[MARCUS_520i]

IMO, they should straightaway hike it to a solid 100 rupees per litre and freeze it for 2 years! This whole 'take the masses for a ride' by hiking 4 bucks and reducing 1 buck everytime, trying to show that they've done us a favour trick has gotten old now!
The prices are going to reach 100 sooner or later. Therefore, why not just hike it once and leave it there for 2 years?

[gsurya]

Petrol is now priced without losses to oil companies, Diesel/LPG/Kerosene still heavily subsidized & will cost Govt upwards of 1 lakh crores to subsidize at present levels. They must go up too sharply to keep CAD below 4%.

Fuel prices will come down only when crude goes below 100 USD/barrel & Rupee below 60 INR/USD. Dont expect it this fiscal year as we try to control inflation to around 6%.

Nobody is happy with price increase, but I am happy our economy is still well managed compared to global recession. Car Sales up 15% over last year in first half of this year!

[shebin]

of course;oil companies are not making the loss now.But whos making the killing.The state and central govt should come down to affordable taxation.the cost of running/km should remain affordable for the masses.Common people are heavily dependent on two wheelers for daily commuting and business/job related activites......its not about increasing diesel and lpg prices.its about keeping taxes on all fuels at a realistic level.if they dont tax rice being essential food item, at least they can ensure taxes of petrol and diesel somewhere within 10% on the ex factory price.both have become essential for the common man now.

Because of UPA,the middle class and upper middle class people are bearing the burden of the failed economy............

[Kartik Kumar]

Originally Posted by gsurya

Nobody is happy with price increase, but I am happy our economy is still well managed compared to global recession. Car Sales up 15% over last year in first half of this year!

that's only because our vehicle base is low compared to mature economies. Once we reach a mature level in vehicle numbers (on a population comparison basis) you won't see such growth.

Our economy is definitely NOT well managed.

[Hayek]

The lack of economic rationality shown on this thread is depressing. Even when the Indian economy has become the sick man of the world thanks to the borrow, subsidise and spend policies followed for the last 9 years, people are cribbing about the price hikes on petrol instead of about the irrational and unaffordable subsidies on other fuels. Petrol is NOT overtaxed in India, Indian taxes are fairly moderate. Yes, some states like MH and KA over tax petrol. Diesel is undertaxed in India - there is no rationale for taxing it less than petrol. And the government involvement in setting prices of fuels is insane and also represents a criminal violation of corporate governance norms- they should set the tax rate, privatise some of the OMCs and get out of the fuel business.

We are running out of time - if India does not change drastically, we are going bankrupt in a short while. Rs. 1000 to the USD anybody?

[gsurya]

@shebin : Oil companies are indeed suffering, they cant invest in exploration or new refineries or upgrade pipelines/equipment unless they get full pricing for fuel. Right now they are splitting it with Govt.

Govt itself is major owner of oil companies so they further suffer. Private oil cos like Reliance/Essar are not competitive because they dont get subsidy.

Right approach is to decontrol all fuel pricing & subsidize needy consumer directly, this will come eventually via Aadhaar/DBT, so we are on the right path as LPG has already moved in this direction.

UPA cant control oil prices, Middle East does & other 'events' like Syria & our rupee-dollar value.

@Hayek: Our economy is nowhere near bankruptcy, a CAD of 4% is totally manageable as long as we grow at minimum 5%. If you take economies of our size, out of top 10, we are at No. 2 over the last decade, only behind China. Smaller economies can grow of course grow faster.

@Kartik: Economy is always relative, in 2010 when world GDP growth was also decent, we grew at 10%! First time since 1991 that too. Since then we suffered a big global recession, so doing 5.5% this year is not bad at all when others are suffering much worse.

[gsurya]

By the way, in almost every major city in the world, those who can afford a car to drive to work are not 'middle-class', they are definitely upper class, like us and we certainly need NOT be subsidized especially when only around 3% pay income tax. Our income tax levels, slabs are also very reasonable one of the best in South Asia.

What we need is good, well connected & comfortable public transportation.. like AC buses, metros, better local trains... all of which happening slowly. I would ditch taking my car to work too once metro is operational along my route.

[hothatchaway]

^^^While its debatable what class of society commuters who drive to work belong to in a particular country, I certainly agree that people in our country who are able to maintain a personal vehicle and afford to drive it often enough (whether to office or not) should not clamour for subsidy. Yet we have a situation of subsidized diesel being used with gay abandon in personal vehicles, not because the owners of diesel cars are opportunists but because the wise mandarins who run the country have not been able to plug the 'leakage', which happens when a subsidized intermediary (diesel) being used to fuel personal vehicles. The stats above by RSR amply illustrate the sensitivity to fuel prices volatility even among people who ostensibly have a choice and the fact that the overall consumption ratio of diesel to petrol is skewed far worse than the limited comparison shown above accentuates the need for fuels like petrol to cross subsidize diesel, LPG etc which remain political holy cows.

The point that I’m making is that while many of us on this forum who own passenger vehicles which run on petrol (if we don’t own a diesel car already) can still grin and bear it and additionally also choose to switch to office/public transportation (wherever the latter is feasible) to lessen the pain, a sizeable chunk of urban dwellers who especially depend on two wheelers to commute/run businesses have no choice. Same is the case with numerous owners of small petrol only vehicles who can afford only that and either have no access to public transportation or can’t use them for various reasons. Public transportation in India is developed only in pockets and just not broad based enough for this to even enter the argument as a viable alternative for many. So what happens to these vast numbers for whom petrol is not a luxury? I guess the administration can let them go to hell since in my rudimentary understanding of poll arithmetic, they fall in certain segments which are not viable enough vote banks. Subsidies definitely cannot be considered as solutions as we all know, so cant the administration evaluate the tax structure on petrol currently to ease the pain at least till the time global fuel prices remain hardened? I can’t see why not, especially in Karnataka and I don’t even want to start a debate on the condition of Bangalore roads currently. Whether petrol in India is overtaxed or not, this commodity is certainly not the cheapest in India globally, even compared to some of the other countries which depend on imports http://www.onemint.com/2013/05/01/pe...oss-the-world/ Subsidies on diesel will not go away in a hurry, not for failure of understanding the economic rationale behind it, but for the fact that not enough people in India have climbed out of poverty to fend for themselves. In the meanwhile, all the progressive economic practices can apply to petrol, after all, there is always the diesel powered bus to take to go to work!

