With crude oil prices scraping the bottom of stratosphere, the Manmohan Singh government has finally increased petrol prices by Rs 5 a litre and diesel by Rs 3, and a cylinder of cooking gas by Rs 50, so that the oil companies do not go under.
Bhamy V. Shenoy, who has for long been asking why discussing oil prices or corruption in oil sector is not as glamorous a subject as IT and BT, argued in Deccan Herald last week this was the correct course to take even at the risk of inflation and a political backlash.
Petroleum product prices, he says, have been frozen at the level of $70 a barrel while international oil prices have climbed to $135 per barrel.
“Actually by not allowing the oil price increase to flow through to the final consumers of petrol, diesel and LPG, the government is helping mostly those who could easily afford. The revenues which government has lost by this misguided policy could have been used to support the poor by subsidising the galloping price of food items and for many other welfare projects.
“At crude oil price of $120 per barrel, the government will lose as much as Rs 193,000 crore per year. I have intentionally used a lower oil price to reflect the possibility of prices coming down. Kerosene and LPG subsidies account for Rs 55,000 crores which is almost equal to the loan write off to farmers in this year’s budget.
“Unfortunately while PDS kerosene is diverted to blend with petrol and diesel, LPG subsidies help mostly those who could afford to pay higher prices. In addition, residential LPG is diverted to commercial and auto sector where prices are considerably higher. This results in black money generation to the tune of Rs 13,450 crores.
“It is true that if diesel prices were allowed to increase with international oil prices, it would have increased prices in general. But the impact of such a price increase on economy is considerably lower than the loss of Rs 1,10,000 crore to the government.
“In the short term consumers may welcome such a price relief. We should not forget that there is never a free lunch. Some one has to pay for higher import cost of oil directly or indirectly. In the medium term because of increased deficit financing it will affect every one. But as is well known, the poor will lose more than the rich and the middle class. Thus the very class that the government claims to help will end up losing the most.”
Read the full article: No free lunch
hopless justification……there are sweeping statements made with no justification of the same. People using LPG can pay afford to pay more !!! whats the logic behind this??? If your line of argument is taken then govt spending huge amount on footing the secutiry to ministers is a waste….. that can be used to subsidies the food for poor……….
Go get your basics right
Excise Duty on base price of Rs 20 was Rs 15 .is there any Justification for the high rate of Duty.Vat rates vary from 9 to 32 %.When the Government is pushing for 13 % VAT and Service Tax at 12 % there is no need for the States to charge 28 % Sales Tax.The Govenment accuses the Steel and Cement Companies of raking in profits and Instructs them to reduce the prices but when it comes to its own COFFERS it decides to pass on the buck to the comman Man.
“Petroleum product prices, he says, have been frozen at the level of $70 a barrel” ?? This statement is completely wrong as it ignores the huge taxes we have been paying.
One barrel = 159 liters (approximately). Even at 135 dollars, cost of one liter of Petrol should be: 135/159 = 0.849 dollars; assuming a rupee dollar exchange rate of Rs 43 per dollar, it is 0.849 * 43 = Rs 36.50. One needs to add transportation & distribution charges to this, but at end it does not justify the current prices of petrol.
The fact is that the Government of India is raking huge profits from buying (from International market) and selling Petrol (to Indian citizens). This profit is financing all the wasteful expenditures of the Government. State Governments too are adding to the misery of the people by applying additional taxes on petrol.
Suri & Chet,
Thank you for bringing this up. I was wondering why none of the other media is even thinking in these lines.
Every body is comparing prices across cties/countries, socio/political/economic implications those are not very relevant to the common man compared how the buck is being distributed. They (the other media) should highlight the capitalist state of a democratic govt.
Why the government not insists reducing of local taxes charged on petro products. Why it cannot be uniform all over the country. Why Import duty on oil is not slashed which itself can bundle out the Oil companies from losing (as they & government estimate). Providing at concessional rate to help public is wrong notion. Kerocene is sold in black market. Domestic gas is used other that cooking purposes from using for gas geysers to car fuel. Petrol/diesel is being wasted by motorists especially in cities which can be reduced if they can use pubic transport. College/ even school children blissfully swallows petrol through their vehicles which are zipping around the city with no purpose. Use of Govt. vehicles by their staff should be reduced to minimum. Both elected reps & top bureaucrats use public transport Yesterday in Bangalore CM’s convoy to visitmareas in the city where rain played havoc had a minimum dozen cars apart from 4 or 5 volvo buses. One the day before similar show of vehicles was seen when newly elected MLA’s and Ministers of the city made a round of these areas. All these looks small and trivial but the loss when counted is huge.
135$/barrel is the international crude price whereas the Indian crude price is some 10-15$ less than international price bcoz it’s not a pure crude but it’s a mixture(In India Nothing is pure!!!)…. so Indian govt gets crude oil for less than 36.. here govt makes 30-40% profit….
In economics subsidy is given to encourage consumption like fertilizers seeds etc and taxes are there to discourage consumption example tobbaco but in case of oil both are there.. this is weird!!.. only indian govt can explain this….
We can keep cribbing about the government and taxes, etc. But fact of the matter is global prices have gone up and we should learn to accept increase in prices.
I would go to the extent of saying that increase should have been mcuh higher. It is a sin to subsidise LPG and petrol for the middle class when the government needs to spend on much more worthy causes. The harmful implicaton is that indirect impact on other goods and services would make life much harder for poorer sections of society.
If it was implementable, I would have argued for increasing price of fuel by more than Rs.5 for private vehicles and and by a lesser amount for public transport vehicles. People who can afford to have cars and bikes can definitely bear this additional burden. And the poor man’s cooking fuel is not LPG.
As it is, I dont complain. The focus must be more on governance and not on increase in prices, which is a fait accompli.
Thomas Friedman’s views – for anyone who cares. Even for those who do not.
You are spot on sir. Middle class population of 300 million wants subsidies at the cost of 600 million poor souls, Imagine so much money could be better spent. I would rather suggest that petrol prices should be made so high(let free market work here) that middle class folks should be forced to either take Public Transport vehicles or use bicycles.
Manifold benefits after realising above would be,
1.) Cycles/PTV make cities greener/pollution free.
2.) Money is better spent on development programs.
