Truth behind Petrol Price Hike

November 5, 2011

Update: For a detailed analysis of exorbitant price rise of petrol, please check Exorbitant Petrol Prices and Dilapidated Indian Economy.

When asked about why petrol prices are being raised every third month, the Finance minister of India, Mr. Pranab Mukherjee answered that petrol has been de-regularized and hence, the issue of rising prices of Petrol is not dependent on the government, but it is dependent on the oil companies offering petrol and the prices will be ruled by the open market forces.

Pranab Mukherjee said¹ ,

Petrol is a decontrolled item. Nobody in the government knows about the petrol price hike because prices are increased by the petroleum companies not by the government.

The idea behind this statement was just to defend the government against the remarks of opposing parties as BJP leader Yashwant Sinha clearly said that prices of petrol couldn’t have been raised again without the permission of the prime minister and the UPA leader Sonia Gandhi.

Obviously, Pranab Mukherjee was telling a blatant lie. The fact is nothing has been de-regulated or de-controlled in India; however, the means of regulations have been changed. These changed regulations are being termed as decontrolling of petrol prices.

Why is he telling a lie?

The very obvious reason is to defend the government and to deny responsibility of price rise and inflation as the government has no solution for the increasing difficulties of common men. The inflation is actually the result of irrational currency increase by the government and RBI which was infused in the market during the economic crisis of 2008 on the name of stimulating the economy. This unchecked supply of currency caused the devaluation of money as it was more than what was demanded; as a result the prices of almost all things are increasing and food inflation is well above 12.2% hike.

However, there is much bigger reason behind this lie. Pranab Mukherjee actually tried to state that in a liberalized economy, or in free market, prices will go insanely high as they are going right now. This is not only a blatant lie but a major attack on individual liberty.

Petrol prices in India are much higher than the price of petrol in Pakistan, Bangladesh, Sri Lanka, America and many other European countries. While the petrol prices are decided by the government in Bangladesh, Sri Lanka and Pakistan, petrol companies decide the prices in United States and European countries. So why is petrol cheaper in the US and other western countries?

The reason behind rising petrol prices

The actual price of petrol which the Indian petrol companies are attaining is around Rs23 per liter however, a common citizen is forced to pay around Rs70 per liter. That is, when we buy a liter of petrol, we pay only around Rs23 for the oil companies² ; the rest of Rs45 to Rs50 isn’t taken by the petrol companies, but by the government as it robs the citizens and the petrol companies both through compulsory taxation. No petrol company can sell petrol at a price lesser than what it attained for from the international market. But a petrol company can easily make good fortune by selling the petrol for just R25 a liter. Then why are these petrol companies selling petrol at Rs 70 per liter?

The answer is the government. Government robs the petrol companies through taxation. Now nobody works for bearing loss. So in order to pay the taxes, these companies raise the price of petrol. In reality, we the poor citizens of India pay the taxes while buying petrol. While government wants the petrol companies to offer petrol at reduced prices, it doesn’t want to reduce the taxes. Unless government abolishes any tax on petrol, it cannot say that petrol has been decontrolled in India. Government controls petrol prices by means of increasing or decreasing taxation; however, government has stopped offering subsidies for Petrol companies.

That is, when we buy a liter of petrol, we pay only around Rs23 for the oil companies³ ; the rest of Rs45 to Rs50 isn’t taken by the petrol companies, but by the government as it robs the citizens and the petrol companies both through compulsory taxation

The Only way to Reduce Petrol Prices

Only government can reduce the petrol prices and not the petrol companies because petrol companies are bound to sell the petrol at the price they attain petrol from the international market plus the taxes they have to pay for the government. If the government reduces the taxes, the petrol companies will have to pay less to the government and hence they will charge less from the consumers.

Government does not want to reduce taxes on petrol irrespective of how high the prices go. Government realizes that it cannot control inflation even if petrol prices are kept constant because the real cause of inflation is not a rise in petrol prices but it is due to the increased currency by Indian government and RBI. Petrol price rise will act as a hide mask for the government to deny the responsibility of inflation.

