Citizens' Issues
Need to fix gas price rates in rupees

A guestimate would put the dollar-rupee conversion rate to be around Rs63. What will happen if the crude oil or gas price goes up dramatically due to unforeseen circumstances, including war-like situation in the Middle-East or elsewhere? Once this price is gazetted, it would actually become due for revision only in April 2015


Practically six months after it was due to have been put into effect on 1st April, gazetted and yet not made applicable due to ensuing elections, and subject to debates and discussions, the National Democratic Alliance (NDA) government at last has settled the score to set the domestic gas price to $5.6 per unit, not $8.4 as indicated earlier by the former government. Is this a concessional, discounted rate?


Anyway, this works out to be roughly 33% higher than the price in operation at $4.2 but becomes effective from 1st November. This price of $5.6 would be reviewed every six months so as to "ensure stability in the market". This move may have been caused by the fall in the international market price and the glut situation in the crude oil business.

A guestimate would put the dollar-rupee conversion rate to be around Rs63. What will happen if the crude oil or gas price goes up dramatically due to unforeseen circumstances, including war-like situation in the middle-east or elsewhere? Once this price is gazetted, it would actually become due for "revision" only in April 2015.


According to the press reports available, the new price of $5.6 per mmBtu is based on gross calorific value, which includes "impurities". However, the effective price for net calorific value would work out to be $6.17 per unit, as stated by the Finance Minister, Arun Jaitley. The fuel retail price, from now onwards, would be "linked" to the global oil prices.


The press reports further indicate that the critical part of the announcement is the decision to allow a premium on this price to gas produced in ultra-deep waters, deep waters and technologically "challenging" areas. This new price, it is stated, does not apply to D1 and D3 fields of Reliance Industries Ltd and that the differential amount would be deposited in Gas Pool Account till the outcome of the arbitration process.


These two fields are located in the deep water fields of Kaveri-Godavari basin. It remains to be seen whether the gas produced from these fields would attract a premium over $5.6 per mmBtu, because of their location?


On the whole, prima facie, it would appear that this long over due revision would benefit ONGC, Oil India, Cairn and Gujarat State Petroleum Corporation besides Reliance when applicable. At the same time, this will also give much needed reassurance to international investors that the government wants to encourage them to participate in such exploratory programmes.


It may also be remembered that Reliance inability to supply the contracted quantity earlier, due to "geographical surprises", which is under arbitration, needs to be kept in abeyance because they were supposed to make the loss of the quantity not supplied earlier.


In announcing this price, the government also deregulated the diesel prices and it was reported in the media that IOC chairman confirmed the system of revising prices every month, based on the international price fluctuation. The revision of price would have a rippling effect on freight rates thus helping to moderate inflation while the subsidy burden on fertiliser may increase but which could be offset by the higher income obtained due to higher price for the government. Would the government consider a reduction or withdrawal of fertiliser subsidy or even permit the manufacturers to decide the price issue?


This price fixation will be considered a Diwali gift for the promotion of business and industry and one may expect it to be welcomed in Dalal Street.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


Blue Buffalo Reveals New Twist in By-Product Battle

Premium pet food company says its products may have contained by-products because of a supplier mistake


This is one cat fight that isn’t ending anytime soon. In a huge oops, Blue Buffalo, the Conn.-based natural pet food manufacturer being sued by Purina for claims that its kibble was better for pets because it didn’t contain by-products admitted Tuesday that, well, some of its pet food may contain by-products and it was its supplier’s fault.

Blue Buffalo said this week in a statement on its website that it had recently learned from its supplier, Wilbur-Ellis, that its Texas pet food ingredient processing plant had shipped poultry by-products to customers who had ordered 100 percent chicken meal and thus Blue Buffalo may have received the by-products. The company called it a “mislabeling issue.”

Purina said in its lawsuit that it had Blue Buffalo’s kibble tested and found that some of its products contain poultry by-product meal and/or corn. It contended, “Blue Buffalo’s brand is built . . . on a platform of dishonesty and deception.” Blue Buffalo countered with a complaint of its own that Purina’s lawsuit is a “malicious attempt to undermine the trust of our pet parents.”

Blue Buffalo congratulated itself in its Oct. 14 statement that it was being upfront with customers by revealing the Wilbur-Ellis mislabeling issue. “Although pet food companies are not required to inform consumers of an incident such as this, where no safety or nutritional issues exist, the Blue Buffalo way is to be transparent with you.” The company said it has stopped doing business with the Wilbur-Ellis plant at the center of the mislabeling issue and the by-product problem was corrected months ago.

But Purina quickly hit back saying it had unearthed the truth about the by-products through testing and legal documents it obtained. In a statement to, Purina said:

Blue Buffalo owes consumers an apology for all the false statements, false labels and false advertising … A half admission that Blue Buffalo products ‘may’ contain undeclared by-products is simply not acceptable. Pet owners deserve to know what’s truly in Blue Buffalo pet food.

No word yet if Blue Buffalo is giving “pet parents” their money back for the premium-priced food that may have had by-products in it.