3.) Traffic Problems would reduce to a large extent.
Too complex a game, International oil companies, sheikhs are playing with the help of local politicians, beaureaucrats and businessmen.
There are many ways oil consumption can be reduced. By sensibaly planning the growth of Rail tracks, MRTS, etc and at the micro level bicycle and making envronment friendly for walking. If people cannot afford to use LPG or kerosene, the altenative is to use fuel wood and coal, equally scarce
Governments should bring down taxes on petrol and diesel which they treat as golden goose
But how when half the population do not pay tax, create black money!
If I may add to your 3 very relevant points:
4. Health benefits to the bicycle rider.
Bicycle is the ultimate zero-emission vehicle. It is seeing a comeback in Europe while becoming extinct in China. The Chinese are in a hurry to become an advanced nation but that is a different issue.
Its not as easy as it sounds. Understand that international prices are rising but that cause of the increase in reserves in US and also due to adding petrol into Future commodity and starting trading on that. Read http://www.rediff.com/money/2008/jun/02mrv.htm
As for the comments above for people who are cursing middle class, Nobody would complain if there were an alternative option, nobody would crib if there indeed were good public transport, nobody would mind using cycles if there are bicycle lanes, nobody would mind using cycle if the roads are good, or for that matter if road exists. Nobody would mind if the money indeed was being used for some good cause, nobody would mind if everybody was indeed paying taxes. Just because people are already paying doesnt mean that each middle class person can afford the rise with ease.
Bhamy Shenoy should also look into other wasteful expenditures of the government like Rajeev Rozgar Yojana’s and the likes of it and how much they are costing the tax payer and also the loan waiver that has been announced by the clueless FM Cheatambaram, which is nothing more than eyewash and costing the exchequer huge loss, but helping his party to get elected for another term in the next election.
@suri and chet
You ignore one important aspect.
Petrol and diesel don’t pop up out of the ground. They have to be *refined*. Add that cost also to the little bit of mathematics you did there.
And it is not a small margin, believe you me.
Plus, sales tax, excise and customs duty are necessary if the government wants to raise any revenue at all in the first place. Reducing indirect tax sounds fun until you realize the bills that the government has to pay, and this money has to come from somewhere. If the Government prints more money, that leads directly to, repeat after me,
so in this nice catch-22 situation, it is whether you want to deal with the devil today or leave it to future generations to worry about (while we casually spend dwindling oil resources)
At the same time, we are indirectly paying the hidden costs of our addiction to boo… i mean petroleum. Increasing air pollution, traffic jams causing longer commutes all have their own costs borne by everyone because we use so much petrol.
Of course if this means people stop using cars (lesser traffic jams, better air), use more bicycles where they can, and go to work by bus, what’s the harm?
On a side note, I am still waiting for a politician, any politician to come out and say how much exactly he or she is reducing his or her energy expenditure.
Dismal prediction for future: 0.
Alok , Even after the increase in the prices , the Governments ( both Central and State ) share would be 55 % of the FINAL Rate in the case of Petrol.The reason for this high rates is cross subsidy.LPG , Kerosine and Diseal have to be subsidised by the government in power to retain their vote banks.The subsidy on account of Diseal to some extent is not justified as most of the Cars and other SUV’s in the market today run on this fuel.
The right decision would be charge special Excise Duty of 5 % of the Sale price of the Diseal Vehicles which are used for Personal purposes.This Duty recovery should be credited to the Oil Pool Deficit.
Kerosine prices could have been hiked by a Rupee.Even 20 litres a month for the lower middle class is not going to hurt as the prices of vegetables and cereals have gone up substancially.There is no case for retaining the FULL subsidy on Kerosine.
LPG is being blanantly misused today and the corrupt agencies make money by supplying to hotels and commercial establishments.A hike of Rs 100 would not have made a significant difference as the Average Monthly House Hold Income has gone up in the past 3 to 4 years.
The Excise Duty on Petrol is Rs 14 ( reduced from 15 )A flat rate of Rs 10 would be ideal.
Governments which has STANDARD rates for Income tax , VAT Rates and Service Tax and which insist on MRP for most of the products must have a MAXIMUM rate for State Taxes.At present some states charge 32 % as Local Levies which is absurd.It should be brought down to 20 % across all states.
Finally Corporates should introduce BUS SERVICES for atleast 80 % of the work force,.This reduces traffic congestion as also the consumption of these petroleum products.The Buses which are used for ferrying passengers to the Airport are CLASSY and it is time corporate executives travel by bus rather than Personal vehicles.But will their EGO permit.
Chief Ministers and Governers should not be allowed to use more than 3 cars.At present we see minimum 8 cars accompanying the CM / Governer.
world crude prices increase is a blessing in disguise…we need to shift to greener fuels
Valid points, but some flaws.
SUVs and cars pale in comparison to the millions of trucks and lorries which use diesel. They transport most of the goods and increase in diesel hurts the urban poor more as it increases transport costs of food and essential items. Petrol can definitely be increased by more than Rs. 5 since most of it is consumed by private cars and vehicles.
The argument for increasing kerosene prices is cruel to say the least in that you seem to be saying, “since they are suffering already, let them suffer some more since they are used to it”.
The central government cannot set a standard rate for sales tax because sales tax is the exclusive domain of the State Government.
Slashing excise duties and other taxes would have made sense if the UPA government hadn’t committed itself to massive expenditure on (supposedly) social welfare schemes such as the NREGA and the farm loan waiver. Already these expenditures are burning a hole in the pocket and asking for a 33% reduction in revenue recovered from excise duty on petrol is asking for trouble.
I agree with asking politicians to tighten belts, but that is more for the sake of a demonstration effect rather than actual impact on demand for petroleum products.
Bus service sounds like a nice idea if employees saw some use in going by bus (lesser costs) when compared to the drawbacks (inflexible timings).
And why will companies bear the cost of buying and maintaining new buses? If they are compelled to by law, shouldn’t employees be also compelled to, by law, travel by buses to work? Why employees alone, all of us should be compelled to use only buses and penalized heavily for using any form of private transport.
The point is that compelling people by law to change their lifestyles is far more easier blogged than done.
Looks like this “Chet” guy is a genius.. I never knew that you can use Crude oil in vehicles..