Government do not want to reduce taxes on petrol companies because it says without these taxes, the government will go in fiscal deficit. Obviously, government does not want to reduce its budget for performing irrational, unsound social welfare programs which are bound to fail. This is so because if the government reduces its social welfare budget, it will have lesser chances to make money through corruption. The thing is simple, if government reduces taxes, it will have lesser money to embezzle.

There is one more reason why government does not want to reduce taxes. The money collected through taxes is often used by politicians to perform insanely unwanted works just to attain goodwill and votes of a certain sect of people. As for example, recently Uttar Pradesh Chief Minister Mayawati inaugurated a huge park in Noida which was build at an expense of Rs 600 crores. Obviously there is no use of this park and it will never be able to attain its price back. While this is a huge loss of Indian tax-payer’s money, it may prove to be a winning cause for Mayawati as she will use it to win votes of SCs and STs. Same goes with the central government as it has also started a number of appeasing policies to win votes of SCs, STs and minorities.

Government wastes Tax-payers money through such social welfare programs which do no good for anybody but only for the government, politicians and bureaucrats. Politicians win votes; bureaucrats win chances of making money through corruption.

Government doesn’t want to reduce taxes on petrol companies because if it does so, how will it attain enough money to perform such huge frauds and embezzlements such as 2G spectrum scam and CWG scam etc.? However, in place of acting responsible and considerate, Indian government and our finance minister Pranab Mukherjee preferred to blame the decontrolling or petrol prices for inflation. Why couldn’t he act responsible and say that he will announce a tax reduction for petrol so that Petrol companies may be able to reduce prices of petrol? He couldn’t because taxes are actually robbery. You can’t expect a robber to give up robbery. Similarly, you can’t expect government to reduce taxes. Since government won’t reduce taxes, petrol prices will keep going on high and high.

Update: For a detailed analysis of exorbitant price rise of petrol, please check Exorbitant Petrol Prices and Dilapidated Indian Economy.

Pranab Defends Government on Petrol Price Hike, IBN 7 [↩]
Petrol Still can be Attained at Rs 23.37 per Liter if there is no Tax, Yashwant Sinha [↩]
Petrol Still can be Attained at Rs 23.37 per Liter if there is no Tax, Yashwant Sinha [↩]

Comments

Vineet Saini

Hi,

Can you please provide the reference to your claim that cost per liter ( including everything like transport, insurance ) to oil companies is only Rs 23 per liter?

Thanks,
Vineet Saini
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  Vineet Saini,
  
  I am sorry, I forgot to mention proper reference in the main article by itself. anyways, I will edit and add it.
  
  Here is the Reference as mentioned by former Finance Minister Yashwant Sinha,
  
  ” Its easy to rule from 7 Race Course Road than to go to the fields and realise woes of the people.” ” You can still get petrol at Rs 23.37 a litre as rest are the taxes that make it Rs 68.65 a litre in Delhi and still more elsewhere,” Sinha said and pointed out the constructive deregulation of petroleum prices conceived during his tenure as the NDAs finance minister to adjust taxes instead of passing the burden on the people.
  
  Here is the link http://www.freepressjournal.in/news/30153-petrol-can-still-be-at-rs-23-37-a-litre-bjp.html
  
  While I cannot provide a direct RTI report for asserting this, yet I and you also can take the statement made by former Finance Minister Yashwant Sinha about it.
  
  He mentioened,
  
  He openly mentioned in a TV News Conference that The NDA government when initiated talks for Deregulation of Pteroleum products, the policy to be implemented was not only to remove subsdies but to reduce taxation incurred on petroleum companies, but the current UPA government overruled the idea of reducing taxes and hence is the increasing price rise.
  
