Basically the Finance Ministry has reacted too slowly and irresponsibly.
All along it was clear that duties being advalorem the Government was making more money on imports.
Import or crude attracts 5% duty.
When the price was US $ 35 per barrel the amount of customs duty the Government earned was Rs. 70 per barrel. ( US $ 35 @ Rs. 40 = Rs. 1400 X 5% = Rs. 70 per barrel ).
Now the price is US$ 130 which is Rs. 5400 assuming same exchange rate of Rs. 40 ( actually it is now Rs.43 hence Government earns more, 15% more to be precise ). On Rs. 5400 a 5% duty means Rs. 270 per barrel. Which means customs duty earnings has gone up by 285% !!!! All this increased revenue has been reflected in loss for the oil marketing companies. Hence it is a misnomer. The reality is Government could have actually controlled the price line by eiminating customs duty.
Besides there are other measures that could have been adopted. AT LEAST THEY CAN BE ADOPTED NOW. - Elimination of sales tax at retail point. - Increased use of ethanol in fuel mix. - Increased spending in development of solar products. - Increased R&D in development of cars with battery power. This should be capable of more HP and speed.
Of course, as somebody has pointed out in this forum, we all have consciously reduce fuel usage.
RE:Finance Ministry should have acted earlier
by rajesh vora on May 27, 2008 04:41 PM Permalink
excellent observation. i have been thinking on similar lines.. i dont understand why doesnt the mainstream media (read TV & newspapers) dont mobilise opinion on these lines so that the government esp. our FM is pressurized into acting on such lines. excellent analysis. congrats.
RE:Finance Ministry should have acted earlier
by Rishi Neema on May 30, 2008 11:50 AM Permalink
Dear All,
Everyone of you has given some interesting suggestions which can be implemented , but practically implication of this suggestions would be like discrimination of richer and poorer . Where as our country being only one nation in entire globe who talks about equal right.
Hence I dont think we should go with this kind of suggestion.
Rather Rationing of Oil can be done same like Kerosine.
Depending on the family size quantity of petrol should be decided. Same like distribution of kerosine in India through Rationing shops.
At the same time any family requiring extra petrol can get the same on premiums.
i.e. If petrol is available for say 55 Rs. / Ltr. and the quantity for a family of four people is say 20 Ltrs. / Month If the family requires say 25 Ltrs. / month which means 5 ltrs. extra then the balance 5 would be available on premiums may be @100 rs./ltr.
This way country would save ample of foreign money , $ reserves would increase and would generate good amount of revenue for the nation.
Pl. comment on same if u do not agree with the same.
Thanks and Regards Rishi Kant Neema 09755097229 (M)
RE:Finance Ministry should have acted earlier
by ASHOK on May 28, 2008 04:48 PM Permalink
I support and appreciate your inputs. But right now FM has committed huge amount as FARM LOAN WAIVER. Govt can not mop this huge amount if it lowers tax on crude oil.
RE:Finance Ministry should have acted earlier
by Thiyagrajaan on May 27, 2008 04:14 PM Permalink
Barani pls. try to understand that Politicians and IAS officers are people who can't think andhence they can't understand issues. They are good subordinates and it is unfortunate that there is no one to guide them.
