[pavi]

Look how the tables have turned over the years. We used to have strikes and what not when there was an increase in fuel prices even by 50 paise. Now the fuel price increase has become a BAU (business as usual) for us. Those who came to power saying "petrol price would be reduced to 40/litre" are now breaching the 40 per half litre mark also. Even after all the wrong measures by this government, I am pretty much sure they will continue in power may be till the world ends. Why?? Because everything becomes a BAU in new India.

There was a comment by a RajyaSabha MP from Kerala when he was asked about the fuel price increase. His answer is still being used in trolls. His answer was around these lines "see, even though the crude oil prices are reduced, we have not increased the fuel prices by the same amount. What is decreased there, is not increased here. So eventually fuel prices are not increased. It may be confusing to you. Fuel prices are not increased the rate by which the crude oil prices are reduced, so there was no increase in fuel prices." People here are still wrapping their head around this new theory.

[RoadTrippin]

The Price of Petrol in Nepal is Rs. 68.43
The Price of Petrol in Sri Lanka is Rs. 60.66
The Price of Petrol in Bangladesh is Rs. 76.69
The Price of Petrol in Pakistan is Rs. 51.56

The Price of Petrol in Bombay today is Rs. 92.86

I for one welcome this Vikaas and look forward to paying more with increased state taxes.

[sou_3749]

Any developing country with sky high energy prices (read fossil fuel and electricity) can't sustain the growth. What we are paying for petrol is in the same range of some of the most developed European countries where as the per capita income is 1/20th of theirs. What it means that we have less purchasing power but forced to spend more on fuel. That means we have less money left to spend on other commodities. Less spend equals to less growth. In short term we may be able to show the spike in GDP but we won't be able to pull poor people out of poverty.

And what's the agri cess on diesel?? Is it supposed to help farmers in some way (I don't know how). The farmer with a tractor will now spend 4 rupees more for diesel(I know retail spice won't increase). Where will he recover the extra spend? This is absolute madness by govt to fill up the tax kitty. God save India.

[Sounak04]

Originally Posted by Hayek

To the best of my knowledge, this helps the central government reduce the share of revenues that go to states - since revenue from cess does not have to be shared. In short state governments get less money - and may have to increase state VAT on fuels to compensate for the revenue losses

That is going to happen. State government will be eventually increasing some or the other taxes, which in turn will lead to increase in fuel price.

Government says that they are increasing the taxes for public welfare. But how come they do not consider the effect of increasing fuel prices on inflation? Each and every individual is affected by rising fuel prices irrespective of the fact whether they have a private vehicle or not. Considering the current economic condition of the public and the current rate of Crude Oil, Government should clearly think about reducing the taxes on Fuel and pass on the benefit to the public.

[1.2TSI7DSG]

On the freight, delivery service front. A huge blow.
Especially, the swiggy and the uber ola cabs who don't have a control on the pricing.

Expecting freight costs to impact all commodities.

On the personal front, covid has brought doen my over all travel cost. So in terms of a home budget allocation I am still spending a lot less than what I used to spend earlier because the number of kms has gone down.

That said, I am skpetical about the trigger it will have on diesel generators, diesel pumps used in agricultural application etc.

[carboy]

Originally Posted by 1.2TSI7DSG

On the freight, delivery service front. A huge blow.
Especially, the swiggy and the uber ola cabs who don't have a control on the pricing.

Expecting freight costs to impact all commodities.

What is the proposal in the budget which leads to this?

[Hayek]

Originally Posted by Sounak04

But how come they do not consider the effect of increasing fuel prices on inflation? Each and every individual is affected by rising fuel prices irrespective of the fact whether they have a private vehicle or not.

Disagree with this, even if this theme has been discussed to death on this thread. The fact is that rising fuel prices have a negligible impact on overall inflation - you should see examples of why if you search for previous posts by me and others on this thread over the years. One can easily argue that taxing fuels is a kind of carbon tax, and is far better for the economy than taxing just about anything else.

[sgiitk]

Originally Posted by RoadTrippin

The Price of Petrol in Nepal is Rs. 68.43
The Price of Petrol in Sri Lanka is Rs. 60.66
The Price of Petrol in Bangladesh is Rs. 76.69
The Price of Petrol in Pakistan is Rs. 51.56

The Price of Petrol in Bombay today is Rs. 92.82

Is not MH having the highest price. Is KA still higher. They opposed Fuel under GST and so now... I was surprised that people hit the roof when the taxation change. Basically an accounting ploy. I guess the centre gets to keep a higher share.

