With TMC exit, Chidambaram to increase AC rail fares by 3%

[Bangalorean]

Abolishing of all taxes?

You live in utopia?

Relevant taxes and not sneaky ones and be upfront. If it affect, then just too bad, but one knows how the money is being spent.

South Indians roads are good.I have travelled on them extensively. But India is not South India.

Air travel cheap? Don't compare world rates, Go by PPP.

Improve the railways for sure. Raise the price of ticket, No hassles. But remember the majority of Indians travel by rail. Check it in economic and social terms when raising the price. I am sure you do not understand social costs and the economics of the not so privileged who use the rail as their means of conveyance for trade and business also.

I think you are too divorced from the reality called India, since air travel is cheap to you and used by the 'middle class'!

I wish that were true!

In India, the "middle class" is vast - it encompasses people earning 7000 a month, to those earning 2 lakh a month. When we speak of "middle class" India, we refer to people from anywhere within this vast limit. You are part of the middle class, so am I and so is Jackprince and most of the DFI members.

Everyone in this middle class pays taxes in one way or the other, in several different forms. As a matter of coincidence, I booked my next ticket just now, and happened to notice this, since we've been discussing about taxes and tariffs:

Look at that massive tax. Almost as much as the fare. If the taxes were removed, I could travel first class, for the same amount. Yet, as you said we do not live in utopia. The government needs to collect taxes and stuff, it is something we cannot avoid!!

Taxes are a certainty of life, and a necessity. All we can press for, is more transparency in the spending mechanism - making things more visible online, IT-enablement and computerization of government functions, etc.

 

[jackprince]

You and I (and others on this site like Yusuf and TR) belong to completely different schools of thought. When I saw your post in this thread, I understood immediately that this is the age-old argument between liberalization and the old pseudo-socialist school of thought.

Yes I AM SOCIALIST, nothing pseudo about that. You speak like socialism is a disease!

Think for a moment, about how defeatist your argument is. You don't want to improve the railways, you want foreigners to "stay away".

It is not defeatist, it was pragmatic. I said unless the authorities strictly imposes rules that are already in place to prevent littering, it is simply impossible for the majority of Indians who do not have even 10% same civic sense as the most foreigners (i guess you meant the UK, USA, Europe one?) to even learn to keep platform clean, let alone the trains. Heck, as a frequent traveller, I would be more happier if the cleanliness can be achieved in Indian railways.

You people said the same thing about roads initially. A growing Malayasian company offered to build roads at bargain rates to connect Indian cities, Rajiv Gandhi said that "we are a poor country, this is not for us". Arundhati Roy said that "India needs food, not mobiles".

WelI don't know what SHRI SHRI Rajiv Gandhi said. But as far I have read he wasn't a very bright fellow, imho; just like rest of the congi brood - excepting Smt Indira Gandhi. And kindly keep Ms. Roy out of any civilized conversation. However, I kind of like what she said (everybody makes a mistake) if it is in the context of providing free mobile to BPL people.

Today, we have an excellent telecommunication network, as good as any in the world. We have excellent roads in many parts of the country, and several great toll expressways.

Who impeded coming of mobile age? I had not been not very interested in any issue expect my gal in those days, but i might have heard something if any of the socialist parties protested the mobile phones. And I guess, ours are way better network than others, as I heard that in UK, USA one still has to pay for incoming calls?!!!! I am also all for Toll Expressways, as long the rate of toll is not prohibiting for common people.

I did not mention FDI in railways at all, but breaking it up and privatizing several aspects of it for a start, would be good. FDI can be invited for high speed tracks for certain sectors like Bangalore-Chennai, Pune-Mumbai-Ahmedabad, etc.

That is how FDI is always invited. In bengali there's a saying " Sunch hoye Dhuke Faal hoye berono", means it enters like a needle and come out as a spade. I dont say FDI is all bad, but it should not be brought into Indian railways. I know people argues, the in Dalhi you pay 20 rupees and get a better service, where in Kolkata it is 5 rupees but service is bad too. But, the all classes of people that uses metro in Kolkata does have a particular class of people absent in Delhi metro who cant pay that high a fare. I am all for raise in Metro fare in Kolkata, but will not support to bring it so high that people at lower rung can't afford it. The importance of Indian railways can only be understood when one meets it personally, daily; not when someone takes a ride once in a while.