However there is process of REFINING Crude oil where we get the following out of a Barrel of Crude oil.
Jet Fuel 12.3%
Still Gas 5.4%
Marketable Coke 5.0%
Residual Fuel Oil 3.3%
Liquefied Refinery Gas 2.8%
Asphalt and Road Oil 1.7%
Other Refined Products 1.5%
So this simply means that you get only 51.4 % of Petrol out of the 159 liters of Crude oil..
Why should the state Governments make extra money whenever there is a hike in Petroleum prices due to sales tax ? It is like adding insult to injury. There should be a Ad-valorem tax per liter instead of on Value basis.
Also subsidy on Diesel and Gas should be removed and instead Service Tax on Transportation has to be removed to avoid cascading effect on prices.
This whole thing is a conspiracy by environmentalists. They’re driving everyone paranoid and working up a frenzy. The frenzied rise of crude oil prices is just a reflection of that. It isnt as if the world is going to go up in flames in 6 months if we didnt shift to greener fuels. 100 varsha bitkondu Enaadre namgenu.. avaravara karma. The reason I say this is because, nowhere is there any talk of using the 80-20 rule. Instead all the effort seems to be targeted the other way round and much to the detriment of developing economies and the poorer nations. Day is not far when every product will carry a concocted “Carbon-tax” depending on how large its ‘ore-to-store'(wow.. i just made something up) “Carbon footprint” was.
Scooty, SunnygaLalli petrol uLtaya maaDO prayatnagaLu jOraagi naDitide. The biggest guzzlers are our power plants.. but the same environmentalists will filibuster and frustrate every attempt to build non-Carbon plants of any kind. dam kaTTadre jana muLgOgtare.. nuclear plant hakadre jana suttOgtare.
There is no reason why in the 21st century we need 18 wheelers to transport Gasoline from place to place. ee peDambutagaLu rODgaLanna gabbebsOdalde (b’lore-m’lore highway for example), they routinely lead to traffic holdups and waste time and fuel for hundreds of vehicles on both sides. Adanna kELOrE illa.
There is no talk even in america of improving public transport. Not itsy-bitsy monorails… but a massive public transport network on a scale never heard of before – like a rail line wherever there is a road, a train wherever a bus can go.. and so on. In India too, though I dont have numbers to quote, I imagine our rail network is still pretty much the same it was 60 years ago.. 60 years of corrupt congress rule has conditioned us to consider ourselves lucky if we can get so much as even one extra rail track sanctioned for ourselves in the rail budget.. which is ridiculous. Instead of subsidising petrol and writing off loans, the same money can be used to expand the existing rail network many times over. Why should Delhi be the only city in India with green autos and buses. Why cant India convert every city and town wholesale to use greener technologies for its public transport? It surely will shave off much more from the oil bill than a million scootys put together.
Come to think of it, why cant we ban 2-stroke engines altogether? Some teenagers may be robbed of the thrill of zipping on their rx-100s .. but we stand to lose little else. If every 2-stroke engine on the road was a four-stroke engine, we’d there and then in one stroke, sorry two strokes, save ourselves a fortune.
anyway.. nan bagge tale kedskobedi… naa heege enenenaar heLtaayrtini..
nim nobel prizegaLannella al gorege kottu haaLaagOgi baddi makkLa.
A different topic: Reading Churumuri gave me the impression that only the BJP got rich. Facts are a bit different.
The Congress has 35 MLAs with very high assets (Rs 20 crore and above) and their total worth is Rs 256.6 crore. In 2004, the party after the election was worth just Rs 54.2 crore which would mean that the party has seen a 373 per cent jump in the last four years.
The Bharatiya Janata Party has 40 MLAs with very high assets and their total worth is Rs 203.8 crore as against the Rs 51.4 crore in the 2004 elections. The party has seen a jump of 296 per cent in the past four years.
Whoever wrote 1 barrel is 159 litres and so 135 dollars divided by 159 is less than a dollar ..Please note 1 barrel of crude oil will not yield you one barrel of petrol…
On average, about 19.5 gallons of gasoline are available from a 42 gallon barrel of crude oil, varying due to quality of crude and grade of gasoline..
Oil price is a global issue….I was in United States for 6 months and the oil price gone up more than 25% in 6 months there….Same thing with China where oil price gone more than 30% during the same period.Compared to India,US and China has better oil reserves and resources….It is a gloablized economy and we can not control prices without switching to alternative fuel sources like green energy.
Prashant has got his stats right. Some of the perception and notions authored above have been made on mere speculation and conjecture. The fuel hike has materialized in a bid to balance the gross instability that had been induced in the Indian economy courtesy of international market trends in the past few weeks. Conspiracy theories have been looming by and large, (inclusive of comments made above that the hike is an attempt to prevent Indian oil companies from going under). That is indeed ludicrous considering the fact that the few Fortune 500 companies from India are petroleum majors like Indian Oil, HP, BP, Reliance, and ONGC etc. They are financially robust to confront fluctuating market trends and more so the steep rise in global crude oil prices. The hike is more reflective of a desperate government battling with the omens of recession after inflation hit an all time high. As some one rightly put it, the layman will be at the receiving end of such contemptibly insane and torturous market inclinations. With food and fuel becoming alarmingly unaffordable, the future indeed likes grim for the posterity.
The Central Govt. has cut excise duty and customs duty on petrol. It is shouldering a burden of 22,000 crore as a result of these cut in duties.
I believe both the state and central govts. have to equally share the burden of high rise of crude oil prices.
But here, we see a congress led central govt. taking on the huge burden, while the state led BJP govt. refuses to lessen the sales tax in Karnataka, which is one of the highest in India.
The petrol price is high in karnataka, because of the state govt. sales tax, which is higher than in the other states.
Every time, the central govt, raises petrol prices, the sales govt. makes a huge extra revenue in terms of increased sales tax. this time the karnataka govt. is expected to get an additional Rs. 350 crores!
In spite of netting an additional revenue of Rs. 350 crores, the BJP govt. has categorically announced that IT WILL NOT LESSEN SALES TAX. Ironically, it is the same govt. which is taking out a protest rally in the city today, protesting against price hike!
