SUV owners should pay full market price of diesel: Ramesh

Discussion in 'Politics & Society' started by pmaitra, Jan 16, 2011.

  1. pmaitra

    pmaitra Moderator Moderator

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    SUV owners should pay full market price of diesel: Ramesh

    PTI, Nov 30, 2010; Times of India

    NEW DELHI: Training his guns again on sports utility vehicles (SUVs), environment minister Jairam Ramesh today asked the users of these fuel-guzzling cars to pay full market price for diesel which is subsidised for the benefit of farmers.

    Ramesh, however, made it clear that his "deliberate" criticism of the SUVs need not be seen as him being against the automobile sector.

    He had recently called SUVs as "criminals" and "Socially Useless Vehicles" for being bad emitters, fuelling a controversy in the auto sector. Germany, which is home to auto major BMW, had also taken strong exception to the remarks.

    "Why should they get subsidised fuel meant for farmers," Ramesh asked while speaking at a conference on 5th Sustainability Summit organised by CII.

    "We introduce the (diesel) subsidy for a certain economic purposes but have ended up with a wholly different purpose...," he said while favouring incentives to the firms aiming at sustainable development.

    Ramesh made it clear that he is not trying to hurt the growth of the auto industry in the country.

    "I am not knocking the growth of the automotive industry but those who want to use diesel cars must pay the full market price for the fuel. Why should they get subsidised fuel meant for farmers?" he said.

    Ramesh said there was a need for creating an incentive structure from a fiscal point of view particularly which rewards and added that stimulating sustainable development at the producer-end is absolutely important.

    The Minister also called for an incentive structure which has to be skewed in favour of sustainable development choice as far as consumers are ready to embrace such mechanism.

    "We need to move to a system which looks at rewarding or incentivise those companies that actually promote the objective of sustainable development, that promote energy conservation, water conservation and protection and preservation of natural resources," Ramesh said.

    Read more: SUV owners should pay full market price of diesel: Ramesh - The Times of India http://timesofindia.indiatimes.com/...-Ramesh/articleshow/7015405.cms#ixzz1B9roPRlR
     
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  3. The Messiah

    The Messiah Bow Before Me! Elite Member

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    I agree.

    Some of these people think they are the cats whiskers and own whole road.
     
  4. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Don't farmers get a subsidy card or something?
     
  5. pmaitra

    pmaitra Moderator Moderator

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  6. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    If they are worried about people using subsidies that don't deserve it, then they need to issue something that prevents it. Just because government says you shouldn't do something is not going to stop it.
     
  7. pmaitra

    pmaitra Moderator Moderator

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    UPDATE 3-India to lift diesel subsidies despite protests

    UPDATE 3-India to lift diesel subsidies despite protests

    Tue Jun 29, 2010; Reuters

    • PM's statement shows govt is serious about reform
    • Private firms to gain diesel prices are freed
    • Main opposition party calls nation-wide strike on July 5 (Adds details, political party's comment, updates share price)

    By Himangshu Watts

    NEW DELHI, June 29 (Reuters) - India will allow market pricing of diesel, Prime Minister Manmohan Singh said on Tuesday, signalling his resolve to push bold reforms despite strong protests from political allies and opposition parties.

    Last week, India allowed market prices for petrol and said diesel may also be freed in the future, to bolster the government's finances and open up a key sector long dominated by state-run institutions. [ID:nSGE65O0AS]

    Singh's comments showed his commitment to a policy that has made his own political allies uncomfortable as it would hurt farmers, raise transport costs and further stoke inflation already in double-digit, putting pressure on the central bank to quicken the pace of monetary tightening. [ID:nSGE65S0DC]

    "With regard to petroleum prices, the fact (is) that petrol prices have been set free; the same is going to be done to the diesel prices...," a government statement quoted Singh as saying.

    Market pricing led to a 7.3 percent rise in petrol prices, while state-set diesel rates, which were increased by 5 percent last week, may rise by a similar amount under market forces.

    The hike is expected to generate a political storm in a country where high prices have led to the ouster of previous governments.

    But Singh and his ruling Congress Party appear unlikely to suffer the same fate at the hands of an opposition that is too divided by internal squabbling to form a cohesive challenge.

    The government has also taken advantage of a lull before major state elections to make its move, seen as a bold attempt to tackle India's fiscal deficit.