 

[jackprince]

In India, the "middle class" is vast - it encompasses people earning 7000 a month, to those earning 2 lakh a month. When we speak of "middle class" India, we refer to people from anywhere within this vast limit. You are part of the middle class, so am I and so is Jackprince and most of the DFI members.

Rs. 2 lac a month is NOT middleclass, however much they wish for it. There is a term "Upper-middle class" formed just for them; and they never can realise the plight of the actual middle class.

Everyone in this middle class pays taxes in one way or the other, in several different forms.

Not only middleclass, but the BPL people too. The indirect taxes used to be primary source of revenue even 5-6 yrs back.

As a matter of coincidence, I booked my next ticket just now, and happened to notice this, since we've been discussing about taxes and tariffs:

Look at that massive tax. Almost as much as the fare. If the taxes were removed, I could travel first class, for the same amount. Yet, as you said we do not live in utopia. The government needs to collect taxes and stuff, it is something we cannot avoid!!

Well if you want to compare the taxes of flights, an International flight, with railway fares, what else there is to say?! If you are trying to bring the people who regularly fly on work or not, to USA/UK with people who travel to another part of the nation by train, and CANNOT afford the flight fare, in the same bracket, what can anybody say?!!

Taxes are a certainty of life, and a necessity. All we can press for, is more transparency in the spending mechanism - making things more visible online, IT-enablement and computerization of government functions, etc.

Death and Taxes?!! Well, left to its own the greedy politicians would take every last penny from us, every last breath - haven't you watched "In time".
The govt. will always wish for more revenue, as we know from our personal life no amount money is enough. Therefore, there should be a system and protest so that it doesn't impose taxes whenever it feels like it.

@Defcon1, can you tell me what does economic study says when a govt. imposes more tax to fight inflation and deficit??

 

[Bangalorean]

^^ Yes, socialism is a disease. It is worse than a disease - it is something that has eaten into the vitals of this nation over the decades, and made our country a substandard and underdeveloped nation.

The Gandhi family and its socialist retardation brought this country to the brink of economic disaster. Disaster was averted, and our country began progressing, only after India shed its crappy socialist policies in 1991. You are asking who impeded the coming of mobile age - rest assured, there would have been no mobile age if the socialist policies had been continued.

The problem today is the residual socialist policies left over from that era, which are still causing untold damage to the country. If we had liberalized the economy in 1975 instead of 1991, we would have been a $4.5 trillion economy today, compared to China's $6 trillion. Our per capita income would have been three times as much as it is today. Poverty would have been 33% of what it is.

From your description (that you were worried only about your girl during the mobile revolution), I conclude that you must be in your late 20s now. It is sad that even some young (relatively) people in India still hold on the the socialist illusion.

Socialism is the best way to uniformly distribute poverty, and to make sure our country falls back into the gutter from where it rose up. We will be known as the nation of cows, beggars, hindooo caste system, and "Ghandi" for eternity, and we will continue to wallow in our socialist poverty. The only way to make it big will be to run away abroad, and kids in Indian homes will wait with open arms every year for their uncles and aunties to come from USA, Singapore, etc. and throw a few "foreign chocolates" like Toblerone their way. And parents will hope against hope that their kids will go to some "faarin" land and settle down there, leaving India behind.

This was the past, and if one goes by your prescription, this will be the future.

 

[Bangalorean]

Well if you want to compare the taxes of flights, an International flight, with railway fares, what else there is to say?! If you are trying to bring the people who regularly fly on work or not, to USA/UK with people who travel to another part of the nation by train, and CANNOT afford the flight fare, in the same bracket, what can anybody say?!!

I am not "comparing" the two. I am just making the point that everyone in the middle class always wants something better, and everyone is affected by taxes. Not just middle class, even the vegetable seller who travels once a year to his village wants to go by second class instead of general. Even you, even me. Yet, everyone pays taxes, direct and indirect.

 

[Ray]

Since airline have also cropped up here, here are some bareboned facts.

"The change to ad valorem rate of taxation without having any cap is a retrograde step, particularly at a time when we are advocating specific lower rate of duty for VAT on ATF by the states," Singh said, adding India was amongst few countries that levied service tax on air tickets.

Observing that the increase in service tax would make the air travel costlier, he said a 10 per cent rise in the price reduces the demand for domestic air travel by about 12 per cent, as per the price elasticity of demand calculations....

Regarding the high jet fuel cost, the Minister said it constituted approximately 40-50 per cent of the total operational expenses of Indian carriers.......