  This is truth that doesn’t need any reference, taxes do raise the price of every product. Even a simple Soap whose cost of produciton is just Rs5-6 per piece is available at a price Rs 15-Rs20 in the market. Check this out– Why Not to Pay Taxes? http://rationallibertariancorner.com/anarcho-capitalism/why-not-to-pay-taxes.html (I have mentioned proper reference about example of Soaps in that article)
  
  On name of providing Social welfare, government taxes and creates poverty by inflation, price rise (which is also a form of tax that is used to rob poor class).. But if there will be no tax even all the social welfare services will be available at much cheaper price provided by Free Market private players. Government only can increase poverty, Injustice and chaos.
  - gaurav
    
    Govt. is giving a lot of subsidies for kerosene (poors cooking source) and cooking gases (common people source of cooking)
    - shk
      
      Hi
      
      I totally agree with u , hike is way to generate more revenue that could translate to higher costs for consumers ,—- these politicians are real robbers.
nathan

you claim that inflation is on account of cash infusion by the govt and the rbi in 2008. what do u base your claim on? can you provide any evidence?
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  Nathan,
  Yes why not? I myself wrote articles against the stimulus policy of Indian government.
  
  However, Indian government keep providing such stimuluses every second year. Government announced waiver of farm loans before the last lok sabha elections and to compensate that, RBI printed new money, or the middle class and upper class were forcinly taxed.
  
  Then 5000 workers of Air India went on strike because AI was suffering economic crisis and government provided huge stimulus for Aviation Industry so that AI workers, pilots and Hostesses may be retained. It was destined to increase inflation. I have written article on that chapter of economic stimulus too and if you will insist I will provide references and links too..
  
  Nathan, when last time Indian government announced Economic Stimulus to improve market iquidity, Even the Governer of Reserve bank of India himself suggested that it will cause huge inflative problems later.
  
  RBI Governer D Subbarao said,
  
  “I worry that in resolving this financial crisis perhaps we are sowing the seeds of the next crisis…next crisis could be a currency or a fiscal crisis,”
  
  Read this article for reference http://www.reasonforliberty.com/anarcho-capitalism/the-devil-of-debt.html
  
  After facilitating the Economic Stimulus, RBI Governer while addressing the Media declared that the Next crisis could be related to currency or fiscal here is the Economic Times Copy of his statement..http://articles.economictimes.indiatimes.com/2010-02-13/news/27609865_1_financial-crisis-central-banks-bank-governor-d-subbarao
  
  I have written many articles against Economic Stimulus of Indian government at http://www.reasonforliberty.com/ that were destined to cause Inflation and now we are suffering INFLATION.
  
  By the way, Indian Governent again is planning to provide stimulus for Aviation Industry (Kingfisher and Jet and AI) this time.
  - nathan bell
    
    this is still conjecture. can you provide solid reasoning or analysis that inflation has been caused by cash infusion by the govt and the rbi? you cant merely use a quote by the rbi governor to push across your thesis. in your last reply you say that the rbi printed new money – when, how much, was it material enough? do you have any evidence at all. if not then all of this is merely a rant, i am afraid.
    - http://rationallibertariancorner.com/ Unpretentious Diva
      
      Nathan Bell,
      
      Whenever RBI Increases repo rates, it do so to bring back all the new currency it offered in market to stimulate. Whenever government provided Stimulus Packages, RBI was printing money, there is no other resource, and GOVERNMENT DID PROVIDE STIMULUS PACKAGES MANY TIMES>
      
      First Stimulus Package was announced on 7.12.2008, Second on 2.1. 2009, Third on 24. 2. 2009, Fourth on 26.2.2009, Here is the report http://rajind.rajasthan.gov.in/Stimulus_Packages.pdf
      
      Now about proof of RBI printing new money, it is self-evident by the fact that now when India is suffering Huge Inflaiton and government is suffering criticism, the RBI is announcing reduction in Repo Rate and Increase in CRR, why? to reduce the quantity of Currency in the market and to increase reserves out of the Market. As the amount of currency will decrease, its value will Increase and Prices of Goods/Food articles will decrease.
      
      I don’t know what are you seeking for. If you are seeking for reasoning about why Prices Increases when government increases Currency in market, it is pretty easy to understand. Let’s say there is a village with closed economy in which there are only Rs100 for the 100 people living in it while 100 Kilograms of wheat is available for every day. since each person have Rs 1 in this economy on an average, the wheat at Rs 1 per Kilo can be bought by every single person.
      
