Increase duty on diesel cars up to Rs 2.5 lakh: Jaipal Reddy

June 13, 2012

Jaipal-Reddy

New Delhi, June 13: If the government accepts oil minister S Jaipal Reddy's proposal, the price of small diesel cars could soon rise by Rs 1.7 lakh while medium-to-large guzzlers could become costlier by Rs 2.55 lakh a piece.

The proposal to impose additional excise duty on diesel cars is bound to trigger protests from automakers, who have seen sales growing at the slowest pace in seven months in May. Domestic car sales declined 24% in May compared to the year-ago period due to high fuel prices and interest rates.

The proposal drew a thumbs down from analysts and private players, who described it as an excuse to avoid fuel pricing reforms. "From the RBI to C Rangarajan, head of the PM's Economic Advisory Council, everyone has recommended deregulation of fuel prices. If you can't do that for political reasons, at least fix subsidy on diesel and then let the market determine the pump price. Taxing vehicles would serve hardly any purpose," said an industry analyst requesting anonymity.

But Reddy has his arguments for seeking taxing diesel vehicles that are outpacing petrol car sales. In a June 7 letter to finance minister Pranab Mukherjee, the oil minister gave three key reasons for his proposal aimed at arresting a ballooning fuel subsidy bill.

Reddy pointed out that the proposed additional excise duties are equivalent to the minimum benefit that a diesel car owner derives from the fuel's price differential with petrol — at current prices — over a 10-year assumed life of a vehicle. Petrol in Delhi costs Rs 71.16 a litre against Rs 40.91 for diesel.

Reddy's arithmetic goes like this: he first calculates the total distance a vehicle is expected to clock in its 10-year life span, assuming an annual run of 18,000km. Then, he works out the fuel costs by taking a median mileage of 18km to a litre for small cars and 12km for medium/large vehicles. For good measure, he shaves off 10% of the total cost to level.

According to Reddy's calculation, the additional excise duty amounts to asking the diesel car buyer to pay upfront the price differential with petrol that he or she would enjoy later. A petrol car owner, in contrast, shells out every time at the pump.

Reddy also pointed out the adverse impact of increased diesel car sales on the government's earnings. Petrol attracts an excise duty of Rs 14.78 per litre against Rs 2.06 a litre for diesel. So each time a buyer opts for a diesel car instead of petrol and visits a petrol pump, the government loses Rs 12.72 in excise duty on litre of diesel. Together with the Rs 12.53 a litre subsidy on diesel, the actual price differential with petrol at Delhi works out to Rs 25.75 a litre.

To drive home the enormity of the situation arising out of this increasing dieselization, Reddy says diesel consumption rose by 7.6% in 2011-12 against 6.2% in 2010-11. In contrast, growth in petrol consumption fell from 10.7% in 2010-11 to 5.6% in 2011-12.

The Kirit Parikh Committee on fuel pricing reforms had recommended an additional excise duty of Rs 80,000 in February 2010 when duty difference on petrol and diesel was Rs 9.75 a litre and under-recovery on petrol was more at Rs 3.97 a litre than Rs 2 on diesel.

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News Network
May 12,2020

Srinagar, May 12: Two paramilitary Central Reserve Police Force (CRPF) officers committed suicide after shooting themselves with their service rifles in Kashmir on Tuesday.

In the first incident, a CRPF sub-inspector on Tuesday committed suicide after shooting himself with his service rifle at Mattan area of south Kashmir’s Anantnag district. The deceased, identified as Fatah Singh of Jaisalmer in Rajasthan, had reportedly left behind a suicide note that read: “I am afraid, I may have Corona.”

Station House Officer (SHO) Akura, Mattan police station Jazib Ahmed said that they have followed the COVID-19 protocol while dealing with the body of the CRPF sub-inspector. “His samples have been taken and post-mortem conducted. Only results would confirm whether he was a COVID-19 positive,” he said.

CRPF spokesman in Srinagar Pankaj Singh said the officer had returned to his unit after performing a day-long duty. “As such, there is no evidence that he had caught COVID-19. Let’s wait for the final report. Details will be shared with the media,” Singh said.

Hours after the first incident, an assistant-sub-inspector of the CRPF posted in Srinagar also committed suicide by shooting himself dead with his service rifle.

Special Director General of CRPF, Zulfikar Hassan said they were trying to find out the reason for the two boys taking this extreme step.

Suicides and fratricide incidents are not uncommon among the CRPF and the Army personnel deployed in Kashmir. In 2006, recognising the rising fratricide and suicide cases among the armed forces, the then Defence Minister had constituted an expert group of psychiatrists under the Defence Institute of Psychological Research in order to suggest remedial measures to prevent suicide and fratricide incidents.