For further information on the Purina vs. Blue Buffalo battle, click here.



How Moneylife Foundation's Free Credit Helpline is important to you
Moneylife Foundation has launched a new Credit Helpline, which will offer free, confidential information about loans to prospective borrowers and indebted customers, stopping them from getting fleeced by ‘debt doctors’
Dr Kirit Somaiya, Member of Parliament, on Friday launched Moneylife Foundation’s Credit Helpline (, in the presence of, Dr Deepali Pant Joshi, executive director, Reserve Bank of India, Mohan Jayaraman, managing director, Experian India, Ranjan Dhawan, executive director, Bank of Baroda and D Venkatesh, director of Softcell Technologies.
Being reported a defaulter on a loan or a credit card has serious consequences to a person's financial life. Unfortunately, along with poor financial literacy, the failure to understand how credit reporting works or its impact on every individual's borrowing ability is rampant. This affects youngsters the most, because the propensity to default starts with education loans and goes on to credit card dues. 
The objective of Moneylife Foundation’s Credit Helpline is to provide information, advice and preliminary guidance to persons needing help in credit related areas. This is being supported by Bank of Baroda for running costs, Experian India for the counselling support and Softcell Technologies for the technology support.
The confidential counselling will suggest ways to resolve a payment problem and even negotiate with lenders. This will prevent financial consumers from being fleeced by ‘debt doctors’. Through the use of internet and video technology, the Helpline aims to reach people in smaller towns as well.
Speaking at the event, Dr Somaiya, a Chartered Accountant & PhD (Doctorate) from Mumbai University in finance & capital markets, highlighted the need to punish the cheater who defaults. "We cannot encourage defaults. However, at the same time we need to make sure small borrowers are not punished while big borrowers are being given settlement options."
Talking about the Credit Helpline, Mr Somaiya said,"Lets develop this concept of handholding borrowers in distress at the national level. I will try to take it up to the Ministry, the Parliament. Let us all try and stop the extortion of borrowers who may have defaulted by the recovery agents and debt doctors."
Mr Jayaraman, who has spoken at Moneylife Foundation's past events on credit reports, spoke about the role of a Credit Bureau and at the same time offered free credit reports to first 250 applicants through the credit helpline.
Dr Pant Joshi, Executive Director of the RBI spoke on the need for a credit helpline and she mentioned that all over the world there are strong financial regulations. In India we have wealth managers, relationship managers, yet many refrain from visiting the banks.
Mr Dhawan spoke on Bank of Baroda’s support to the credit helpline and how banks could benefit from such an offering. He said illiteracy in financial matters is very high even among educated individuals. Financial literacy at the bottom is extremely low, hence there is a lot of mis-selling that takes place. A great deal of consumers education is required, he said.
Mr Venkatesh,  plays an important role in spreading the reach of the helpline. He said that technology plays a very important role for spreading the reach of the helpline. And he will always be there to support moneylife.
Often individual borrowers are ill informed or confused about the terms of credit/loan, actual interest rates applicable and the hidden charges on their loans. They are also scared of admitting financial difficulties to their lenders. Consumers who default in their payment are easy prey for “debt doctors”. Certain credit repair agencies / debt doctors charge fees that range from Rs7,000 at the lower end to as much as Rs16,000. Some agencies start from Rs3000, but have add-on costs including for obtaining the Credit Information Report (CIR), explaining the CIR and signing a Power of Attorney to represent the defaulter with banks/ financial institutions. Some ‘debt doctors’ partner with recovery and collection agents and are sometimes seen buying bad-loan portfolios from lenders and are in a position to threaten consumers with legal notices.
This is bad for the lending environment and people need and are entitled to a reasonable service that does not profit from their financial distress. Moneylife Foundation hopes to fill this gap.
Moneylife Foundation’s Credit Helpline as well as a panel of counsellors and our other resources in this initiative are free and can be availed by anyone.
We expect the Credit Helpline to go a long way in creating an informed customer base for banks and finance companies and helping solve the vexing problem of bad loans.
In fact, it is beneficial to banks as well. If a defaulter can be made to understand that he cannot renege on his obligations without consequences to himself, he will make an effort to pay at least some of the money, rather than run away. This allows banks to improve recoveries in personal credit far more than through threats and recovery agents.
Debashis Basu, founder trustee of Moneylife Foundation made a presentation about the newly launched Helpline and the process. He also mentioned the features and benefits of the helpline.
To access Moneylife Foundation's Credit Helpline, please fill up the form available at If you are a Moneylife Foundation member, your details get pre-filled in by our algorithm, for your convenience. However, you need to be logged in to to see your pre-filled details (and edit them, if needed).
  • Consumers shall email/ call and Moneylife Foundation personnel shall set up a confidential meeting with counsellors, if required. 
  • Counselling shall be done by ex-central bankers, commercial bankers and credit bureau experts. 
  • The details of each case reaching out to the Credit Helpline will be opened with a standard documentation and closed with a feedback form.



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