8 or 9 years now. Peter Schiff is often deridingly called perma-bear (always negative about economy).

However, he has identified certain risks (all that debt) in global economy correctly. Not sure how it will all pan out.

And now it is happening, that too within two years as predicted.

Nobody knew the premise that it would take a pandemic. But powder keg of massive debt had been created, and the spark is finally lit by Coronavirus.

[SmartCat]

Originally Posted by Samurai

Nobody knew the premise that it would take a pandemic. But powder keg of massive debt had been created, and the spark is finally lit by Coronavirus.

True, and I have been following some of these guys (Peter Schiff, Mike Maloney, Chris Martensen etc - all of them are gold bugs) on the internet for years now. These guys have been predicting that popping of debt bubble will cause economic depression, Unlimited QE, hyperinflation, fall of the dollar and rise of gold as currency again.

Now thanks to the pandemic and global lockdown, we are possibly looking at economic depression. Like they predicted, Fed/Govt have announced unlimited QE/asset purchases/free cash etc. Now we need to see if it eventually causes high inflation/hyperinflation. Or fall of US dollar as reserve currency.