The average ATF price at major airports in India was also "significantly higher" than those in other hubs like Singapore, Hong Kong, Dubai, London and Abu Dhabi, he said.

Noting that the Civil Aviation Ministry had commissioned an expert agency to study the ATF market, he said the major reason of the high ATF price was the taxation regime, particularly ad valorem VAT levied by states ranging from 20 to 30 per cent.

There was also lack of effective competition in the ATF market with the oil marketing companies maintaining ownership of and control access to the infrastructure also, he said.

Maintaining that the experts had recommended reforms to promote competition and bring in transparency in ATF pricing, he said the first step was to bring it under "Declared goods" category that attract uniform lower rate of VAT.

The experts' agency had also proposed switching to specific rate of duty instead of ad valorem taxation of ATF.
Revert to old service tax rates: Ajit to FM - Indian Express

Back-breaking tax levels: The total tax levied on the airfares in India is among the highest in the world! Consider these facts:

- The total taxes on Aviation Turbine Fuel (ATF), levied at various levels (Sales Tax, Excise duty, etc.) add up to over 75% on the base cost of producing ATF (cost of producing and transporting a kilolitre of ATF, at current price of USD 100 per barrel would be less than Rs. 40,000, while the price it is sold currently is at Rs. 70,000).

- ATF accounts for almost 40-45% of operating costs of airlines and ATF prices in India are 60% higher than in competing hubs such as Singapore, Bangkok and Kuala Lumpur, making India's airlines distinctly uncompetitive in international air travel.

- The airport charges India are estimated to be the second highest in Asia, which is exorbitant considering the quality of India's airports

- Service tax on air fares introduced in March 2010, and user development charges levied by recently modernised airports, add to the total airfare cost, hurting profitability.

- User Development charges in Delhi and Mumbai are being planned to be increased by 350-500% to improve the viability of these airports

Lets look at how this adds up. A short haul flight from Bangalore to Chennai could cost Rs. 3500. Of this, about Rs. 1000, that is 40% taxation on the base fare of Rs. 2500, goes directly to the taxman's kitty. And this does not include tax on salaries, tax on profits (if any!) etc. A rough estimate would indicate a total tax collection of at least Rs. 20,000 crores a year, from the airline industry! And what does the industry get in return, at a time when it is in its most dire state of affairs? Nada!....

A valid argument can be raised by sceptics on why should Government do anything at all to a competitive industry, largely dominated by private sector? The following points should address such sceptics:

- Indian airlines and Air India, together own over 160 aircrafts, by far the largest among all airlines in India (Jet Airways comes distant second at 100 aircrafts). With limited accountability of the state-owned airline in terms of profitability, cash flows, debt repayment, etc., this airline can (and often does) set the pricing range for every major sector, with scant regard for the costs involved and profitability. This in turn forces private sector players to set their pricing at levels that does not allow sustained profitability.

- The taxation level, which is clearly a public policy item, suffered by airlines in India is among the highest in the region, rendering them uncompetitive in International routes.

- World over, every government treats airline industry as an important sector and have provided safety nets in times of distress. In USA alone, over 40 airlines have gone bankrupt since 1980, some of them more than once, which have subsequently been reorganized and have subsequently emerged out of bankruptcy.

- Given the large public impact of failure of airlines, this sector deserves to be treated (and in many countries do treated) akin to banks, where regulations are designed to encourage healthy competition, while at the same time prevent sectoral failure.

A government that destroys : Centre Right India

That should indicate how industries are stifled from growth that all talks about as the panacea for all our ills.

 

[Bangalorean]

Since airline have also cropped up here, here are some bareboned facts.


That should indicate how industries are stifled from growth that all talks about as the panacea for all our ills.

But sir, that was supposed to be my argument - in favour of growth and industry.

But seriously speaking, tax revenues need to come from somewhere, and it is better if the airlines and AC coaches are taxed, rather than stuff used by the "aam aadmi". With our constraints and need for social justice, there has to be a balance somewhere.

I am all for lowering taxes and leaving the private industry to slug it out, leaving lower prices for consumers. But the GoI does need taxes - we are not blessed like the Gulf nations, to have tax-free setup. There has to be a balance, and that balance needs to come from those who can pay it relatively easily.

If a certain sector, say aviation, is in doldrums and needs support, the government can intervene by rationalizing taxes and giving a temporary reprieve. Such rationalization can be done on a case-by-case basis, revised every few years. It is a fine balance that they need to strike.