      Now if government of this village increases the currency of by 100% that is, it makes it Rs200 total currency while the wheat available is only 100kilos, the market will have to increase the price of wheat to Rs2 per kilo. There is no mystery about it.
      
      Now about RBI, government, if you believe in government then it is other thing but you see, the government is ranting because it is offering irrational reasons for inflation. Inflation cannot be controlled becauee GOVERNMENT CAUSED IT. Since last 2 years government is claiming that inflaiton will be brought down and it is failing. This proves that government is ranting about when it offers fake reasons for inflation.
      - nathan bell
        
        wow!! have you even read your own reply? maybe u should read your own reply before reading my response. u clearly have no idea what the repo rate is, u have no clue that the repo rate is being hiked unlike the crr. can you tell me how much additional currency was printed by the rbi in 2008, 2009 and 2010?
        
        http://rationallibertariancorner.com/ Unpretentious Diva
        
        Nathan Bell, can you prove that No Currency was Printed out in 2008, 2009, 2010? Have you got any Audit report of RBI?
        
        Just because you (xyz) are claiming that RBI is honest, government is honest, I should accept that Government and RBI are honest? And anyways, you haven’t offered your view about inflation and why it is.
        
        Burden of proof is unto you. You need to prove that while RBI never increased any currency in the market, inflation occured by itself. You also need to explain the cause of Boom and Bust and Economic cycles.
    - http://rationallibertariancorner.com/ Unpretentious Diva
      
      Nathan,
      
      I am also appaled by the fact that while you are claiming that all the irrational ideas offered by government for inflation (like Indians are eating more hence prices are increasing, Indians are becoming rich and hence price are increasing, or Crude Oil price are increasing in internaitonal market hence price are increasing which is false because when Crude oil price in International market was 120/bbl, we were paying Rs 69 per liter for petrol, now when it is 100/bbl, we are paying Rs 74 per liter. )
      
      All these excuses by government are proven rants.
      
      Here is one more PROOF, Prime Minister’s Economic Advisory Council (PMEAC) Chairman C. Rangarajan on Thursday pitched for roll back of the stimulus that was provided to the industry to combat the slowdown in the wake of the global meltdown in 2008 to reduce Inflation. http://www.thehindu.com/business/Economy/article2556047.ece
      
      Even they realize that the CAUSE OF INFLATION is the Stimulus Government provided and Inflation can be tamed down by pulling back the stimulus.But you are not agreeing to it. But I don’t care:P
      
      But you seem to be believing the government and accusing me of ranting. Can you prove any valid reason for suggesting that it is all rant?
      
      What is your theory of Inflation if not increase in currency? What do you expect? If RBI prints money and offers a million for each person in India living below poverty line, India will become Super Rich? No, India wont’ become Super Rich, it will suffer extreme INFLATION/PRICE RISE.
      - nathan bell
        
        please read my posts and your replies. where am i making any claims? the link nowhere mentions that rolling back stimulus will reduce inflation as you claim. on the contrary increasing excise duties will increase prices and hence inflation. a broader point is that you need to back up your assertions with solid reasoning and analysis. you cannot merely say that because xyz has said something it has to be true. this kind of arguments would get a person a flunk grade at any half decent university.
        
        http://rationallibertariancorner.com/ Unpretentious Diva
        
        Nathan,
        
        Reasoning is different thing and analysis is different. I have no way to look for the audit report of RBI, there is no way to attain a neutral audit report of RBI. I guess Ron Paul also failed to gain success in attaining a neutral audit of FED. In India, its almost impossible.
        RBI has only two ways to increase amount of currency in the market, either to allow bank credit expansion, or to print new money. In 2008, 2009, 2010, Indian financial sector was under meltdown, banks were facing danger of defaulting, SBI was under debt. So, there was no way for RBI to allow Bank credit expansion, in fact banks were not ready to accept it. Yet, the stimulus was provided on the name of increasing liquidity (increasing amount of currency in the market). How was it doen? You can guess. You cannot offer any proof because you have no way to have a neutral audit of RBI.
        
