Economy
India provided $103 million per year in national subsidies to oil, gas and coal producers
Investment by state-owned enterprises (SOEs) in fossil fuel production represented a large portion of overall government support, says a research study from IISD 
 
A research study by International Institute for Sustainable Development (IISD) on fossil fuels reveals that on an average over the years 2013 and 2014, India provided $103 million per year in national subsidies to oil, gas and coal producers. In particular, capital outlay targeting the extraction and production of crude oil, natural gas, coal and the development of fossil-fuelled power projects constituted the largest share of India’s national subsidies to fossil fuel production, averaging $64 million per year across 2013 and 2014. Other support in the form of tax breaks for coal excise duties and fossil fuel transport infrastructure also contributed to this total with average of $40 million each in 2013 and 2014.
 
India has substantial fossil fuel reserves, including 61 billion tonnes of coal, 5.7 billion barrels of oil and 1.4 trillion cubic feet of gas (BP, 2015). The Ministry of Coal (MoC) is responsible for overseeing the management of India’s coal industry through a number of agencies and companies, including Coal India Limited (CIL), a 90% state-owned enterprise (SOE). India’s upstream oil and gas industries are overseen by the Ministry of Petroleum and Natural Gas (MoPNG) and, despite the markets opening up to private investment in the 1990s, upstream and downstream petroleum markets continue to also be dominated by state-owned enterprises (SOEs).
 
Investment by SOEs in fossil fuel production represented a large portion of overall government support with a number of state-owned companies being involved in the production of coal, oil and gas and also in the transportation and refining of oil and natural gas in India. Annual expenditure by these and other SOEs totalled nearly $15 billion on average in 2013 and 2014, points out the research note.
 
SOEs dominate India’s midstream and downstream oil and gas sectors. GAIL (India) is mainly concerned with transporting oil and gas while Indian Oil (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) are the dominant refiners in the country. The combined capital expenditure of the midstream and downstream sector was $5 billion and $4.5 billion in 2013-14 and 2014-15 respectively, says the research note. 
 
Indian public finance institutions and state owned banks provided $3 billion in fossil fuel financing domestically over both 2013 and 2014, for an annual average of $1.5 billion per year. The large majority of domestic financing domestically went to coal plants, reveals the research study. Further support occurs through schemes like the National Electricity Fund to encourage investment in electricity distribution projects and the Power System Development Fund to increase utilisation of gas based power generation capacity.
 
India also provides public finance for production of oil, gas and coal abroad: in both 2013 and 2014 its total value was $4.2 billion averaging $2.1 billion per year, adds the research note.

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Rising costs spoil the promise of Achhe Din?
From onions, pulses, black gram, petrol and diesel to eating out, travelling or life insurance service, costs of everything is going up and common people are still hoping for a respite from spiralling prices
 
Despite several initiatives from the Narendra Modi government, for common people there is little or no respite from rising costs of everything, including food, services or travelling. In fact, the consumer price index (CPI) inflation in October 2015 rose to a four month high at 5%, mainly triggered by increased food prices. As if this was not enough, the central government first increased service tax rate to 14% from 12.36% in June and last week added a Swachh Bharat Cess of 0.5% on the service. This will make services like eating out, telephone bills and travelling more expensive.
 
During October, the pick-up in food inflation was concentrated in pulses and spices and is not broad-based, despite deficient monsoons. According to Nomura, food price inflation rose to 5.2% y-o-y in October from 3.9% in September. However, the pick-up was concentrated mainly in pulses (+10.1% m-o-m; 42.2% y-o-y) and spices (1% m-o-m; 9.8% y-o-y). Sugar and edible oil prices also rose over the month, reflecting higher global prices. By contrast, prices of vegetables and meat fell over the month, while most other items (cereals, eggs, milk) registered only a modest rise. Overall, while pulses are a cause for concern, food price pressures have not been broad-based despite deficient monsoons for a second consecutive year.
 
 
"We expect underlying inflation to stabilise at about 5%, although higher food prices will push headline CPI inflation to above the underlying trend in coming months," Nomura said in a research note.
 
Within the food products, barring the pulses complex, the other key segment that comprise the food and beverages basket have seen a moderation in their growth rates when compared with the previous year. Prices of pulses and related products increased 24.7% during April-October 2015 from 6.71% same period last year. Meanwhile, high frequency data or daily retail food prices indicate an upside risk to food inflation in the coming months, due to the adverse impact of deficient monsoons.
 
As per data released by the government, wholesale price index (WPI) inflation in October increased to -3.8% from -4.5% previous month, mainly due to higher food prices. Pulses inflation is above 40% and, for the past one year, has been galloping. In addition, onion inflation, in the past three months, has risen at an average 90%. 
 