While Maharashtra, Bengal and Kerala can reduce their sales tax, and thereby reduce petrol prices by almost up to Rs. 2/-, why cant BJP in Karnataka also reduce the sales tax? Why must Kannadigas pay for BJP’s inability to lessen the sales tax?
It is simply bad politics to deflect all public anger against the Central Govt., while conveniently trying to disown all responsibility.
For a party which made price rise a major issue in the recent elections, here is a golden chance for BJP to bring down petrol prices in Karnataka.
But, the question is: will they allow narrow political interests to score over the interests of Kannadigas?
I agree with JustaPoint. It is sheer votebank politics being played by BJP.
The BJP govt. is expected to get an unexpected bonus of Rs. 350 crores (in sales tax revenue)..it makes sense to pass on this benefit to the Kannadiga consumer.
JustaPoint has a point it seems. The irony is not merely in the fact that the BJP is busy engendering what is but a travesty of a protest, but also engaging in a bid to hog the limelight, as this would be it’s maiden issue that the party will have had to tackle. Bolstering confidence in their supporters, they seem to be endeavoring to convince the unassuming populace that this potential landmine can be brought under control if not resolved. Well, if anybody were to do a root cause analysis, it is the BJP itself that is at the core of this conflagration, as far as the repercussions on Karnataka is concerned. Yet they seem to be pinning the blame on the UPA, an entity that’s trying to balance the economy. It must be comprehended by one and all that the fuel hike would be on par with the international market only if the raise hovered around Rs. 15 for petrol. Yet the government has successfully reined in the maniacal apparition of the hike to Rs. 5 which is itself a commendable achievement. The stupendous sales taxes which the BJP has come up with seem to be levied with hidden interests. Nobody’s going to gain anything by playing the blame game. Let us perceive what the ground reality is and play our cards likewise.
Congress needs to wake up from their lethargic slumber and get pro-active.
If BJP is organising a protest rally, Cong needs to communicate from every rooftop of bangalore, that BJP can actually reduce sales tax, but it is not doing so.
Maharashtrians, Bengalis and Keralites are paying Rs. 2 lesser in their respective states, while Kannadigas are made to suffer, merely because BJP wants UPA to take the entire blame of price rise.
Cong, wake up!
“Yet the government has successfully reined in the maniacal apparition of the hike to Rs. 5”
You call scam of ‘oil bonds’ as a success ? They are just passing on the burden to someone else in the future.. that is their only success. I’m not blaming the congress for this, but every gov’t. They have left kerosene untouched for the sake of the “aam aadmi” .. this is inviting fuel adulterers with arishina kumkuma. There is no control on use of diesel, infact diesel usage has gone up by a great amount, and not all of this is due to increase in transportation (sorry don’t have the numbers here). Companies have started switching from fuel oil and naptha (which are the last outputs of refining) to diesel due to this unbalanced and senseless subsidy. This whole oil thing has been ridiculously mismanaged for a very long time and this is just the start of it biting us back, just like other things such as reservation.
Yeddi is talking about Gujarat model, hopefully he is serious about it and starts cutting back on the freebies like free power to farmers as GJ has done. Farmers don’t need free power.. they need reliable power.
The Sales Tax Rate in Karnataka is the Highest in the country.If the person who occupies the CM’s chair makes STUPID statements like ‘ the state had not resorted to any fresh impost in the last budget ” then he qualifies to be a Moron and does not deserve to be the CM of a State.None of us are asking him to reduce the prices by Rs 5 , all that the citizens ask is that the sales tax rates have to be brought down in line ith the rates charged by other states thereby bring down the prices of these products.If arrogant statements like these are going to be the order of the day , I would be happy if he is KICKED out at the earliest.
The factual position given below reflects the reality .
“About 59 percent of the retail price in Bangalore and Karnataka are central and state levies in the form of sales tax, entry tax, excise duty and cess, making the cost of petrol highest in the country,” said a top official of state-run Indian Oil Corporation (IOC).In the case of diesel, 37 percent of the retail price in Bangalore are central and state levies.Though the government increased the cost of petrol by Rs 5 (11 percent) and diesel by Rs 3 (8.5 percent) on Wednesday, the retail price in Bangalore has gone up by an extra 61 paise for petrol and 36 paise for diesel due to levies on the basic price.The levies include a whopping sales tax of 28 percent on petrol and 20 percent on diesel imposed by the state government across Karnataka. In addition, an entry tax of five percent on petrol and diesel is levied on the basic price plus sales tax.
“But the basic price of petrol itself includes 23 percent excise duty and three percent cess on it, while the maximum retail price (MRP) includes freight cost and dealer’s commission,” the official said.As a result, a litre of petrol in Bangalore at Rs 58.50 includes excise duty plus cess amounting to Rs 13.75. Similarly, a litre of diesel in the city at Rs 39.80 includes excise duty plus cess to the tune of Rs 3.71.
“Retail pricing of petrol and diesel is a very complicated process, as the basic price includes refining cost, customs duty on import of crude, landing cost, etc. For instance, a one percent reduction in excise duty, as made by the government, has brought down the central levy to Rs 13,350 per kilolitre from Rs 14,350. Cess of three percent on reduced excise is about Rs 400.
It is shocking that the state govt. levies a grand 28% sales tax on petrol. it is definitely in the state govt’s hand to reduce the burden on the common man. But they just don’t want to .
so that they can continue to protest in shrill voices about UPAs failure in controlling the prices.
The BJP govt. doesn’t seem to be bothered about the suffering Kannadiga. Why should Kannadigas pay the highest sales tax in the country to the BJP state govt?
Everybody has chipped in with their contribution. The central govt. The oil companies. The common man. All these three entities have taken the burden of the rise in crude oil prices. The only entity which refuses to take the burden of rising prices is the Karnataka state govt.
Sad, that Kannadigas are suffering because of complete lack of concern and bad politics.
Ban private means of transportation for three days out of the week. Let Naraayana Murthy and Premji ride the bus with the rest of us. Kiran Majumdar could lose a few pounds by walking to her office.
Let all government officials, including ministers and IAS persons vanpool. No outrunners or pilot vehicles for anybody. No emergency status for vehicles other than police, fire, and medical ones.
No traffic on our streets after 10:00 p.m. No television after 11:00 p.m.