        However, reasoning can be offered Money Bank Credit and Economic Cycles
    - nathan bell
      
      i am replying to this thread becoz i cant seem to post a reply to your post dated nov 15. nowhere am i claiming that the rbi or the government are honest, its a figment of your imagination. why is the burden of proof on me? nowhere am i making any claims. all the assertions are being made by you. its the lack of data and analysis behind your assertions that i am pointing out.
      if at all you need a treasure trove of data you can see rbi’s website where they publish the weekly statistical supplement every friday (you will get all the data you need over there to disprove your analysis)
      t
      - http://rationallibertariancorner.com/ Unpretentious Diva
        
        Sorry Nathan bell RBI issues no such DATA. Not only RBI but No Other central bank of any country ever provides any Annual audit of how much money they printed and on what premises.
        You may try to check it at http://www.rbi.org.in/scripts/statistics.aspx
        
        Nither bank of Japan, or Bank of England, nor FED of US provides any such informaiton. However, Ron Paul made a try to ask for annual AUDIT of FED. In India such demand has never been made.
        
        Yes you may try to attain information about how much money from the RBI reserves had been issued out in the market. But that is what I a saying is wrong, that is what I am claiming has caused Inflation. And I have provided proof of that, RBI issues currency through its reserves in market by means of ECONOMIC STIMULUS. Now I said RBI printed that money, it is the truth because if RBI didn’t print it then who DID?
        
        No other bank/authority in india or outside India can print Indian currency and stock it in reserves, ONLY RBI HAS THIS POWER. and RBI did issues new currency in market in 2008,2009,2010… it is not figment of imagination, it is the reality beyond doubt. And I have provided enough proof of it.
        
        And Nathan it is not my analysis, it is my reasoning. And you cannot disprove my Reasoning without providing your own tale of inflaiton.
        
        http://rationallibertariancorner.com/ Unpretentious Diva
        
        The only idea given on RBI’s website is–
        
        How does the Reserve Bank estimate the demand for bank notes?
        The Reserve Bank estimates the demand for bank notes on the basis of the growth rate of the economy, the replacement demand and reserve requirements by using statistical models. (http://www.rbi.org.in/currency/faqs.html)
        
        it proves my point. This is what caused inflation/price rise. RBI decided to increase the bank notes by assuming that there is a demand and the result is out in the market which is huge inflation.
        
        Now when RBI/Government realizes that inflation is becoming too notorious to handle, the PMO Advisory is suggesting increasing tarrifs, excise duty, taxes and all other things. Why? Because now government/RBI wants to bring back the ‘extra money’ or ‘new money’ that it infused in the market in 2008.2009.2010 back in its reserves.
        
        They know that increased currency caused inflation and hence now they are trying to take it back by increasing excise duty/taxes etc.. (http://www.thehindu.com/business/Economy/article2556047.ece).
        
        They know as the ‘extra currency in market will start disappearing, the inflation rate will start decreasing.
      - http://rationallibertariancorner.com/ Unpretentious Diva
        
        Nathan, here is one more reasoning about what ‘Inflationary monetary policy’ can do or cause. (India, Britain, America, Germany, Greece, and other countries all are strictly following inflationory monetary policies)
        http://www.youtube.com/watch?v=5KIDTGKX298
Abhijit

You are correct to the point that it costs ~23/- to produce petrol. But there are a few things that need to be kept in mind
1. Crude is imported in India and then refined by the Oil Cos (here again there should be a differentiation between an ONGC (which produces but doesnt market the crude), IOCL (which markets but also has some level of upstream production, HPCL (almost completely markets products)). So a company like HPCL would be worse hit than let us say IOCL
2. Product prices in India and most other Latin Am, Russian bloc, SE Asia, ME countries are subsidised which means you increase the price of one product to keep the price of the other artificially low. Today if we can have LPG and kerosene at ridiculous prices it is due to taxes that the Government imposes. Now over and above these taxes are the State taxes that each government imposes.
3. It is not true that the prices of petrol are the highest in India. Actually US doesnt even have diesel as a main fuel. UK ranks as one of the countries with the highest prices of petrol! DO a general Google search/Wiki entry search – the prices in India are quite low comparatively. Please don’t take petrol as a standalone product – look at LPG, kerosene, diesel and petrol.
4. Global crude prices today are at ~$100/bbl – enough has been said about this so wont explain this.
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  Abhijit,
  
  I am sorry mate but you are missing the point. Crude Oil is not available at Rs 23 per liter, refined Petrol is available at Rs 23 per liter and all the extra money is Taxation on refinement, collection, distribution and sales of Petrol.
  
