PETROL AND OUR NATIONAL DUTY

So many times we just take up part data and draw conclusions that suit  our argument. This is also the reason why the standard of Indian researchers in our colleges/universities is less than satisfactory.
The below table is itself explanatory of this fact.
The compiler has taken lot of trouble in accumulating the data and making the slide.However he has overlooked a certain  fact that that a nation's economic calculations are not based on simple additions and subtraction.
In the year2005-2006 the average Re/ $ average rate was  Rs.44.2735 which as per the table pegs gasoline(petrol) as $0.9224 per litre.
For the year 2015-2016 the official average rate is still not out but let us take it as 64.50. The rate per litre comes to $0.9488 .
Here too I can take whatever $/Re and petrol rates to suit my argument=- that is the beauty of statistics- but that is not our lookout here.
1. What the compiler has overlooked is that during the decade in question Diesel was heavily subsidised and the subsidy component was either being financed by Fixed and elevated Petrol price.
2.Apart from the petrol , government was covering the shortfall by giving cash transfer to OMCs. This shortfall was obviously being funded by the tax payers.
3. The prices that you are seeing between 2007 and 2008 and again between 2008 and 2014 Jan have highly fluctuating. What do you think was the price that the Oil importers were paying to the O(il) P(roducing) C(ountries). This price is the spot price or sometimes the long term contract price.
4.During this time there have been great political turbulence in the middle east .Iran has been a subject of great interest. It could not sell it's oil and US placed embargo on it's oil export. All these had effect on the oil availability as such the country had to do a lot of spot purchases, all this while burdening the tax payer and the Petrol user.
5.Even the Onion buyers know that prices vary with demand. During the above decade the automobile industry has churned out a double digit growth . The farmer in Punjab has used free water  generated by diesel pumpsets running on subsidised diesel.
But during this growth in demand the price of petrol has mostly remained static.
6.All the well-to-do citizens bought 2000cc+ powered SUVs running on subsidised diesel.That included politicians, businessmen,media person, property dealers and crooks who paid no taxes.
At this time no one ever questioned the price of petrol, because they were not using it. It was being used by the poor Scooter, motorcycle and  Maruti 800 and Santro users.
Just for your information, very few luxury cars exist that run on petrol.Most run on diesel.
7.Now when the oil price has inched down only in line with the previous pattern. Should the government not try to eliminate the oil subsidy that has already burnt a hole in it's pocket and cover the shortfall on account of old subsidy..
8. As per government statistics ( which may not be accurate) 8 crores of LPG cylinders have been distributed to people who did not deserve it. This has been extrapolated from the no. of people who have given up their LPG subsidy.

At the end of my poorly managed argument, all I can say is that whatever be the form, it will always be the citizens who will pay the bills of the government. The government has no money, NO GOVERNMENT OF THE WORLD HAS EVEN A SINGLE CENT. It is all citizens money in form of taxes or loan given to the government in form of Bank FDs, Post Office schemes , PPF etc.
What your objection should be not micro issues that the government tries to put forward to you to distract you. should ask and ask for good governance.
File regular RTIs and Public Grievances for the useage of your tax money.
File petitions on downsizing of government machinery.
When most of the work is handled by Infosys and TCS, why is the IT department using almost 45% of it's tax revenues generated.
Why is there a full department of service tax in just 15 years?
Why should the direct taxes not be done away completely and we survive on the GST and expenditure tax?
Why must the government revenue departments not publish a Annual Report like Private and Public companies.
These are the questions that citizens must ask but no-one ever will.
It is much easier to throw vague barbs at no-one in particular and pretend that we have done our national duty... but we haven't.
JAI HIND

DOING WHAT YOU KNOW BEST

DOING WHAT YOU KNOW BEST

At least two to three times a year , the financial world provides an opportunity to the 2 billion literate experts of this world. This opportunity manifests itself in making quite a few armchair economists every time  and also throws up a lot of investment experts and advisors. This is required also, because there are serious shortage of jobs in this world; and what better job can be there than to comment upon the economies of the world , tell the televisions that the doom is near and how this crash is worst ever that the world has seen- ever in most cases meaning since last week .

