Head
Pic - :; Inflation in the price of petrol WHY SHOULD NOT THE PETROL PRICE BE DROPPED
Why should NOT the PETROL price be dropped
It is or is it that the Government is chopping the heads and doing its business in a barbaric manner when it is not passing the the advantage of the fall in the price of the oils and the crude oils in the OPEC market. Or is is that the Government is very right-now- not to drop and lower the price of the petrol in the open Indian market.
Is that the Government should sell the petrol at a throw away price in the open market because the prises of the petrol has dropped in the international and the OPEC market. The OPEC has reduced the price of the petrol to its lowest minimum- then whey is that the Government not dropping and reducing the proice of the petrol in the open market
2016 to 2019 : Prices of Petrol everytime drops, the advantages are NOT passed to the consumer
The price of oil has fallen again. From 2016 to 2019 it did fell about four times in the international market yet the benefits were not passes on to the consumers. The benchmark Brent crude was below $53 per barrel when the price was cut down in 2016. And besides spooking stock markets around the world, it raises the question of whether oil companies will reduce petrol pump prices again or not.
With the Covid-19 hitting the world in such a ruthless manner and in such a crude way of putting the entire economy of the world into the DUMP, Last week, in the year 2016 and then once again between 2018 to 2019, the government did not allow the price drop to change retail prices, instead it raised the excise duty of petrol and diesel for the third time in two months to collect revenue. On eight other occasions, it has allowed retail prices to be lowered.
Fiscal Deficit-: Government getting serious to forbid a DEFICIT BUDGET taking place
It seems that the government is finally getting serious about the fiscal deficit. By raising the excise duty on petrol and diesel again, ostensibly for infrastructure, the Government hopes to collect Rs. 17, 000 crores rpt Rupees seventeen Thousand crores, through these moves. The government seems to have decided that no further cuts are needed at the moment, and it is more important to focus on the macroeconomic picture than making the middle class happy. However after ther lockdown was OFF and in between the the last year and the phase when the FOURTH LOCKDOWN was over the Union Government induced a increase a price in all the petroleum product .
Congress not in tune with the problems in the “macro-level” of economy
Of course, the Congress has criticised the government for not passing on the benefits to the consumer. Unfortunately, the Congress is taking an extremely myopic view of the economy, forgetting the problems at the macro level.
And the macro picture is not very rosy. None of the Government in the power were able to reduce the FISCAL DEFICIT except ONCE in the year between the period 2014 to 2015 when the Modi Government 1.0 was saddled in the chair and they could do it once, the government was reported to have reached 99% of the Fiscal Deficit for the FY 14-15, and we still have three months of the year to run. This means that either government controls spending or gets more revenue or a bit of both. It may also be the reason that RBI Governor Raghuram Rajan then had and has been hesitant to cut interest rates since high fiscal deficits fuel inflation. There were many economist then and as one analyst pointed out, the money being raised by the excise increases cannot be for building roads - the Transport Ministry has not been able spend its allocations in the last two years, so it clearly doesn't need more money in the area of transportation and road building.
EXCISE DUTY ENHANCEMENT- FACTORS AFFECTING THE SAME-:THE “ PLAUSIBLE ” REASON
In fact, it would be a very good thing if the government raised the excise duty further, even if it meant raising the price of fuel. There could be many an eyebrows raised on the same but I hereby put my reasons one after one to explain my view of the same.If the Union Government adheres to the same it can immensely benefit and the benefits could be passed onto the health sector and the defense sector in the days to come as these two sectors BADLY neds to be REINFORCED and STRUCTURED to the BEST-OF-THE-STRENGTH to keep the nation absolutely on it’s feet. I hereby put the reasons and there are a number of reasons for doing so.
Firstly, our petrol prices are lower than China, Nepal, Sri Lanka and EU countries, all of whom are major oil-importing countries like us. So why are we encouraging wasteful consumption? So that people can buy gas-guzzling SUVs rather than economical small cars? It does not make sense. The price of petrol (more about diesel later) should be driven not just by the worldwide price, but also by the need to encourage people to use it economically. Which means keeping the prices up. Since keeping prices up also allows the government to collect greater tax revenue from petrol and diesel, it helps keep the deficit under control.
Pic :: Fuel Prices at India
Given that there have been articles suggesting that the
Government's development plans are going to lead to a breach of the fiscal
management plan (where the deficit has to be reduced year on year until it
reaches 3% by 2016-17), and it remains between the analytical gap between 2% to
3% between 2020 to 2021, perhaps raising
the excise would be a better way to fund the plans than increasing the deficit.