  It is true that Subsidies and Taxation works simultaneously but both are coercion and extortion and both need to be abolished only than one can expect fall in price of EVERYTHING.
  
  It doesn’t matter if Petrol prices are highest in India or not, I never claimed that, my claim is if Indian government removes taxation and subsidies on everything, everything will be much cheaper and well the poor will have more money because they will have more jobs/work why or HOW? Because the middle class and rich class people if not taxed will have more money to invest in job creation and since they will create more jobs, poor will earn much more, much better…Price of labor will automatically increase if there will be more work (demand of labor) and less supply of labor.
  
  Global Crude Price were $120/bbl when Petrol in my city was available at Rs65 per liter and in Delhi it was available at Rs59 per liter. Now when Global crude price has been dropped, I am forced to pay $74 per liter for petrol and in delhi it is around Rs68-69 per liter.
k l goswami

As per figure above about 50/= is going to coffer of Central Govt and State Govt by way of Custom duty / excise duty / state vat /state octrai /, it would be better that Central and state governments should give relief to common man by reducing their taxes, which is too much on higher side, keeping in view the price of import price
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  Kl Goswami,
  
  In order to understand Taxes and its effect on common man, I hope this story will help Understanding the Tax Laws and Tax Reforms
  
  Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
  
  The first four men — the poorest — would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.
  
  That’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).
  
  “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80.00.
  
  The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?”
  
  The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
  And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.
  
  But once outside the restaurant, the men began to compare their savings.
  
  “I only got a dollar out of the $20,” declared the sixth man who pointed to the tenth. “But he got $7!”
  
  “Yeah, that’s right,” exclaimed the fifth man, “I only saved a dollar, too . . . It’s unfair that he got seven times more than me!”.
  
  “That’s true!” shouted the seventh man, “why should he get $7 back when I got only $2? The wealthy get all the breaks!”
  
  “Wait a minute,” yelled the first four men in unison, “We didn’t get anything at all. The system exploits the poor!”
  
  The nine men surrounded the tenth and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill!
  
  And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
  
  (source Here)
gaurav

When you are comparing petrol prices to other countries w’d you also like to concern about the lpg cylinder prices and the kerosene price i n neighbourhood countries. Well here are the right facts:-

1. PDS kerosene price of Rs 14.83 a litre in Delhi was the lowest in the region, with the cooking fuel priced at Rs 44.06 per litre in Pakistan, Rs 24.67 in Sri Lanka, Rs 27.32 in Bangladesh and Rs 45.38 a litre in Nepal.

2. Similarly, the domestic LPG rate of Rs 399 per 14.2-kg cylinder is lower than the price tag of Rs 757.04 in Pakistan, Rs 863.40 in Sri Lanka, Rs 469.24 in Bangladesh and Rs 819.60 in Nepal.

3. The price of kerosene is subsidised by Rs 23.74 a litre and LPG by Rs 247 per cylinder in India.
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  gaurav, do you realize that if Taxes are robbery, Subsidies are nothing but rationalization of Robbery? Subsidies are NOT GOOD they are just a way to try to prove that Robbery (taxes) are good. But in truth both are EVIL.
  
  Subsidies in reality make poor more poor. How? Try to meet some Honest social worker and he will tell you that more than 45% of BPL Cards and Ration Cards are fake and are owned by rich or middle class people who really dont need any subsidies. Poor always fail to attain any help through subsidies because in order to attain help, they first need to BRIBE.
  