    India's main opposition Hindu-nationalist Bharatiya Janata Party has called a nation-wide strike on July 5.

    "Whatever the government is doing about fuel price is only going to worsen the food price situation. The government does not bother about the poor and this can not be allowed to happen," the party's spokesman, Parkash Javdekar, said.

    Friday's price increases would shrink revenue losses of state-run oil firms by about $4.6 billion in fiscal 2010/11 to $11.4 billion, according to the latest oil ministry projections.

    Source: http://in.reuters.com/article/idINSGE65S09W20100629
     
  8. pmaitra

    pmaitra Moderator Moderator

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    Govt to overhaul oil subsidy mechanism

    Govt to overhaul oil subsidy mechanism

    New Delhi, December 30, 2010; Hindustan Times

    While it is certain that diesel and cooking gas (LPG) prices are set to rise further, the timing and quantum of this hike will depend on the government’s new subsidy-sharing mechanism. The Centre is currently giving finishing touches to the policy to compensate the under-recoveries incurred by state-owned oil marketing companies (OMCs) for selling cooking and auto fuels below the cost price, a senior petroleum ministry official said.

    OMCs including Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp currently lose over R225 crore per day for selling diesel, domestic LPG and kerosene below their imported cost, with global crude oil prices hitting $92 a barrel.

    A decision to increase diesel and cooking gas prices would only fuel inflationary pressures and hit consumers already bearing the brunt of high food inflation, the official said. Diesel has a weight of 4.67% in inflation, while LPG contributes 0.91%.

    Following its consultations with the finance ministry, the petroleum ministry has assured that revenue losses or under-recoveries of oil firms — estimated to touch R68,361 crore this fiscal year— will be “fully compensated.” The revenue loss of OMCs “would be adequately and fully addressed,” oil secretary S Sundareshan said.

    Upstream firms Oil and Natural Gas Corp (ONGC), Oil India and GAIL India will shoulder 33% of OMCs’ subsidy burden, while the ministry is pitching for half of the revenue loss to be provisioned for in the Budget.

    A EGoM meet to consider a R2 per litre hike on diesel and R20-20 per LPG cylinder on December 30 was postponed at the last moment.

    Source: http://www.hindustantimes.com/Govt-to-overhaul-oil-subsidy-mechanism/Article1-644697.aspx
     
  9. pmaitra

    pmaitra Moderator Moderator

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    Quite true. The government can make an estimate about how much diesel a diesel vehicle is going to use in its lifetime. This can be based on the following:
    • Engine displacement (in cc or litres).
    • Number of occupants.
    • Percentage distribution of each class of vehicle between private and commercial users.
    Thereafter, the government can impose a one time cess at the time of sale of such cars. There could be other ways too.

    I would like to highlight one law in Japan that taxes larger engines. Many other countries have this law as well.

     
    Last edited: Jan 16, 2011
  10. anoop_mig25

    anoop_mig25 Senior Member Senior Member

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    yeh they so do it and it should start from pm/sonia gandhi/rahul gandhi/ reason all this people use SUV (of courseprovided by government) for their transportation need
     
  11. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Well, this sounds reasonable. Why not? But the devil lies in the details, and I can't begin to imagine how they are going to implement this!
     
  12. neo29

    neo29 Senior Member Senior Member

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    The highest pollution in the country is made by badly maintained state transport buses and diesel run locomotive engines. Why is Ramesh not targeting them??

    Matter of fact the municipality of most cities burn of dry garbage. Why cant he look into it???

    Perhaps SUV manufacturers have not paid him the bribe properly. Seems to be a vendetta like George Fernandes took against Coca Cola.
     
    Singh likes this.
  13. anoop_mig25

    anoop_mig25 Senior Member Senior Member

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    Ramesh is an brilliant men he transformed a non-atm ministry into cash+popular transformation ministry
     
  14. pmaitra

    pmaitra Moderator Moderator

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    Yes, will have to agree with that. It is nice that there is no haphazard industrialisation but care is taken for environmental concerns like in most developed countries. I think we are seeing a transformation of India from a developing to a developed country. Of course there will be friction with industrialists and there will be criticism from the corporate media, but eventually, we will see a proper implementation of checks and balances between industrialisation, mechanisation, urbanisation on one side and environment on the other.
     
  15. Yusuf

    Yusuf GUARDIAN Administrator

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    There is no way that diesel prices can be differentiated at the pump. it will lead to unscrupulous practice by the dealers.
     