According to a report from Economic Times, higher costs of black gram have crushed Kerala and Tamil Nadu's papad industry. "The price of black gram has almost doubled to Rs210 a kg in six weeks, forcing an industry that employs lakhs to cut production or to add alternative substances like rice flour or corn flour to offset the higher cost," the report says. 
 
Raising the price of appalam, a variant of papad used in Tamil Nadu, has resulted in the thinning of orders, it said. Quoting C Pradeep, owner of Anju Appalams in Madurai, the report says, "We had no option but to increase the price from Rs135 per kg to Rs190 as the price of black gram escalated from around Rs7,000 per 100 kg to Rs16,000. But the sales have dropped. We are now working two days a week." 
 
The price rise in not limited to pulses only. According to a report from Business Standard, prices of basmati rise went up by Rs100 per quintal during first week of November due to increased offtake by stockists. 
 
Even prices of fuel are going up despite lower crude oil prices. On Sunday, oil marketing companies (OMCs) increased prices of petrol by 36 paisa per litre and diesel by 87 paisa a litre. Although the Central government on 7th November increased excise duty on petrol by Rs1.60 per litre and on diesel by 40 paisa, OMCs had decided not to pass on the hike to consumers at that time.
 
Last week, the Central government decided to levy additional 0.5% as Swachh Bharat cess on all services, which are liable to pay service tax. With the imposition of the cess, the service tax rate will go up to 14.5% from 14% on all taxable services. From 15th November, due to imposition of the additional cess, eating out, telephone bills and travelling will became expensive. 
 
Service tax on restaurant bills will go up to 5.8% from 5.6% following the levy of 0.5% Swachh Bharat, or Clean India, cess. The finance ministry has clarified that for restaurants or eating joints having air-conditioning facility, the cess would be 0.5% of 40% of the billed amount that is 0.2%.
 
Travelling includes first class season as well as AC tickets on railways. According to a Rail Ministry circular, the levies make for a 4.35% hike for travel in first class and all AC classes from 15th November.
 
Another interesting point is just in June 2015, the government had increased service tax rates to 14% from 12.36%. 
 
This additional cess is expected to fetch the exchequer about Rs3,800 crore in the remaining months of FY2015-16. It is noteworthy to mention that while the Central government would receive all the money, it is the responsibility of the local bodies to keep the environment clean. But there is no mention in the notification as to how this amount collected under Swachh Bharat cess would be passed on to local bodies. It only says, proceeds from the Swachh Bharat cess would be credited to the exchequer and the Central government, after due appropriation from the Parliament, utilise it for financing and promoting Swachh Bharat initiatives or any other related purpose.

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COMMENTS

Mahesh S Bhatt

2 years ago

There are so many cases of Center /St
ate/Municipal double /triple taxations.

I would like to highlight following areas which are Center/State /Municipal subjects with gross overlaps /poor or little accountability

1) Education
2) Roads /Infrastructure
3) Health care & sanitation
4) Power

All this places we pay taxes to Center / State Government/ Municipality now Center is asking cleaning tax.

There are educational cess in telecom bills.Service tax on fees paid in colleges /schools.

Where do we go next??

Who cleans what where how when why ??

Mahesh

Mahesh S Bhatt

2 years ago

Suck People off & they shall soon chuck you out

Mahesh

Ankur Bhatnagar

2 years ago

Clearly, as far as governance is concerned, we aren't getting much of it.

manoharlalsharma

2 years ago

Rising costs spoil the promise of Achhe Din or Ram rajya past never come back at any cost and long-run of a single party in power has made such policy to KILL Indians in INDIA itself that u can not make temple of u r choice at Ayodhya?

Gopalakrishnan T V

2 years ago

Service tax among other things is the culprit behind rising cost of commodities and services and this Government and its bureaucrats continue to tinkering with the taxes which are inflationary.Instead if the Government is after speculators, hoarders, black money dealers, corruption in various places, improving the Governannce standards in various institutions particularly banks and Public Sector undertakings, the revebues of the Government wil automatically get augmented and they cannot be inflationary bu any reckoning. Old habits and practices of tinkering the taxes to loot tye masses if continued the so called Ache Din will be a distant dream and it wont take much time for people to realisse how they have been fooled The Government cannot take it for granteed the a;; people can be fooled always and in all ways. .

India's annual wholesale inflation moves up to (-)3.81 percent
India's annual rate of inflation, based on wholesale prices, inched up to (-)3.81 percent for October from (-)4.54 percent for the month before, mainly on account of a whopping 86-percent spike in the prices of onions and 53 percent in pulses over the past year.
 
According to the data on official wholesale prices index released by the commerce and industry ministry, the indices for both the major groups of primary articles and manufactured products registered a decline of 0.36 percent and 1.67 percent, respectively, during the month under review.
 
The index for the sub-category of food articles, though, was up 2.44 percent during the year. In the past month alone, prices for urad dal rose 17 percent, arhar 12 percent, gram 7 percent and moong 6 percent.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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