I have always approached most of the things rather simplistically i.e. from First Principles. Here is how they went:

 What is a Stock/Share? It is part of a business that anyone can own legally, even if someone has limited funds.

What Stocks/Shares should I buy? Of a good reputable business which has near monopoly . Preferably a product that is used regularly and cyclically.

But I don’t understand balance sheets, all the financials which are to be considered while buying a share what should I do? Invest in Mutual Funds. Diversified and preferably large cap.

How long should one hold the shares of a good company? Forever! If the business is good and growing , why would you want to sell it and start looking for another good business. It is like closing your own running shop and starting another one instead.

This was as close my mind worked towards investment and all was going well… till something called derivatives came along.

These were very complicated financial concepts which made the people who were regularly buying and selling everyday (and hence called traders)- even more busy. Now they were not buying shares but promising to buy a whole batch of shares of a company by paying a fraction of what you and me were paying by “actually buying shares”. To cut a long story short at various times when the markets fell due to a lot of reasons that they do, a lot of people lost money, homes and even lives.

An even more complicated product wiped out the economy of United States and Europe in 2008 .

During all this time I was quite bewildered (not enough to not continue with my MF investing).I was wondering that what economically productive function was being performed by the FnOs or derivatives and individuals and companies who were dealing in it.

If something is not produced, it is not part of an economic activity. This production can be of something tangible like metal, petroleum, machinery, banking, Pharma OR non tangible like IT, healthcare OR services. Something must be produced to have a value attached to it. We all are part of that economic activity. If we do not work, not only will we not be able to earn for a living but also not add any value to the society and the economy. There is a classic theory of economics called Guns and butter, which you can google .

In short… we must do what we know..exert and assert our skills.

It is very important to read the above and understand before reading what I am about to mention below.

We earn by working and save it in the banks and further invest it in Mutual Funds, stocks, gold, real estate, bonds etc. The companies, the stocks of whom you own are carrying on their business and making a profit because of which your share price goes up. But what happens if that company whose shares you own, instead of using it’s profit to expand it’s business uses the money to invest in the Stock Market or buys MFs for itself? There is nothing wrong with it legally. They are confident that they will make more profit by investing than by carrying on their own business.

Let us further take this example. The government of a country has wealth in form of foreign exchange or surplus taxes in its budget (which rarely a government has). Now instead of using that wealth on development programs the government decides to take that money and invest in the stock market. Is that right, or is that correct? Is the government doing anything wrong? It maybe argued that by doing so the government is trying to bridge the deficit that it is always saddled with because the receipts from taxes are always less than what it has to spend for development. It maybe true ,however to me it looks like a python trying to eat itself tail onwards.

This was what China was trying to do. It was using it’s reserves to make profit from the market that was supposed to be coming up by it’s own developmental and growth policies…and who was supposed to be having a higher growth rate than China.

There is more to this in form of improper or incorrect data that used to be flowing out from China, which I always believed was “doctored” by the government. China is in fact in a unique position to show to the world what it intends to show and how much it has to show. I am personally witness to 2,3 incidents where the government or party workers kicked in to what was supposed to be a private drydock in order to create subterfuge and diversion from accidents that happened due to safety having taken a backseat.

Coming back to our talk… it is important for everyone to do what they are trained to do or supposed to do.

Government is supposed to create policies and a safe atmosphere for it’s citizens and businesses.

Businesses and industries are supposed to carry out their enterprise in earnest.

Citizens are supposed to abide by law like everyone else, work and earn their living and ensure that their dependents are looked after.

This is the ideal world…or utopia as we call it.

What actually happens is …

Government does business or creates confusion by interfering in businesses.

Businesses try to interfere with governance and twist laws to extract unfair amount from the citizens.

Banks mislead the clients and channelize the wealth they are supposed to protect into avenues that are profitable only to themselves.

The professionals who are supposed to heal, build bridges, protect the country and carry on their professions start dabbling with their money and lack of knowledge…

As a result all goes haywire… and we have the entropy and disorder that we have.