[shebin]

lets not discuss the merits of UPA and NDA and make the thread political.let oil marketing companies price the products at a fair margin so that they dont suffer.Assuming a fair net profit of 7%(here the turnover is huge)they can price the product on a cost+margin basis.But now the prices are not realistic.I believe this is happening due to exorbitant taxing by states and centre. This is where we need some kind of rectification, i believe.why cant the taxes be reduced in such a way that prices reflect some kind of reality(like in goa).We are not asking the government to feed us with subsidy and freebies.we are asking them to stop looting us in the form of petrol coz every person cannot afford a diesel car due to the cost of buying.

The topic regarding the class of person owning a car is debatable subject.But truth is that petrol usage starts from Mopeds,rickshaws and extend into hatches.Now all of them cannot be put into upper middle class or economically privileged class.
The government is reluctant to free petrol from over taxing as it has become a major source of revenue for them to cross subsidize populist subsidies.

The basic concept i would like to project here is cost of running should be affordable to the masses whether its petrol diesel or LPG and at the same time oil companies should get fair profit........but govt taxing one particular fuel alone is not acceptable.

Btw i own both diesel and petrol vehicle;so i am not against diesel users here....

[gsurya]

@shebin: Norway is a major exporter of oil & still petrol is most expensive there in Europe. They use taxes for infrastructure & welfare. Cars & petrol are both expensive in Singapore. China produces a large quantum of its crude & taxes like India too.

2 lakh kms of roads have been built in this last decade; also from our taxes. Ours is not a country which shd price fuel low with our huge population, roads will get flooded with vehicles, Govt shd instead provide cheap public transport.

People using private cars shd remain a private luxury, not a necessity.

[shebin]

@gsurya i appreciate the second point you have communicated.Yes petrol should not be kept cheap so that the roads are not flooded with cars.But why petrol alone is my question.........they should price all fuels accordingly so that the moped owner does not have to subsidize prado owner

Regarding the roads bulit i am wondering why i cannot find a single pothole free road at least in bangalore/kerala(including NH)....its damaging my vehicle and causing risk to public especially two wheeler owners(after paying highest tax for fuel).If there is any good road, immediately i can find a toll booth ready again taxing me for the road.So wheres the tax mony collected on fuel going.This all happens after collecting road tax also for fifteen years in one shot...

So i fail to understand the logic of keeping taxes high on a single fuel and providing the worst infrastructure possible to travel.

Btw i am sure in norway the roads and public transport is much better compared to here.At least that justifies the taxation.So i wonder whether we can compare norway pricing to indian circumstances......

[gsurya]

@shebin: agree all fuels should be priced without subsidy. Only issue is diesel is used heavily for transport of people & food & by farmers - hence subsidy is being phased out slowly. If Rupee had remained around Rs 55, the subsidy part would have already reduced to just Rs 4 to the litre by now, but will take a bit longer now.

Kerosene will be moved to DBT/Aadhaar based payments like LPG once most poor have their Aadhaar id.. expected sometime in 2015/16.

Norway was in terrible shape before oil was discovered, had famine like situation too. India does not have a single large natural resource we can exploit & export too. Except people

[shebin]

@gsurya, a difference of 5-8 rupees is acceptable if govt feels diesel to subsidized at the cost of petrol.but past data have shown that increased diesel prices actually brought down inflation....here the actual price of petrol and selling price of petrol is vastly different to justify it from any aspect the govt should urgently resort to realistic pricing rather than considering petrol users as golden egg laying goose.

eventhough i own a diesel car ,i prefer my petrol car for daily use.somehow i feel more comfy in my k10 (i wonder why)than in my sunny diesel.even in high ways i prefer my k10.so now i have to use my sunny more and the thought of giving up my zero safety revvy little friend is killing me.....i love it when k10 revvs.....wanted to keep a baleno.but size and mileage was not matching my requirements.so compromised with mini baleno

ultimately if the govt understands that progressive taxation rather than regressive one would help economy in long run.penalising a particular category of consumers only will not be productive for the economy,i feel.it has become disgusting now.i can see politics of the govt creating all this ruckus in the economy.Salute to my economist PM........

[gsurya]

@shebin: Govt is already raising 50 ps per month on diesel price, if rupee stabilizes, in a few months the difference between diesel-petrol will be back to Rs 5 or so. Inflation is controlled because of a record monsoon & Chidambaram's promise to keep CAD at budgeted level.

And yes, I genuinely salute our finance team Manmohan-Montek-Chidambaram-Raghuram for this, despite global recession, our debt-to-gdp ratio is under control, much better than many western countries too:

http://timesofindia.indiatimes.com/b...w/21113187.cms

[shebin]

@gsurya...hope things will turn around for good.ultimately we petrol heads are hurt when our fun drives and revving is compromised.
your optimism regarding manmohan team is appreciated eventhough i feel they have always cheated the law abiding tax payers for populism and political compromises.The govt should be able to foresee and control uncertanities in economy.the common folks are not able to handle all these price rises.for the common man its not cad deficit....its quality of life and good governence