From the bar-chart above the prices of petrol and the diesel on
an average stood the highest during September when the average price of the
petrol was marked a bit above Rs 74=00/litre and ther lowest at Rs 72=00/litre
and that amount of the price lowered did bing about many a deficit of less
revenue for the Government . This kind of a reduction in price definitely gives
NO-HAPPINESS to the PEOPLE of the country but IT KILLS the REVENUE of the GOVERNMENT.
The LOSS accrued in terms of the
collection of the taxes at last leads to a deficit budgeting which becomes a nightmare for the nation to
control and equalize.
Pic :: The Petrol and the Diesel PriceIn the rein of the Modi Government 1.0 and now at the point when it rules now the price of the petrol has been about Rs 75=00 per litre which is below the average price of Rs 79=00 per litre when the Manmohan Singh Government was ruling the nation
Similiary when the Vajapayee Government was there at the ruling seat the prices of the diesel was around 42.06 per litre and the price difference between the diesel and the petrol was around 21.02 per litre. When the Manmohan Singh Government took it over the diesel was priced around Rs 43.95=00 per litre and now when the Modi Government 2.0 is at the saddle it is around 58.37 per litre and the price differential between the diesel and the petrol is around has been around 16.41 perlitre
Mr Manmohan Singh was the GREATEST ECONOMIST and he did a WONDERFUL JOB- WHO SAYS THAT ???
During the period of August 2104 when the Modi Government was places the difference between the two commodities was at the lowest which the Government had to give it as a subsidy and that was the LOWEST ever in the annals of India. THAT AMOUNT OF THE DIFFERENTIAL OUGHT TO BE MADE UP BY THE GOVERNMENT AT ANY COST . That is ONE of the major reason for HIKE in the prices of petrol and diesel and the GOVERNMENT is at NO-FAULT to do that .
From the chart above we find the CONCLUSION that as it was PROCLAIMED that Mr Manmohan Singh was the GREATEST ever ECONOMIST that rules as the “ PM ” of this country the REAL graphs say and rules it otherwise .Infact the Vajapayee Government and the Modi Government in the case of ECONOMY has been proved FAR-BETTRER-THAN-THE-MANMOHAN SINGH and his Government.
WE USELESSLY HAVE THE TV MEDIA AND THE CHANNELS HOWLING ON THIS FOR NO CAUSE. That way too the MEDIA is RULED by the “ SOLD-ASS ” to make the public an “ASS ”
Reason for price enhancement by the Government, Environment and pollution to be checked -:
There are other serious reasons for the government to keep petrol prices up. The environment is one of them. And while this government has been accused of loosening environmental norms for infrastructure needs, it could use extra funds to finance urban public transport and cleaner diesel (Euro V), both of which would help reduce pollution levels in our cities. To move to Euro V, oil companies will have to spend a great deal to upgrade their refineries and a cess on Diesel would help pay for that. One could argue that this is a subsidy to the oil companies, but if you don't fund them, then they will have to raise the prices of petrol and diesel anyway to pay for modernizing their facilities.
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Pic :: Major Non LPG Fuels used for cooking
Major Non LPG Fuels Used For Cooking
Public transport in our cities is desperately needed. Delhi is
heading towards almost 400 kilometres of metro by next year, but it is facing
financing problems for the metrobus, and more importantly, it's struggling to
keep metro prices reasonable. Already a long distance ride on Delhi Metro costs
Rs. 21 ( with a peak price of Rs. 29) which means anyone travelling five times
a week from home to work and back would spend over Rs. 1,000 per month on
tickets. For the same Rs. 1,000 the consumer can today buy 16
litres of petrol which would run his motorcycle 800-1000
kilometres. So why would the commuter take the metro? Only because s/he cannot
afford the capital cost of a motorcycle. All this sounds counter-intuitive. We
need, if anything, to subsidise urban public transport, build
more metros and have more buses. Cars and motorcycles must be kept
at home and used for going out to dinner or shopping, not for going to work. Now let us glance at the picture above. We find that even in this MODERN ERA that exists at India, 93% of the public uses the FIREWOOD SIXTY PERCENT of the resident use the COW DUNG and 33% of the resident use the CROP-RESIDUE for their existence when it leads to cooking.The CHOPPING of the FIREWOOD ultimately over the years from 1947 and even before that uptil now has been the reason as to WHY THE FOREST HAVE GONE AWAY.They DID THAT AWAY for their cooking for them to live.That apart in the modern India the flats and thr housing schemes have done away with every small-mini- and the huge forest that existed.