M. K. Gandhi would be pleased.
Sonia Gandhi has asked Cong CMs to reduce sales tax on petro products and offer some relief to people…Is this a case of good cop, bad cop…ones does not know.
Let us see if BJP that is protesting loudly about the price hike will ask its governments – esp Karnataka – to follow suit or something better
Congress sure has an edge to put BJP on the mat if its protestly too much
and too loudly
Karihaida, Aren’t you missing the bigger picture here? The oil crisis is not solely a national issue; it’s a global threat. Are you preposterously accentuating on the fact that this international phenomenon is the fruit of UPA’s mismanagement? You couldn’t be more wrong if you were. I would like to humbly invite your attention to the fundamentals that have fostered this crisis:
-Uncertainty of oil supplies
There is a sense of obfuscation as to the reserves that are left globally. The Arab nations and other european suppliers viz, Venezuela have chosen to remain silent so as to prevent chaos within their community. However they have consciously pumped up thier production in view of the global shortage.
– Stagnation in energy supplies, in spite of the increase in oil demand from emerging economies & the world over.
Absence of alternative fuels have exacerbated the already volatile situatuation. But at the end of the day, the question on the utility of these alternates shall remain unanswered. How many hybrid cars do we have? What good can wind or solar energy do for a petrol hungry nation like ours?
– Speculation regarding the oil prices
OPEC wants to maintain this high oil prices as they believe a fair price have been finally agreed upon after decades of unreasonable and stagnant rates for crude oil.
So basically, we should be analyzing measures to control this, rather than sling mud at the UPA.
Some of my suggestions would be to :
– To decrease the dependencies in oil & rely on more renewable resources. Ventures like Honda’s hybrid automobiles and Suzlon’s energy initiatives have provided us with the impetus. We ought to shoulder the onus of carrying forth the mission.
-To follow the Brazilian model & blend the saleable oil with up to 25-35% ethanol. It’s not as spurious as you would think, it works just as good though, and effectiveness would marginally decrease. It still helps in the long run.
-Hope against the hope that OPEC will try to increase the output of the participating countries.
– Increase stability in oil producing countries like Iran, Iraq & Nigeria. This may be achieved to a certain degree by decimating the western dominance and their deplorable stranglehold on such politically infirm economies.
India has statred feeling the pinch. Here’s praying that the abrasion’s not as serious as it seems.
Are petrol/deisel prices in karnataka highest in the country? Im in delhi now and its still 51 here
Yeddi came to power claiming ‘congress balu tuTTi’. Has he refused to reduce the taxes?
I cycle to office and I pay tax. I feel cheated as the rates have been raised by only Rs.5 and Rs.3 instead of Rs16 or so. The government is using my tax money to subsidise those rich buggers who zip past in fancy (diesel) cars. Well if this continues and oil prices remain high, rupee will depreciate against a weak dollar and this might threaten all our well-being. But who cares?
Best is to adopt Eco-friendly life styles.
The prices of petroleum and petroleum products are shooting up all over the world.
Dont use cars.
Use public transportation or zero-emmission vehicles.
Ban Cars and private vehicles.
Introduce a good network of railways.
Best is leavy heavy taxes on car users.
LPG is not a luxury at all. It is common man’s necessity.
Policy makers must be crazy to think LPG as a luxury item.
Best is to use cycles.
Improving Sub urban and Metro trains will reduce the congestions and in turn brings down the demand for Petrol/Diesel.
I’ve just written a concise article on this very topic. I know this may be unsolicited advertising (called SPAM by some), but hey, I want you guys’ opinion. http://www.indimag.com/index.php/2008/06/05/why-should-i-pay-for-the-oil-i-do-not-use/
I’m holding the congress gov’t responsible because they failed to foresee this situation. Since 2004 we have had good consistent economic growth, the forex reserves have increased hugely.. and instead of using this opportunity to put the country on a different path they have let India blindly copy the American addiction to oil and consumer driven market. They didn’t complete the gas deal with Iran (due to Amru pressure) when the prices were low and now Iran is not even interested in it anymore. They don’t allow the oil companies to hedge in international markets.. how stupid is that? Only now has RBI allowed PSU oil companies to hedge.. rail hodmele ticket tagoladu.
Instead of focusing on these things, their priority was sachar report, minority appeasment, farm loan waiver.. For the last 4 yrs the stock markets gave massive returns, but they didnt allow PPF to invest in it, when pension funds from all over the world invested and made a killing.
This is just a small sample of the mismanagement of the country by congress for the Italian lady’s narrow personal and political goals…
This Italian lady you’re referring to is as chauvinist an Indian as any of us would claim to be. I feel honoured to live in a country, the policies of which are often decided upon by the intellectual prowess of this noble individual, you have so sarcastically condemned as a seeker of personal and polititcal goals. Voted by the Forbes as the World’s 3rd most powerful lady (2007), securing a prominent postion in Time’s 100 most influential personalities of the century and a personage who’s championing of rights has won her acclaim and accolades the world over, is by no means worthy of the degradation that you have heaped upon her. The world is not blind, it knows talent when it sees one, and procrastinates not the appreciation of such calibre. Those comments above however, are nothing short of being racist and unfitting for a dignified discussion. A student from Cambridge, her edification alone speaks volumes of the integrity and sagacity that she bosoms. Her sacrifices to negate herself the PM’s seat was intended so that the venerable denizens of this nation would not squander their time venting their loathing and abhorrence questioning her nationality. It seems that we still are. Some habits die hard.
A developing nation like ours has limitations, but your stats are as inaccurate as your deliberations. India’s forex reserves stood merely at $316.17 Bn (as on May 23, 2008) while our Chinese neighbors were galloping way ahead at $1.76 Tr. But the fact is we had overtaken our projected estimates, thanks to the economic initiatives of the government.
You seem to claim that the govt has encouraged the spending trends, and coerced us to imitate the American markets? The yearning for oil is not an addiction; it is a necessity, be it in the US or in India. When people earn more, they tend to spend more. It’s universal. Don’t blame Sonia for it!
By the way, India negotiations for a gas deal with Iran successfully ended in 2005, for the supply of 5mn tons of gas annually for 25 years. Mid 2008 will see another gas deal being signed, for a $7.4-bln IPI pipeline. Amru Mousa, whose criticism has been solely focused on western policies, would have the last person to get involved anyway. Besides, he has always promoted Asian alliances.