 

[Ray]

I am not against Taxes.

Without tax, there can be no growth. I am all will agree on that.

What I am against is 'sneaky' manner of doing raising finances.

I am against inefficiency persisting even when a tax is there because it makes the product efficient. Like the Superfast surcharge in train tickets and the silly train chugs in 12 hours late with no one to say sorry or return the surcharge for failing to live up to the service for which it is levied.

One talks of the horrid state the IR is in so far as service, safety, security etc is concerned.

Why should it not be so when each Railway Minister thinks it is his personal fief and he or she can do what they want. What is the idea of increasing trains when you don't have the rakes and so you flog the rakes 24 x 7 without time for maintenance and repairs? Why have unlimited stops just to pander to populism? On safety, where are the railway police on the trains? I f there is a dacoity on the train, then why are those entrusted with the security of passengers not suspended? Well, I could go on.

If the IR is to be efficient, then it must have a 20 year integrated plan and it should improve over the years based on that. One has to ensure connectivity and at the same time not overflood with redundant trains leading to inefficiency and becoming uneconomical.

The only mode of Express, Mail and Passenger should be returned to and not make all Express and Mail trains become Passenger trains.

In short, the Govt is 'ripping the tax payer' and pandering to inefficiency and populism and then when in a tight corner in revenue, raising cess as and when they get out of the wrong side of the bed.

 

[Ray]

NHAI meets only 20% of road target

NEW DELHI: The highways sector, which was the sole shining light in the infrastructure sector, has joined the list of laggards with the government unable to award new projects due to lack of interest.

During the first four months of 2012-13, the National Highways Authority of India (NHAI) could only award contracts for construction of 4.25km-a-day, which is around a quarter of the 20km-a-day target fixed by Prime Minister Manmohan Singh........

The government has repeatedly said that it is critical to step up infrastructure construction to remove a key hurdle to faster economic growth. Several countries have used more rapid infrastructure expansion to boost economic activity, something that India too did successfully during the NDA regime when the National Highway Development Programme was conceived and four-laning of the Golden Quadrilateral was taken up.....

Highways are not the only infrastructure sector where the government is facing difficulty. The state of railways, starting with operations to finances, is in a mess and power shortages are taking a toll on the industry. In the ports sector too, data available with the government reveals that targets fixed by the PM were missed. Against the target of awarding 42 projects, the shipping ministry has been able to award only a couple of projects despite weekly monitoring by secretary P K Sinha.

NHAI meets only 20% of road target - Times Of India

During Gen Khaduri's time as the Minister, the Highways went ballistic in growth.

And now, it is a snail!

India remains India and the Ministers of NDA and UPA remain Indians.

But efficiency?

Who shall bear the burden?

Tax payers and by 'sneaky' cess thrown in most nonchalantly!

That is my grouse.

You may like to read Gen Maneckshaw's address to the Defence Services Staff College to understand Leadership and Discipline.

http://defenceforumindia.com/forum/...anekshaw-s-lecture-leadership-discipline.html

 

[The Messiah]

Defcon1 is right, this is very good news. The nation cannot make rules for exceptional conditions of the kind that you speak of. I am sorry to say, this country's middle class is too used to being pampered and getting subsidies which they do not deserve. Its time the middle class learned to pay for what they consume.

The message is: travel by 2nd class if AC is too expensive for you. Don't live beyond your means and expect the nation to subsidize it.

Harsh, but that is the reality.

Well atleast your consistent and not a hypocrite like others who abuse socialist policies and demand subsidies in the same breath.

 

[Ray]

What is 'socialist policies'?

'Socialism' is not a catch all word.

There is difference between 'socialism' and 'populism'.

Or is there no difference?

 

[Bangalorean]

^^ Well, when I use the word "socialism", I refer to NehruGandhi era licence-raj economics. I do not know what the textbook definition of "socialism" is - there are various sub-categories I believe. But the NehruGandhi variety of economics is the "socialism" that most Indians know of.

 

[Ray]

I wonder if India follows socialism.

I would feel that India is following what is known as ' mixed economy'.

A mixed economic system combines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources.

But where the problem lies is there is Populism thrown in which is not conducive to economic well being.

 

[Ray]

^^ Well, when I use the word "socialism", I refer to NehruGandhi era licence-raj economics. I do not know what the textbook definition of "socialism" is - there are various sub-categories I believe. But the NehruGandhi variety of economics is the "socialism" that most Indians know of.