This NINETY PERCENT of the living being added to the ones who still depend on the Cowdungs and the crops residues are the ONES who do not pay any taxes to the Government. How can the Governmet afford to spend it on the very important and necessary ectors to build a strong nation. The defivit of the taxes theby forces the Government to imply the taxes and a HIGH RATE IMPLICATION on the petrol and petroleum products.
Pic:: Inflation in the petrol price at Delhi Finally, the other reason to keep petrol and diesel prices high is that this low-price regime is not going to last forever. Without too much discussion on the reasons for the current glut of oil and its low prices, it is suffice to say that low economic growth in China, India and the EU, along with a deliberate OPEC policy to discourage further US investment in oil fracking, is not going to last forever. And when prices rise, will the government allow the oil companies to raise the prices at the petrol pumps or will they like the UPA Government fear a public backlash? Given the fact that we nowdid seem to have elections somewhere or the other every six to 12 months, between the period of 2006 to 2012 when we saw a numerous state government fallin and the elections being held at every nook of the time, it is likely that the government will stall price increases. So it is better to take advantage of the current situation of low prices and keep prices reasonably high and collect as much revenue as possible.
Organisational Restructing-:
This also plays an very important role. Over the years right from 1955-56 to about 2015-16, the Government has purchased the petrol price at a very high rate and has sold it in subsidies to almost every sector, individually or institutionally. The loss incurred was borne by the Government which runs into some Trillions of Rupee from then to now for the government to bear .
Secondly, the Government organization which deals in Petrol was given its full salary and other expenditures from and by the government.These Offices runs in losses particularly because the losses of course was always borne by the Government. Running an organization in deficit and then maintaining it for so many a years is not a childplay. These losses ought to be recovered . The Government now has decided to make its losses.
Third- the depots and the filling stations where these petrol pumps are filled for its onward transportation has also a lot of expenditure for the Government to bear the same . The establishment cost, the administrative expense, the cost os transportation and shipment of the oil from one station to the other, the loss of the spillage, the insurance cost which covers the insurance for the losses that may accrue, the terminal and the port handling cost- all these have made the losses for the Government and the expenses for the Government to bear.
Pic :; E- Commerce The Chart finally depicting the various elements that adds upto the final cost A lot of overhead expenditures are added to the same when the petrol from the refineries moves up to go to the ultimate retailer who sells that and fom there to the final consumers who consumes that.
If all the elements are added it works out to be a very high percentage of the overheads which I have clubbed it into the E- Commerce category and this at the final analysis makes the final consumer or the customer as we call it to pay from his pocket to consume the petrol.
People blame the Union Government for this as well where as the union Government has nothing to do with the E- Commerce prices which the consumers has to pay from his pocket .This also is a very important factor which adds up to the final and the Maximum Retail Price of the petrol and the diesel aand the Union Government has NOT to be blamed as such for the same. Yhis is an mandatory gamuit that goes in with the sale of petrol and one cannot do away with it as well.This one has to take into the consideration.
Pic :: Health Care Just see and compare the health care chart where South Korea leads the WORLD
The figure is collected from the World Bank and it’s journal. In South Korea the ratio between HOSPITAL BEDS to the PHYSICIANS is in the ratio of 12:2 which means that there are and there is ONE physican per SIX beds to take care of the patient but in India it is less than 1 to a little over “ ONE ” in terms of the physician to take care of the patients. It means in India the hospital beds just DOES NOT EXISTS and NIETHER there are PHYSICIANS to take care of the patients in that number which is REQUIRED to be there for the emergencies and casualities. In other words the HEALTH CARE system of India is in PERIL with NOTHING at stake for the one’s who suffers from the disease to expect them to be cured by the physicians at India.
It is SO INTRIGUING to see Pakistan ahead of us in that matter THOUGH we LAUGH at Pakistan in and for ALL THE MATTER. We should STOP laughing and start preparing ourself in the appropriate earnest
IT IS HIGH TIME THE COUNTRY AND THE UNION GOVERNMENT TAKE A SERIOUS NOTE OF THE SAME.
“ They ought to raise the money NOW once for all to build a strong infrastructure of health care to take care of the 135 crores of the people of this country” . This is ONE of the reason that the people ought to understand why the Oil prices ought to be high and also for the Government to see STRICTLY that the tax collected ought to be spent in the appropriate area and not in the arena of 1G, 2G, 3G, 4G, 5G, CWG, Jija G and Mata G with the Beta G howling for NO causeafter commiting " PURPOSELY" all the " HEINOUS " crime.