And what’s that about oil companies not being allowed to hedge in the International market? India’s most lucrative ventures have been in petroleum, with 5 of the seven Indian companies in Forbes’ Fortune 500 being oil majors (Indian Oil, BP, HP, ONGC and Reliance).
Farm loan waivers were the need of the hour. Initial estimates placed the number of beneficiaries as high as 30 million small and marginal farmers and 10 million ‘other farmers’. As it turned out, the number of small and marginal farmers was more than 30 million and it was estimated that the number was likely to be 36.90 million, while the number of other farmers were estimated to be about 5.97 million. Doesn’t the interest of such a sizeable population qualify as a national interest? Just because you belong to the creamy layer doesn’t give you the right to revile the govt’s endeavors to emancipate a downtrodden section of society. Stocks are trading on record high in the exchanges today, a scenario that couldn’t even have been envisaged a decade back. India’s doing well. The oil crisis is the fruit of a more global phenomenon, and it requires a consolidated international effort to bring it under control; denouncing Mrs. Gandhi’s stature wont help.
Let us quit personal attacks and concentrate on addressing the issue at hand.
karihada says Instead of focusing on these things, their priority was sachar report, minority appeasment, farm loan waiver..
Minority appeasement ?
Mr Yeddiyurappa, when he was deputy CM gave Rs.100 crore to minority fund (as reported in TOI, in the last week of May 2008)
The BJP says it believes in justice for all appeasement for none. Why did they appease Jats in 1999 and give them reservation in the OBC class? Clearly it is narrow, selfish otebank politics played by BJP.
Farm Loan waiver?
the last colation BJP-JDs governement too handed out doles in the form of loan waiver in Karnataka. BJP has also subsidised loan interest rates to farmers..isn’t this appeasement? If UPA does it, it is bad, if BJP does it, it is out of concern! Pathetic.
Under the congress govt., the country has witnessed unprecedented growth rate in the past four years. Around 9% growth is fantastic. Income tax collection has seen record levels.
Agreed, infation is high (Because of global factors) but Congress has put more money in the pockets of virtually everybody. Income tax reduction has come as a boon for all the people in India.
Cong led coalition has revolutionised railways in the country. The railways has made record profits. Among other things, the cong led coalition has come out smelling of roses for its NREG scheme, which has given jobs to millions of poor in the countryside. The RTI also is a revolutionary achievement of UPA.
Cong definitely has the vision to look for alternative sources of energy other than oil. the cong led coalition is pushing for alternative sources of energy (like the nuclear energy). But the BJP with its churlish behaviour is playing spoilsport and not supporting the nations interest.
” A student from Cambridge, her edification alone speaks volumes of the integrity and sagacity that she bosoms ”
We all know what her qualifications are.
She enabled her bosom buddy from Italy to loot the Nation in the name of security for the nation.Bofors Scandal.
She enabled the scum who had made India HIS HOME to leave the country when the going got tough.
She finally allowed HIM to encash the Tainted proceeds from the London banks by sending her CHAMCHA’s and withdrawing the petition against the Stay granted in the court.
She got her Indian Passport done only after 25 years and that too when it was unavoidable.
Farmers all over the counntry are suffering and commiting suicides .The exchanges are doing well as the Farmer gets 25 % of the Sale price only , the rest pocketed by the brokers.India is shining inspite of the Rs 5 hike in the Petrol Price hike.The Finance Minsiter reduces the excise duty from 15 to 14 ie 6 % and allows some duty concessions which will be compensated by increased prices.But end consumers have nowhere to go.We still have to Pay Rs 58 for a litre of petrol.
The PM and this Italian Lady can give speeches and extol the citizens to SHUN extravagant expenditure and try to save the precious fuel.But when it comes to them and their cronies it does not apply.Even today you will see 20 cars in the convoy of the PM or the Congress President and her immature Son.
So please spare us from this lecture on her noble deeds and dedication to INDIA.
I liked your retort to Karihaida.
You have presented your case very clearly, logically and concisely. The positive points you speak about Sonia and Congress, is unfortunately not being communicated by Congress to the people.
The biggest problem of UPA is that it has undersold its achievements to the citizens of India. It needs to articulate itself better, probably hire a communications or election management expert to lucidly communicate its programs and policies to the country, in such a way that people understand it.
BJP is in a constantly attacking mode, Cong is in a constant defensive mood. For instance in Karnataka, an aggressive BJP took out a protest rally against fuel hike.
Congress could have taken a similarly aggressive posture, based on the following:
Like i have mentioned before, Karnataka pays the highest sales tax (28%) on petrol in India. Why doesn’t congress take out another protest rally with the message : ” Kannadigas are paying the highest rate for petrol because the state govt. taxes are the highest in India. While the centre has cut excise and customs duty, the BJP state govt is not willing to cut sales tax to ease burden on common man”
Soniamma never went to Cambridge to study!! It is just a face saving technique. Her name is not seen any where in any Cambridge alumini associations. ayamma madiro hana Microsoft Bill Gates kooda madilla.
Both Rahulappa and Priyamma also have “Idli” citizenship and travel on those pass ports. In India people and media value white skin and that family can keep fooling people forever.
Christians will support soniamma becoz she is also a staunch practioner of the same religion. They will also get a free hand to convert several people in rual areas and poor localities to Christianity.!!
If farmers problems are not addressed, things will go beyond control in India. It is very sad so many farmers committing suicides.
India’s economy is doing well not because of Italian lady.
It is because of several Indians who were instrumental in changing pseudo socilist economy into market economy. It was Late P.V. Narasimha Rao’s bold step that made the economy move farward not backward. Till then Congress leaders did not liberalise economy for the fear of loosing gaddi. T
JustaPoint, Juby Joseph,
Manmohan Singh bagge helidre ok an bahudagittu.. but Sonia ? Sonia? You got to be kidding me.. Her only qualification is she is WHITE.. period. She is worse than our sons of the soil JD(sons)..
It was reported in papers today that she was calling up CMs of kaangi states and ordering them to lower sales tax on fuels. Does she even know what the finances of the individual states are before doing such a thing.. who will pay for her stupid NREGS. Infact who is she to do such a thing ? She is leader of a political party thats all, she has no place in the gov’t. Its a shame that the country is ruled by such people.