[Quoter]

A better question to ask might be - Where is the government spending it's tax revenue. Every revenue item is used for funding government expenses in some way or other. If not fuel, government has to raise taxes by either:
- Increasing income tax rate at same slabs (Big No in an inflation prone economy like ours)
- Increasing corporate tax (Can't do if you want to increase domestic manufacturing)
- Increase tax on luxury goods such as expensive cars, 5 star hotels etc. (Already so high that it is impeding consumption)
- Increase tax on sin goods such as cigarettes, alcohol etc. (Again, already so high that it is increasing smuggling)
- Bringing untaxed sectors such as agriculture in tax net (Not for a few decades)
- Increase import duties (Already done in the budget plus already high enough that it is going to impact our export competitiveness)
- Borrow even more from the market (Our fiscal deficit is already at very high levels that it might cause high inflation in another 12 months)

In fact the situation is such that wherever tax rate is increased, it is going to cause problems because it's so high everywhere. To make it sustainable, government has to start looking at reducing its expenditure, especially the recurrent expenditure such as wage bills, subsidies etc. since these provide only short term benefits vs capital expenditure such as roads and ports which give long term benefits. It's easier said than done though !!

PS: The agri cess on fuel will actually not change end consumer prices immediately though states might increase their share of taxes to compensate for revenue shortfall. This in itself may not be a bad solution as each state has different requirements. More rural states might want to reduce diesel prices while more urban states might want to tax diesel more.

[AZT]

Building up on the every price hike has become "Business as Usual" comment, I found the below cartoon by Shri RK Laxman very apt for this month. This is from 2003 but his satire remains evergreen, among the most gifted illustrators our country has ever seen.

[landcruiser123]

Farm cess? Interesting.

What is the net benefit for farmers? Are they getting additional subsidies? With such an increase in the price of diesel, the farmers are screwed twice over. Running their tractors/generators gets more expensive and the middleman charges more for transportation. I hope this move doesn't hurt the people it intends to help.

[longhorn]

Originally Posted by landcruiser123

Farm cess? Interesting. I hope this move doesn't hurt the people it intends to help.

No it won't. Just don't be fooled by the name of the cess. The name has nothing to do with the intended beneficiaries.

[prajwalmr62]

Fuel price hike hurts everyone. The vegetables you're buying from the market which is right in front of your house? they weren't grown there, it was transported by many trucks or mini-vans from farms to storage to store. Your car/bike ownership doesn't matter. Everyone has to pay for this increase. Fuel price increase is always going to create inflation. On paper, it might be business as usual, but on streets, that won't be the case.

With this current state and constant increase, I'm expecting petrol prices to breach 100/l mark by March (non-branded). And branded/premium petrol is just a rupee or two shy from reaching that mark as of now.

I'm just wondering, we could have saved 30-40% of taxes by having non-corrupt government and its officials. Probably even higher, if they were efficient.

[CarJunki]

Fuel is the only thing consumed by much broader populace and thus effect of taxes on fuel is more uniform than income tax or other such taxes. We will continue to see higher taxes on fuel. Come state budgets, VAT on fuel will go up. With COVID, there are only two major items for tax left fuel and alcohol. Other sources are dwindling significantly.

Is this budget inflationary? yes to certain extent as there is now cess proposed on things like pulses.

[condor]

Why is it not possible that the ear-marked agri infra cess goes back to agri infra spend in the states itself, so they dont have to spend from their budgets ? And spends on agri infra has to be in the states, and in-directly helps every single person in the country.

When FM has said there will not be an increase in end user prices, there shouldnt be added inflation due to this re-direction of taxes that are already being collected.

Having said that, fuel prices can go down a bit if GST is applied to fuel, but some states dont want that. May be once that happens, there can be some relief.

On the other hand, defence spending is a dire necessity in the current global geo-political scenario. From what I hear from other sources, next couple of years will be critical and we can see some not comfortable times. What is going on are like under-currents that are not visible to us public, but the govt must be prepared for such situations.

Some posts here are like the FM doesnt know finance or economy, and that a hike in fuel prices will affect inflation and the common man - even more on the populace that earns lesser than most of us here.