  Second thing is, when rich and middle class people are robbed (taxed) the government reduces their potential to produce jobs for poor. this further increase poverty.
Sohel

A good write up ,it would have been better if written as an analysis and not as criticism of Govt. Policy. A good story always end with solution or suggestion,it fails to work mind to think for positive thoughts. Any which way Petrol Price is not the only economic criterion for judging inflation, subsidy are required – Rural areas are having now have at least a meal a day for children if they attend school.
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  Sohel,
  
  In absence of government subsidies, Rural areas will do much better and this is the fact.
  
  A public school begets more than 1 Crore of Tax payers money wasted on a frugile building built by corrupt corporate which may fall on the heads of “rural students” any time and a gang of school teachers enjoying a monthly package of Rs10,000 to 40,000 who seldom visits school and if they visit, students fear when will they be sexually harassed or raped. Mid-day meal? A good way for corporates and Government school Mafia to embezzle more of Taxpayers money.
  
  I have seen private schools offering quality education much cheaply in villages, at one of the village where I visit regularly, there is a private school run by two people of a single “poor family” right in front of the Government school. Private school has more students than government school.
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  And ohh yes, please read a little more ogf Government Criticism here, Busting “The Myth of Education for All”
k l goswami

your logic of sharing seams to calculated on Tax, but at present rich getting maximum dividend of subsidy 0n diesel, as they buy diesel car, Govt should should also take care of AM ADAMI, who are maximum users of petrol in Urban Vat was implemented for uniform prices of product all over INDIA, but State Govts are singing their own music, maximum vat on petrol is in following states,Gujarat,Maharastra,Rajsthan,Punjab,Bengal, these states bring the Vat at par with other states
- http://rationallibertariancorner.com/ Unpretentious Diva
  
  K.L Goswami,
  
  I am talking about removing ALL SUBSIDIES, so your anger against diesel car owners makes no sense.
  
  Second thing is , subsidies for diesel is because of the fact that all Farming Tractors are run by diesel, and who uses Tractors for farming? Villagers (some villagers are poor, some are much richer than most of city dwellers).
  
  Now government is planning to remove diesel subsidies in urban areas but to offer it only in villages. Will it really help?
  
  No the rural people will take this subsidized diesel and sell it in urban areas at a little profit. So it won’t work but increase corruption as mostly the politicians will start selling subsidized rural diesel in urban areas. NO JANLOKPAL can stop it because even the officer of Janlokpal will start selling such subsidized diesel in urban areas for a little profit.
  
  The only way to reduce corruption is to remove all subsidies and Taxes, when taxes will be removed both diesel and petrol will be much less. If petrol will be available at Rs23 or Rs 25 per liter, diesel will be available at Rs 16 -20 per liter. Due to taxes, even diesel is much costly although it is sold at subsidized rates.
  - k l goswami
    
    Due to subsidiaries on Diesel /. kerosene, common man is suffering with the hike in petrol, poor man does not get kerosene from Ration depot and it is easily available in black market i.e. Rs.35/= to 40/= liter,what is the fun of subsidiary,if it does not reaches the poor, ultimately it helps black marketrs
    - http://rationallibertariancorner.com/ Unpretentious Diva
      
      KL Goswami,
      
      Subsidies are wrong not the black market. Unless this simple thing is not understood, we cannot expect to limit blckmarket. The only way to reduce practice of black market is to make it legally acceptable
      - k l goswami
        
        Unless and until l politicians are to ,fill their coffers,poor will remain poor, my main question why states are having different VAT by reducing the vat, AM ADAMI will mhave some relief
    - http://rationallibertariancorner.com/ Unpretentious Diva
      
      KL Goswami,
      
      Plese check this true story of a Chinese City which exist only because of the success of Black market. http://reason.com/archives/2011/11/17/wenzhou-a-town-built-on-failure
      - nishith
        
        can u pls help me in building……such strong financial knowledge as u got….in practicality/?
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Anuz

Hi Unpretentious Diva, Thanks for the information. I didnt know that the actual base price of Petrol is Rs 23. Keep it up.

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