[Inflation: CNBC TV 18: 9th March 2011:  The recent March price hike by Coal India, after the Budget, will fetch them 6500 Crores additional revenue in the next Financial Year. Bunch of Economists given plush seats, continue to bluff that inflation will come down to 7% by Mar 2011. Gaddafi / middle east crisis will be blamed as the major cause. Media as usual, blare it loud and irritate us further with empty discussions]

Mute Millions

The Oil Secretary just cried on CNBC 18 at 1342 hours on 22nd Feb 2011 that with Crude Prices touching 93 Dollars in New York Stock Exchange, the EGOM may have to meet to review the position. [ If EGOM means empowered group of Ministers and are matured and powerful enough to decide on major issues, why have Cabinet and State Ministers in high numbers ! Does it not sound superfluous ]

The major point that the Mute Millions avoid asking is 'why Petrol is still sold around Rs 24 per litre in America ?

why do you quote the crude Price / raw material price in America but not the Selling Price ?

Subject: 

The Oil Marketing Companies, which are majority owned by the Government of India, raised the prices for the 7th time in 6 months,  on 15th January, 2011. In December 2010, BPCL raised the price by Rs 2 / litre. With Taxes, the price rise at the pumps was Rs 2.95 / litre. The reason given is that the Oil Marketing Companies are incurring losses with rising crude Oil prices and only petrol prices can be raised to minimise their losses

Here are some scathing comments questioning the basis and cheating. [One can have a look at Petrol Pricing after reading this page]

Basic Stupidity / lack of Common Sense

We the Public cannot sit at home. We have to move from one place to another. What all we need to exist, does not grow in our backyards. They come from different parts of India and the World. For movement of people or goods, Transportation is a basic need.

Vehicles run by Petrol or diesel. When the price of Petrol or Diesel is raised, that price rise is passed on to the Public, with some cushion for possible additional rise added by sellers / service providers, to the Public

Everyone loots to some extent. To illustrate, let us say that in Ahmedabad, minimum fare in Auto is Rs 10. Auto Rickshaw Union would deliberately ask for Rs 12, go on strike and then Government / concerning authority, would settle for Rs 11.

You cannot see anyone having the guts to say, the auto fare can go up by only 30 paise, that autos run over 15 kms with one litre of petrol. Worse is the horrible fact, that in Ahmedabad, autos run on CNG and there is no need for any auto fare rise.

 

 Inflation Goes up !   Who suffers except the Common Man ?

Of Course we are thoughtless and stupid - Government's confession - Jaipal Reddy on CNBC TV 18 on 20-1-2011

The new Petroleum Minister made a categorical assertion that there is no question of any price rise in Diesel till March 31, 2011. Does Diesel serve a different purpose compared to Petrol ? If diesel price is not justified, Petrol price rises was stupid and unwarranted. The earlier excuses were wanton exhibition of convoluted Logic

The inept Prime Minister and his clones have assumed that vegetables and food items are delivered free at your home by Santa Claus at night. Catch one and use him for doing some domestic work also free

From the main / major Vegetable Market, vegetables have to reach our nearest / convenient sellers through Petrol Driven vehicles, in all major towns and cities

Will that not lead to increased vegetable prices / inflation ?  They do not know. You can tell them

Government is an ungrateful beggar

'Iswar key Nam pey dhey dhey baba'  'Allah key Nam pey dhey dhey, baba' and similar terms are used by beggars. When you give them a Rupee [ nowadays they do not accept 50 paise ], they express their gratitude.

Government is a perpetual, incorrigible, greedy, authoritative beggar who wants more and more - one summarisation by a CA in 1991

All Governments in general take extra efforts to prove Parkinson's first law 'work expands to fill the available Time ' and with greater vigour, the second law 'income rises to meet the expenditure'. [vice versa for public !]

They have to honour Peter's principle ' Everyman reaches his level of incompetence'

The present Government begs in the name of inefficient Oil Marketing Companies and the education cess for the long term benefits of the future generation. In the long run, all are dead - Keynes

Out of the multitude of Economists in power, some are lawyers too. Is that a heady cocktail, for all the present topsy turvy state ?

 

Government is a cheat on several Counts

1] The International Crude prices have gone up due to which Oil Marketing Companies incur loss. So Petrol Price has to be raised is the Government's explanation.

This is a blatant lie. The Government of Man Mohan is cheating the Public - cutting the arm that feeds. It is highly unethical

International / Brent crude price is around 90 Dollars. The Media, except for some minor comments, swallow that. The discussion specialists on TV spit their gibberish, glad that they got free Publicity.

