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R.Ranganathan M.Sc., [ MBA - IIMA]     Just some blunt, forthright views       on some subjects / outfits

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Press and some commentators gloss over some glaring in built contradictions. That is a pity

They say the base has changed - the international crude price is now 95 Dollars against earlier 65 Dollars - 46% more cost escalation. Murli Deora says that the Petrol Price can go up by Rs 2 per litre - less than 5% compared to the present price

Cost has gone up by 46% and planned recovery is hardly 5% ! something fishy ? You bet

They were recovering more earlier, planning less recovery because of vote bank politics, fooling the public or there is no need, if the direct taxes, which has gone up by 40000 Crores this year is sufficient to absorb the ' crude shock'. It is a combination of all these factors, as the following sections will analyse / expose

Indian Rupee has appreciated about 12% after March 2007 - less than Rs 40 from 45.50 level. These fellows know that and still do not account for it. They are insincere in their presentation

The International crude price of say, 98 Dollars per barrel, in effect means only 86 Dollars, if the exchange rates are accounted. So what are they cribbing about ?

on the 

Public

Why should it be charged less that Petrol ? The more affluent persons fly. Praful Patel asked the Minister to lower the prices, by reducing the taxes and Mr. Deora promised to take up the matter further. 

Reliance Industries Gross Refining Margin is about 13 Dollars per barrel - and it is less with other Public Sector Refineries. Add 40% for Packing, Transportation and Distribution cost. That is, 100 + 15 + 45 = 160 Dollars at the most. One barrel is 160 litres for crude. Assume that Dollar is equal to Rs 40 though it is a bit less. Petrol can still be easily sold at Rs 40 per litre

The price revision is  delayed because of Gujarat Elections - ! Why not have then elections once in 3 months in one or the other 23 States and Union Territories ?  Will not CEC oblige ? If CPM does not continue to act like a Paper Tiger, even elections to the Centre is not far away. 

The public pays Rs 49 per litre in Ahmedabad. The Government does not account for 49 divided by Rs 32 or the hidden 55.5% extra amount collected from the Public. [ There can be, say 5% wastage / loss in recovery - but that is minor and can be overlooked now ]

Check with Bush

Price of Petrol is only 3 dollars per gallon [ US gallon is 3.785 litres ] in States as of November 12, 2007 - that is 0.8 Dollars per litre or Rs 32 per litre

Another circumstantial, clinching evidence: Bush has not attacked any other Country like Iran or others after Iraq. Would he have sat still if US Energy security or Crude prices were a problem ? 

[ Besides the PM, we have an egomaniacal Finance Minister, who may be eying for Noble Prize, with his discovery of direct corelation between Cement Prices and Inflation. He is an unworthy disciple of Indira Gandhi - she saw inflation with Onion / Potato prices and cashed on it ]

Brinda Karat did: When the Government raised the petrol and Diesel prices last, she said in the Parliament that the Government collected Rs 5000 Crores more than what they promised. 

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

In 1993 or earlier, the duty was raised more to reduce the petrol consumption / import bill because of poor foreign reserve. The Foreign Reserves have improved. Government desires that India becomes an Auto Centre like IT. Given these, inflating petrol prices is illogical / insane. 

'The Government's notification today [ 3-4-2007] of the withdrawal of nearly 20% duty on imported Cement to make them cheaper than the present prevailing market prices in India is a categorical proof that it is an unwanted act of a demented, unbalanced, short sighted, egomaniac    [ April 2007 ]'  - refer Sack Chidambaram for more

His defense: 'please articulate concerns with the farmer who buys a bag of cement' Chidambaram's interview with CNBC TV 18

Public do not need Petrol as much as they do Cement, Manmohan Singh dare not ask or interfere with what I do, Either Mukesh Ambabi or Ranganathan will buy up all the petrol and starve the petrol pumps / public, we can act Right only if Left kicks or perhaps any other hundred excuses that these fellows / spokesperson, Sanghvi can think of. 

The 100 Crores Indians pay more to the Government than the Rich and Affluent Income Tax payers. They, including the poor, also pay for the Petrol and not, just the buyers of Petrol from Petrol Pumps, who are only conduits for the transfer of the money to the Government. 

The manufacturing companies, the service providers, bus / train operators, and the vegetable vendors pass on the 'additional cost' to the buyers. The cost trickles down to every person and every object of daily use 

Petrol and Diesel price raises increases the Transportation cost of Goods - be it a match box, salt, soap or wheat. Public will pay more and these fellows will preach worthless sermons

Crude price increases: OPEC was formed in 1973 and the initial price got fixed at 14 Dollars. In 74, the barrel price was 18 Dollars or so. Even we assume it to be 14 Dollars then and take 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 ]

These fellows lease Iron Ore mines at about Rs 25 per ton / per 1000kgs. Is it not a National property and the benefit should go to the people. SAIL and NMDC export the ore at over Rs 6000 per ton. Whose money is that ? Why did they not have ad valorem duty for this natural resource ?

This Iron Mines leasing is the major reason for high net Proft Margin by SAIL, NMDC, [ Government shares the profits ] Sesa Goa and Tata Steel. Why Mittal wants to put up only 2 Steel plants ? He can put up a few more. The rich can / always get richer. Lime Stone quarries aremostly leased at 45 paise per kg.

India's production of Steel is 170 Million Tons / 17 Crores Tons / 17000 Crores in kgs.  Just imagine that Iron ores were charged at 10% of Market price or 70 paise per kg, it would have given about 50000 Crores to the Nation, for the benefit of the Public - and not free gifts to NMDC, Mittal, Tata or Agarwal

Excise Duty - NES 68: To recover the Bangla Desh war expenses, products falling under section 68, not elsewhere specified or NES for short, were brought into excise and 1% levy was made. Then it became 2%, got raised to 5%, then to 8% and finally 10%. And you have the service tax also on that - [ Petrol was under NES 68, I think. ]

Benefit to the Public - added cost in the short term and extra added costs in the long run

Only Government benefits - Work expands to fill the available Time. More Government employees, more pay, less work and shallow, tall structures to scare the public - that is Public Service !