Now coming to economic issues.. the populist measures of this gov’t look good only on paper but everyone knows that nothing will work.. The Employment guarantee scheme guarantees only one thing .. corruption.
The Farm loan waiver.. so what will happen next year? will we have this waiver every year? The need of the hour was agri reforms, providing better marketing facilities for the farmer, reliable power and irrigation facilities, eliminating middlemen, educating farmers about scientific cultivation.. And because of this loan waiver drama, banks have slowly stopped giving loans to farmers or will run out of money to lend and they are again being thrown into the crutches of money lenders.
I can go on and on about all the stupid populist measures of your beloved Sonia led kaangi gov’t, whose one and only goal is getting elected in the next election.
But the sad thing is BJP is proving to be no better (as you rightly point out), instead of being a party with a difference they are becoming another congress thats all. But there is hope, given how developed Gujarat has become under BJP rule. Maybe Narendra Modi is the answer to our country’s problems.. :)
“Christians will support soniamma becoz she is also a staunch practioner of the same religion” ??
Since when did this turn into a religious issue. Are we discussing the crude oil crisis, or tribal conversions? Do I need to be a Hindu to admire the non violent practices of the Mahatma, does it make me anti hindu when I condemn Modi for inducing communal hatred and instigating the fissiparous forces within the Gujarati community. Do i need to be a Christian missionary to laud the revolutionary practices of AK Anthony and his dextrous handling of the Defence portfolio. Am I being anti christian when I deride George Fernandez for trampling underfoot the ethics of politics in his contempt for the Kargil martyrs? It’s about discerning the right from the wrong, the light from the dark. I never claimed Sonia had single handedly uplifted the nation, but I voraciously remonstrate to anybody censuring her for issues engendered by entities essaying against national interests. She has played a pivotal role, in the integration of communities segregated by politics and religion, obliterating schizms and internal cross border tensions. Yes, several other eminent icons have partnered her in this gallant and intrepid venture, and kudos to them for their enterprise and fortitude. But please, PVN Rao, whose appellation is notoriously reminisced solely for the JMM bribery scandal, the St. Kitts forgery scam, the Lakhubhai Pathak swindling case and many more infamous faux pas’ , is not to be teamed up with the league of extraordinary politicians, who have moulded India from mud and stone. Let us bear in mind that the economic reforms under his government was spear headed by Manmohan Singh, then the finance minister. Be it the abolishing of the Controller of Capital Issues(1992), which decided the prices and number of shares that firms could issue, or the encouraging of FDI by increasing the maximum limit on share of foreign capital in joint ventures from 40 to 51 percent with 100 percent foreign equity permitted in priority sectors, Singh’s (an alumnus of Cambridge – undergraduate 1957 and Oxford -DPhil 1962) brilliiance was unquestionable. The economy has had no looking back since then.
well written article……this artical really says it…..and Mr Karihaida……narendra modi is an evil……so is BJP……u want riots political unrest and theocratic nation BJP’s the party…..they have the least educated pple……
Funny how people are grossly biased & opinionated, than focussing on the real issue.
Some random observations,
Juby Joseph : True fan of Sonia gandhi & congress, slightly measured comments … late attempt from him to bring discussion on track.
Karihaida : Welcome to the Cheddy Zone! As usual comments are in bad taste, Racist above, JDS hater. Sometimes talks some sense, but when they talk its often only to oppose congress.
Suri : Subject could be a cheddy supporter. Just stopped short of expressing his support to BJP above.
Dr Sree Reddy : Made some personal comments, denigrated & degenerative. Reddy I think has a fascination(always praises) of Narshimha rao, telugu & Reddys themselves(which I think is not wrong/bad, let a man have his fixation).
last but not the least,
Myself: Identified by cheddies as an anti-Cheddy guy who doesn’t wear anything(they are still trying to convince me to wear something). I may be a commie or support congress in absence of commies. Lastly, I dont hate cheddies but somehow their actions/comments make me impossible to stand up for them once!
ALL SET TO RECEIVE BRICKBATS FOR ABOVE :)
Poli, I deem your observations to be impeccably spot on. Few of my recent comments however have failed to make it to the blog (it seems to be awaiting moderation; those snippets would have made you re-consider the findings of your analysis – Anyway, you’re not very wrong). You’re also right about the fact that the discussions have deviated wildly. We’re discussing politics in lieu of economics. That fine line of segregation has been violated, and I believe that we are now standing in no man’s land. That dose of humour from yourself made for good reading. I think it has helped take the steam off the debate a little. I apreciate it. I’m also beholden to all the bloggers for airing their candid opinions. My humble apologies, if my remarks have offended anybody. Keep blogging people.
I’m a cheddi whose main interest is India’s economic development and don’t care about pseudo-secularist nonsense. Doesn’t bother me if you label me a racist as I’m just stating facts about congress party and the current economic situation of the country due to it (both good and bad). But hopefully the people who have defended the pseudo-socialist economic policies of the current gov’t are sincere in their beliefs unlike the congress party…
From today’s TOI: I rest my case..
New Delhi: Even before the June 5 fuel price shock had sunk in, the inflation rate touched 8.24% on Friday, heightening the government’s woes amid fears that populist expectations in a poll-packed year may hamper its efforts to rein in a further rise in cost of living.
While the government is hoping to ride out the inflationary impact of the oil price hike so that prices begin to stabilize within the three-month timeframe that Prime Minister Manmohan Singh has set for his government, doubts are being aired whether this is possible. Big commitments on programmes like Bharat Nirman, farm loan waiver and NREGA have put immense pressure on finances.
If this was not enough, the government is having to contend with strong pressure for a record hike in paddy MSP ahead of four crucial state polls. The revenue hit of Rs 22,000 crore that the Centre has taken by way of duty cuts on petroproducts means that the government is critically dependent on continued high growth to ensure revenues remain buoyant and its populist programmes are not choked.
This, even as RBI governor Y V Reddy hinted at “conventional and unconventional” measures — read higher interest rates — to check inflation. The growth-versus-inflation dilemma has just become sharper.