The Public reconciles to the unwanted change of circumstances and carries on. Why ? We are Millions of mutes

 

Exposing the Cheapness

1

The Government is cheap enough to quote the International Crude Prices, the raw material for Petrol, but not the International / US Selling Price - Price of Petrol in America is only Rs 24 / litre [ CNBC TV 18 ]

Should the parameters keep changing at every step to dupe the Public - different yardsticks at the start and the end

2.     Cost

In the total price of say, Rs 60 per litre per petrol, [ I quote in percentage. These fellows may raise the price tomorrow, quoting the crude price in Moon ] the Transportation charge is Rs 6 - that is 10% ? !

Petrol is transported from the Oil Depot to the Petrol Pump station, in bulk / in truck load. There are no persons in between officially [ unofficially, it could be different the way an ex IIT chap of IOC died for poking his nose]

These nitwits should then concede that Transportation charge for Vegetables, from truck to 1 or 2 ton van, to autos and then to handcarts, should be more in percentage / more than 10%.

And if their Transportation charge of 10% is accepted as true and fair, raising the price of Petrol / Diesel, shoots up all food / perishable product prices and Inflation

 

3. Charge for doing nothing

When BPCL raised the price of petrol by Rs 2 per litre but it was nearly Rs 3 / litre for the consumer. The print and TV media faithfully blared the news but none questioned, the extra loot of Rupee One by the Government for doing nothing.

There was no Excise Duty before 1973. Then it was 1 paise per kilo / kg to meet the Banga Desh war expenses. Then it became 1%, then 2%, then 5% and then 8% [ ad valorem ] on the Selling Price. Like the weather, you may have to refer the newspaper daily. It keep rising.

If you raise the voice, then it is rolled back or duties cut. About a year back, after a rise, Shiela Dixit, Chief Minister of Delhi, cut the Duties and the final price of LPG or Diesel became less despite the 'price rise'

[ National assets like Iron Ore, Lime Stone quarries have fixed duty per ton. But not petrol ? Funny,  isn't it ? ]

Sales tax is on base price plus Excise duty. Such irrational and unfair collection of money from the Public only adds to inflation and increasing public discomfiture

 

4. Unethical Cheapness too

If, Educational Cess collected from Petrol users is fixed, the question is why spending on Education be fixed, when the cost of Education is going up.

In case, the education cess is in percentage, has the Finance Ministry shared the extra loot with the concerned department in the last 6 months.

If not, they fooled the Public and pocketed the difference

 

Some other points / excuses

Once, when the Government raised the petrol and Diesel prices, Ms Brinda Karat said in the Parliament that the Government collected Rs 5000 Crores more than what they promised to collect. 

Tragic Joke: Mr. Sudhir Raha, ex Chairman of ONGC said on CNBC - TV 18 on 6th Nov, that the duties inflate the final price. The Press / Commentators ignore this - should they ? No

Cross Subsidisation: When Petrol was sold at Rs 1.35 per litre in Nov 1974, the price had enough margin to subsidise the sale of  Kerosene at 25 paise per litre. 

Should we blame Crude? OPEC was formed in 1973 and the initial price got fixed at 14 Dollars.  The present price is 7 times more around 98 Dollars. So Petrol price should be 7 x 1.35 =  Rs 9.45

Accounting for exchange Rates:   The Dollar was equal to about Rs 12 in 1974. As of  November 2007, it is about 40 - less than 3.5 times more. If we use this multiplier, Petrol prices should not have been over Rs 30  [ 9.45 x 3.5 ]

Inflation and Distortions

RBI has admitted now that fiscal measures like CRR, repo and reverse repo rate have largely been ineffective

The above 2 excuses are for diverting the public attention. Transportation cost is a more relevant basic cause.

 

Disconcerting Doubts

1. Advertisement Waste ?

 

IOC advertises for the Engine Oil in CNBC. Less than 1% of the population is connected with share market. Granting that they hold 40% market share amongst business channels, does that fetch any added business. Put it another way, will it affect the sales IOC Engine Oil sales, if such wasteful expenses are cut. No

2.

Ethanol blending is not yet 5% despite the proclamations in 2005.

If Sugar Companies are allowed KG Gas pricing formula of 3 times the Production cost, with sugar cane accounting for Rs 21 in a kg of Sugar, the selling price of Sugar should be over Rs 60 / kg.

 

Mere Bharat Mahan

Free Management Education

See no evil, hear no evil, speak no evil; If one faithfully keeps the seat for Yuvaraj, an inept, ineffective person can also become a Prime Minister.

 

	Errors and Omissions exempted.  If there be any unwanted oversights, mistake in content or suggestions for improvements,  I will be thankful for your feedback
	Personal website of R. Ranganathan M.Sc., [ MBA - IIMA]    Main / original content: 2007: last minor modification, June 5,  2011