Over the last decade, incidents of fratricide have reportedly reduced in the Army as the force has taken measures to address the issue.

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News Network
May 21,2020

Srinagar, May 21: Two Border Security Force (BSF) personnel were killed and their weapons snatched by militants in the Pandach area on the outskirts of Srinagar yesterday.

According to IGP Kashmir Vijay Kumar, the two BSF jawans, who were on road surveillance deployment, were fired upon by two of the three terrorists on a motorcycle around 5:15 pm on the 90-Ft Road at Pandach, near Soura. 

They were critically injured and later succumbed to injuries. The terrorists escaped after taking away one AK rifle and one INSAS. Efforts were underway to trace the terrorists.

He said that two jawans, Constable Rana Mandol and Constable Ziaul Haque of ‘C’ company of 37th battalion, were injured and they later succumbed.

“The terrorists managed to take away the weapons of the martyrs. Area has been cordoned off and the search for the terrorists is on”, he said.

Residents around the spot said that the two soldiers were buying chicken for Iftar from a mutton dealer, around 300 meters away from their deployment location when three militants on a motorcycle stopped and opened fire on them.

Medical Superintendent SKIMS Dr Farooq Jan said that both the jawans were brought dead to the tertiary care hospital.

Senior Police officials said it was a “clear case of security lapse” as the two jawans had left their spot of deployment on Srinagar-Kargil-Leh road and gone to a shop 500 metres away on a different road.

They said that possibility of terror attacks and subsequently claims by the new outfit TRF had been flashed to all forces earlier this week.

The terror strike in the capital city has occurred a day after an encounter in downtown Srinagar, where two Hizbul Mujahideen militants, including the top wanted Junaid Sehrai, had been killed on Tuesday.

In the last one month, five Army and Police personnel and two militants had got killed in an encounter in Handwara area of Kupwara, a day before three CRPF men were killed in another attack.

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News Network
February 9,2020

Mumbai, Feb 9: Given the slow progress on the ongoing Rs 38,000-crore capacity expansion at the four largest metro airports, and also the surging traffic, the snaky queues will continue at least till 2023, warns a report.

The four largest airports -- New Delhi, Mumbai, Bengaluru and Hyderabad -- handle more than half of the traffic and are operating at 130 per cent of their installed capacity. These airports are under a record Rs 38,000-crore capex but the capacity will not come up before end-2023, says a Crisil report.

“With the dip in traffic growth largely behind, we expect congestion at the top four airports of New Delhi, Mumbai, Bengaluru and Hyderabad, which handle more than half of the load, to continue till about FY23,” says the report.

Already these airports are operating at over 130 percent of installed capacity, and the ongoing healthy traffic growth this operating rate is expected to rise further in the next 12 months.

“Operationalising of capacities in the following two fiscals will bring down utilisation levels albeit still high at over 90 per cent by fiscal 2023 and that is despite an unprecedented Rs 38,000 crore capex being undertaken by the operators of these airports over five fiscals 2020-24,” says the report.

Despite this unprecedented capex that is debt-funded, ratings are likely to be stable given the strong cash flows expected due to healthy traffic growth, low project risks associated with the capex and improving regulatory environment, notes the report.

“Capacity at these four airports will increase a cumulative 65 per cent to 228 million annually (from 138 million now) by fiscal 2023. However, traffic is expected to grow strong at up to 10 per cent per annum over the same period. Since additional capacities will become operational in phases only by fiscal 2023, high passenger growth will add to congestion till then,” warn the report.

High utilisation will ride on pent-up demand (accumulated in 2019 as traffic was impacted with the grounding of Jet Airways) and one-off issues with new aircraft of certain airlines.

Further impetus will also come from improving connectivity to lower-tier cities and reducing fare difference between air and rail. Increasing footfalls at airports provide a leg-up to non-aero streams such as advertising, rentals, food and beverage and parking, which comprise around half of the revenue of airports already.

These are expected to grow strongly at over 10-12 per cent, also supported by higher monetisation avenue coming along with current capex. The other half of revenue (aero revenue) is an entitlement approved by the regulator, providing a pre-determined, fixed return over the asset base and a pass-through of costs.

Aero revenue is also expected to get a bump up during fiscals 2022-24, when a new tariff order for airports is likely. Overall aggregate cash flows are likely to double by fiscal 2024 and provide a healthy cushion against servicing of debt contracted for capex, the report concludes.

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