The current trends indicate the days of double-digit inflation may not be far away once the hike in fuel prices and higher spending on farm and social sectors as well as government’s salary bill begins to register on the index. The farm loan waiver, hiked from Rs 60,000 crore to Rs 71,680 crore, is to roll out by the end of this month itself.
More money looks set to flow out of government’s coffers. After hiking MSP for wheat to Rs 1,000 per quintal and claiming that the incentive has resulted in higher production and procurement, the government is faced with demands for a similar hike for paddy. It will find it difficult to ignore this politically sensitive demand in a election year and when it has claimed that it has outdone the NDA in profarmer initiatives.
NOTHING SEEMS TO WORK Inflation rises to 8.24% for week ended May 24. Will rise further when effects of fuel price increase register
Slight fall in fruit/vegetable prices, prices of imported edible oil shoot up by 6%
States continue to take steps to ease price sting, Haryana reduces prices of diesel by Re 1 and cooking gas by Rs 13 Don’t criticize if you cannot advise: FM
New Delhi: Finance minister P Chidambaram on Friday suggested that any criticism on government’s handling of inflation was not welcome if not accompanied by concrete advice to ease prices.
“I regret to point out that BJP’s resolution is an exercise in self-deception and is aimed at spreading disinformation,” he said, referring to the resolution adopted by the opposition party’s national executive that sought the UPA government’s resignation.
As inflation for the week ending May 24 rose to 8.24%, he admitted that: “We have not overcome all our problems… We admit inflation is a problem…” But added that the government was yet to hear “concrete suggestions” from the BJP-NDA to moderate the rate of price rise.
“We are willing to take more measures (to control inflation),” Chidambaram said, adding that “The UPA government is confident that it will, with the understanding and support of the people, overcome the current difficulties.”
Separately, RBI governor Y V Reddy has said that the central bank would take measures to control inflation, leading to speculation that there would be hike in banks’ mandatory cash reserve requirements or short-term inter-bank policy rates.
On June 4, the day the government decided to hike prices of petrol, diesel and cooking gas, the BJP had described the increase as “economic terror” unleashed on the people by the UPA.
Giving out inflation figures under the NDA regime, he said: “In 2000-01, in 48 out of 52 weeks the WPI was over 6%; in 22 of those weeks it was over 7%; and in 12 of those weeks, it was over 8%. These are facts that cannot be wished away”.
Countering the claims made by the BJP that it inherited a bankrupt economy and left behind a strong economy, Chidambaram said the NDA government did not have the vision or the compassion or the fiscal space or the financial resources to undertake schemes and programmes to directly benefit the poor and make growth inclusive.
“Why did the BJP/NDA not conceive NREGS? Why was the BJP/NDA parsimonious in increasing the MSP for paddy and wheat? Why did the BJP/NDA not bring succour to the farmers through a debt waiver and debt relief scheme”, he asked.
While the government claims some political mileage for paying more to farmers, officials warn that an increase of MSP for paddy from last year’s Rs 645 per quintal (for common varieties) is bound to impact retail prices. MSP sets the benchmark for retail rates which are at least Rs 2-4 higher. Also, unlike in the case of wheat and flour, conversion of paddy to rice is more inefficient.
All this means that the government’s fervent expectations that inflation would be tamed before the next round of assembly elections in Madhya Pradesh, Rajasthan, Chhattisgarh and Delhi might not be met.
Stuck in Bengal for 24 hours
Kolkata: It took a little over 36 hours for passengers of Ernakulam-Guwahati Express to reach Bengal from Ernakulam. But their passage through West Bengal itself lasted nearly 24 hours. These passengers bore the brunt of the bandhs on Thursday and Friday.
Railway officials spent hours running from station to station, pleading with Trinamool workers to make way for the incoming trains.
“Why can’t parties spare us this plight?” a passenger asked. The train to Guwahati left Ernakulum at 9 pm on Tuesday. It was stopped by CPM cadres when it entered Bengal on Thursday. The train finally left Howrah after 7 pm that day. When the train reached North Bengal, the Trinamool bandh had come into effect.
Controlling inflation is not the centre’s burden alone. State govts. too have enough power in their hands to drag down the inflation numbers.
If the centre has increased the support price for wheat, then the BJP govt. in Karnataka too has promised to increase the support price for milk by Rs. 2/-. Both these steps will surely raise inflation.
If the centre cut excise duty and customs duty on petrol, the BJP state govt, too can cut sales tax and entry tax(but they refuse to relent).
While Delhi can reduce VAT on gas cylinders, (LPG costs just Rs. 10 more compared to Rs. 50 more in Karnataka) why can’t Karnataka govt. do the same?
You say you don’t care about pseudo secularist nonsense. In that case why did Yeddiyurappa dole out Rs. 100 crore to the minority fund when he was deputy CM? Why did he not dole out to Kuruba fund or Vokkaliga fund? Why did he select only minorities? Surely, it was for minority vote.
My comments personal!!
Dont forget “Personal is Political”!!
I am sorry if I have given you the impression I am showering praises on Reddys. Hardly.
I am not. The contribution of Telugu speaking Reddys in Karantaka for state developement is not all that known.
I you guys have fixations of bashing Telugu speaking Reddys from karnataka, I think it is needed to enlighten you!
I am just taking oppurtunity(ies) to enlighten you!! :)
I have no facisnation for any particular community nor any person. I just wanted to give some facts which many of you guys do not know and dont even bother to know. I know many bloggers keep wititng without even checking up the facts.
my comments denigrated & degenerative!!
It depends on your political standing.
I think truth is bitter. !!
Your comments are a proof in itself that your political make up is mostly shaped by religion that you practice and your idol Sonia Gandhi. It is a well known fact that she implicated PVNR and accused him false charges.
Is she and her late husband Rajiv Gandhi are clear of BOFOR’S Charges?
The case is still kicking and alive. But Congress government Oh sorry (Congress with Communists alliance) have made all the efforts to forget it!.
Sonia’s inner coterie always consists(ed) of many Christians. Her good firends are always been Europeans in New Delhi. When the emergency was declared, she took her husband and children to Italian embassy to hide and was making preparations to flee the country.
She is a great Samaritan!!
Ak Anthony is a different person. He is honest and simple. Dont comapre him with that woman!!