I am afraid very few would subscribe to the licence raj as any form of economy. It was corruption in the name of Command Economy.

Under so circumstance was it socialism.

 

[Bangalorean]

I am afraid very few would subscribe to the licence raj as any form of economy. It was corruption in the name of Command Economy.

Under so circumstance was it socialism.

And yet, the licence raj era contained all the essential elements of socialism. Attempting for the government to do everything required for the citizenry, thorough distrust for private enterprise and entrepreneurship, stifling private industry that already existed, trying to achieve some "social justice" utopia, but ending up distributing poverty uniformly, distrust of foreigners and foreign companies.

This was just another version of socialism. And all of India's current socialists have the same thinking as above - eventually, it all leads to the same thing - corruption in the name of command economy.

 

[Defcon 1]

Rs. 2 lac a month is NOT middleclass, however much they wish for it. There is a term "Upper-middle class" formed just for them; and they never can realise the plight of the actual middle class.



Not only middleclass, but the BPL people too. The indirect taxes used to be primary source of revenue even 5-6 yrs back.


Well if you want to compare the taxes of flights, an International flight, with railway fares, what else there is to say?! If you are trying to bring the people who regularly fly on work or not, to USA/UK with people who travel to another part of the nation by train, and CANNOT afford the flight fare, in the same bracket, what can anybody say?!!



Death and Taxes?!! Well, left to its own the greedy politicians would take every last penny from us, every last breath - haven't you watched "In time".
The govt. will always wish for more revenue, as we know from our personal life no amount money is enough. Therefore, there should be a system and protest so that it doesn't impose taxes whenever it feels like it.

@Defcon1, can you tell me what does economic study says when a govt. imposes more tax to fight inflation and deficit??

I don't understand your question.

Increasing taxes doesn't help in fighting inflation, it only helps in fighting deficit, but at the same time, it can also decrease demand and thus revenue, and thus increasing the deficit instead of decreasing. In addition to that, it is also unpopular. Thats why increasing taxes is seldom used for fighting deficit.

 

[sob]

You are right. The world over and also in India it is a proven fact that when the taxes are lowered, the total tax collection increases.

This reminds of JRD Tata, who in 70s when the peak tax rate was 97% had to sell some property every year to pay taxes. He never tried to evade taxes. It was such high tax rates that have lead to the present size of the parallel economy.

 

[VIP]

I am a middle class person as well and travel once every two months. How often do you think such a situation arises when you cancel your ticket. I believe this is being done to stop people from making more than one reservation which they do to have a safe side, like when they are not entirely sure about the dates. Non reimbursement of service tax will stop people from doing so and thus make sure that seats do not get filled up so quickly as is the case right now.

"¨"©"¨I don't think this move is to reduce safe side reservations.Infact, if people cancel tickets, it will be allotted to RAC,WL people.Even,cancellations can earn govt a good money.Seats will be filled up quickly,whether you increase the price or not.

 

[VIP]

Defcon1 is right, this is very good news. The nation cannot make rules for exceptional conditions of the kind that you speak of. I am sorry to say, this country's middle class is too used to being pampered and getting subsidies which they do not deserve. Its time the middle class learned to pay for what they consume."¨"¨The message is: travel by 2nd class if AC is too expensive for you. Don't live beyond your means and expect the nation to subsidize it."¨"¨Harsh, but that is the reality.

"¨"¨"©I understand what you're saying but such partiality towards AC class isn't right.I mean middle class people travel in SL or 3AC but if govt divides the price between these 2, it would be good.As sleeper class always has lot of seats,so only minor hike is needed.

 

[VIP]

Sir,"¨"¨Going abroad is a different issue..While in India its always a train especially if its a private visit."¨"¨But thats not the point. For years, IR has been screwed just like Air India has been screwed by total mismanagement. There has been no increase in fare for so many years while the price of everything else has increased so much over the last few years. If the railways has to improve its standards, its gonna increase the fares and make use of the money to bettering its services."¨"¨Think of it this way. If there is a fare hike, you pay only when you travel. If there is no hike, you pay everyday a small part by means of the subsidized travel that others enjoy which comes from your tax money..That is exactly where your tax money is going.

"¨"¨"©You're right but would you think govt would try to decrease the price in other sector or use that money for public benefit instead travelling abroad for studies,tours,treatments,etc.Will they decrease income tax rates ?? The main problem is the mismanagement,policies and corruption.