  16. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    I'm sorry, but this is extremely stupid. The Indian middle class loves to spew rhetoric against "corrupt politicians" at every opportunity, but what you have said is the realm of fantasy.

    What do you mean "SUV manufacturers"? All "SUV manufacturers" in India also manufacture petrol cars like Sedans and Hatchbacks. Never heard of exclusive "SUV manufacturers". And his point is perfectly valid. The reason for petrol price deregulation was that the elite who own private cars should not be subsidized by the government, and that is a very valid concern. This is how the free market works, deal with it. If petrol is expensive, people will switch to LPG/CNG, as more manufacturers will begin to release CNG cars from the factory itself, and the petrol consumption will stabilize.

    But now, what is the point if car owners use the loophole of diesel cars to get around the increased price of petrol? It is very very necessary to come up with a mechanism to make SUV owners pay the full price of Diesel, otherwise the very purpose of deregulation is defeated. I can't think of a good way to implement this, but we really need to start thinking of this asap.

    P.S. Let me clarify that I am a car freak, and I have been driving more than 60 km daily for almost 4 years. I have a petrol car today, but I will buy an SUV soon, probably Tata Safari. But I support the endeavor to deregulate petrol, and to charge SUV owners the complete deregulated price.
     
    Last edited: Jan 25, 2011
  17. pmaitra

    pmaitra Moderator Moderator

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    Well said. Most companies that manufacture cars manufacture petrol and diesel vehicles. Perhaps, only Mahindra is one company that does not make petrol automobiles for the Indian market (I could be wrong).

    Now, it is necessary to subsidise diesel for commercial vehicles like trucks, buses, taxis and auto-rickshaws, otherwise, there will be gross inflation due to rise in food prices and public transportation costs. However, private car owners must pay the full price of diesel. Again, if a car is used for commerical purposes like rental, then they should also use diesel at full price, because rental cars are used mainly for tourist purposes and for corporate bigwigs. Taxis should be kept exempt because many serve as share taxis and act as a mode of public transport than a hired car.

    There are enough accusations of corruption against LPG dealers. LPG is subsidised by the government so that cooking gas is affordable. This subsidy is meant for domestic consumers and not commercial establishments. There are dealers, who, in order to make profits, would delay supplies to their customers and divert some LPG cylinders to the taxi and auto-rickshaw operators and restaurants.

    Somebody needs to look into this and co-ordinate well with the Petroleum Ministry.
     
    Last edited: Jan 16, 2011
  18. Welcome

    Welcome Regular Member

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    DUAL pricing is very good option for poor country like india. But it is very difficult or impossible to implement in big country like india. Our respected jairam naresh can tell us how to implement it in india. i think he has no answer. he only know how to speech very well.
     
  19. pmaitra

    pmaitra Moderator Moderator

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    What Jairam Ramesh is doing is creating a public opinion in India. We Indians will have to come up with recommendations. What do you think of my suggestion (post #8)?

    We all should come up with suggestions. When there is a problem, there has to be a solution and we want to be a part of the solution, not the problem.
     
  20. S.A.T.A

    S.A.T.A Senior Member Senior Member

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    Variable pricing for diesel vehicles will be a perfect recipe for epic corruption,dealers will be motivated to charge the full price and will stoop to any malpractice in order to achieve that.Govt will be forced to mount a massive operation to keep tab on deviant dealers and furthermore this issues will become an source of constant and daily friction between diesel car owners and dealers on one hand,the dealers and govt on the other.Either all diesel vehicles must charged full price or mechanism must be evolved where diesel guzzling car makers must compensate for the subsidies,monetary burden which they then will obviously transfer to their customers.
     
    Last edited: Jan 16, 2011
  21. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Your suggestion in post #8 seems to be the most viable solution. Such a solution will also force manufacturers to focus on development of alternative fueled cars such as LPG/CNG driven ones, hybrid cars, and so on. In the interim, those who are willing to shell out the higher amount for Diesel cars to take advantage of subsidized rates are free to do so, based on their own individual cost-benefit analysis. At the moment, your solution seems to be the only viable one.

    To the other posters who have pointed out that variable pricing is not easy to implement: yes, I agree, and that is why we need to look at solutions to make the basic idea work (i.e., ensuring that SUV owners don't leech subsidy benefits). Maintaining status quo is not a solution.
     

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