Assuming that oil prices remain low, the next fiscal would allow the government to collect a hefty amount of cash for fixing the deficit, funding urban and road transport. One caveat - the government should earmark a substantial amount directly to these areas rather than letting it all go into the Consolidated Fund of India where the usage is unknown.
Social Distribution-:
The THEORY of PUBLIC ADMIISTRATION says that the distribution socially of the Government should be in the ratio of 3:2 . That means the Government should screw the public for THREE years and pass on the benefit top the public for TWO years.
Pic :: The pattern of domestic fuel Here the chart as revealed shows that the pattern of domestic fuels even after all these cooking gas and the free electricity provided by the Government, throws in a DIFFERENCE of about a DIFFERENCE in the categories that uses FUELS and the NON-COMMERCIAL items and the differential gap is about 7% and THIS IS A HUGE DIFFEENCE which states that the NON-TAXABLE NON-COMMERCIAL items throws about 9.45% say about 10% population both in the rural and the urban area from which the Government is NOT in a position to collect any taxes yet allow them to enjoy the facility of fuels to survive.
The forest and the places where the woods are available are the one’s which are cut and chooped off by these living beings to prepare their food etc, and which again hits the Government and pokes into their budgeting system. This the Government obviously makes to raise the price
This deficit run into some millions of rupee per year to the Government to bear and obviously to make them to live and for the Government for themelves to exist the Government is LEFT with NO-CHOICE except to raise the prices of the petrol and the fuels.
Proposed rate of Petrol -:
When the price is so low at the OPEC and the international market- the Government should price the same at a much lower price , the price been decided by them and their department after a national costing, to fix it as per litre with effect from June 2023 so that the public use their vehicle to the extent they wish to. Till then the Government is at the right track for pricing it high and recovering the profit to cut off the deficit of the losses that it has incurred from this sector .
The reason for the people of India to pay such a huge price for
the crude oils the petrol and the petroleum product is that thee are explored
by the countries abroad and sold in India.In other words the nation IMPORTS
these from the country which are based at abroad.
India has to explore the potential of finding out the basins
from where the crude oils could be explored and there are places like the basin
of Andhra, the basin of Bay Of Bengal, the Basin of the Brahmaputra the coastel area of Karnataka and kerala and
the area that is attached to the Tripura-Bangaldesh border in the state of
Tripura and if possible Assam.If we can cut the IMPORT of the crude oil to an large extent and produce the same here in India to sell those in the Indian market, and if we could sell it at a lower price as this would be extracted and refined at india and pass on the benefit of the same to the petrol sector where the costings are high as explained by me through the charts, and can neutralize the HIGH-END-PRICE of ONE with the LOW-END-PRICE of the other ie the crude oils that could be extracted here then definitely there would be a stability of the price that could be envisaged and worked out
HOWEVER THE PRICES AND THE TAX COLLECTED FROM THE OILS AND PETROL AS WELL AS THE PETROLEUM PRODUCT WILL ONLT STRENGTHEN AND FORTIFY THE DEFENSE, THE EDUCATION, THE HEALTH AND THE INTERNAL SECTOR and for that this nation will have to pay the same through their nose
HOWEVER- THE GOVERNMENT TOO WILL HAVE TO DRAW A LINE ABOUT WHEN TO CALL IT A “FINAL” PRICING
Pic : Indian Crude Oil produced by region and the places of NEW exploration
Rgds
Shyamal Bhattacharjee
Mr Shyamal Bhattacharjee, the author was born at West Chirimiri Colliery at District Surguja, Chattisgarh on July 6th 1959 He received his early education at Carmel Convent School Bishrampur and later at Christ Church Boys' Higher Secondary School at Jabalpur. He later joined Hislop College at Nagpur and completed his graduation in Science and he also added a degree in B A thereafter. He joined the HITAVADA, a leading dailies of Central India at Nagpur as a Sub-Editor ( Sports ) but gave up to complete his MBA in 1984 He thereafter added a Diploma In Export Management. He has authored THREE books namely Notable Quotes and Noble Thought published by Pustak Mahal in 2001 Indian Cricket : Faces That Changed It published by Manas Publications in 2009 and Essential Of Office Management published by NBCA, Kolkatta in 2012. He has a experience of about 35 years in Marketing .
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