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Petrol, Diesel Prices Can be Cut, But Lack of ‘Political Will’ Keeping Prices in India Highest in World: SBI Economists

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Decreasing petrol and diesel price under gst sbi ecowrap report 2021

Shimla-Petrol and Diesel prices in India could be brought under control and their price could be reduced to Rs. 75 and Rs. 68, respectively, says the SBI’s Ecowrap report released by its Economic Research Department. The Indian Government can do this simply by brining these fuels under the ambit of the Goods and Services Tax (GST), the report said.

However, according to the report, lack of political will is keeping Indian oil product prices at one of the highest in the world. This lack of will arises from the fact that Centre and States are loathe to bring crude oil products under the GST regime as Sales Tax/VAT on petroleum products is a major source of own tax revenue for them. The states, in particular, would face a loss in revenue.

However contrary to this possibility, the government had been maintaining that it doesn’t control fuel prices. On February 17, 2021, on a day when petrol crossed the ₹100 mark, Prime Minister Narendra Modi had blamed it all on the previous governments. 

The report said that one of the unfinished agendas of the current GST regime is bringing petrol and diesel under GST.

Every state has its own tax structure. The states choose to levy a combination of ad valorem tax, cess, extra VAT/Surcharge based on their needs. These taxes are imposed after taking into account the crude price, the transportation charge, the dealer commission and the flat excise duty imposed by the centre. The multiple taxes have made petroleum products prices one of the highest in the world, the report said.

share of states in petrol taxes

The base price of Rs 75 for petrol and Rs 68 for diesel has been calculated on the following assumptions: Crude price at $60/bbl, exchange rate of Rs 73 for a dollar, transportation charges of Rs 7.25 for diesel and Rs 3.82 for petrol, dealer commission of Rs 2.53 for diesel and Rs 3.67 for petrol, cess of Rs 30 for petrol and Rs 20 for diesel, GST rate at 28 per cent and petrol consumption growth rate of 10% y-o-y and 15% for diesel y-o-y.

Using all these assumptions, the researchers have found that the base price for petrol and diesel comes out to be Rs 75 and Rs. 68, respectively at pan India level. At this base price, with multiple simulations Centre and States have a revenue deviation from budget estimates by only Rs. 1 lakh crore 90.4% of the GDP) after adjusting for the increase in consumption with the intended price cut.

The report further said that a dollar increase in the crude oil prices will push up the petrol price by around 50 paisa and diesel prices by around 150 paisa and bring down the overall deviation by around Rs. 1500 crore under the suggested baseline scenario.

If this tax structure is used for the Financial year 2022, when Centre and states taxes are already so high, we see that states which have the highest rates are losing revenue if they shift to this GST regime. But this flat taxation structure brings in uniformity and as per the calculations, it brings down the burden of taxes on the common man by almost Rs. 10-30 depending on the product consumed and the state in which it is consumed, the report said.

Additionally, it benefits some states which do not drastically tax their petroleum products, like Uttar Pradesh.

“Interestingly, our simulation exercise suggests that when crude oil/bbl declines by 10 dollars, Centre and states could save close to Rs 18,000 cres, if they keep the petrol prices at baseline Rs 75 and diesel at Rs 68 and don’t pass on the benefit to consumers,” the report said.

Further, the report recommended that the Government should build up an oil price stabilization fund which can be used in bad times for compensating revenue loss by cross subsiding fund saved from good times, without hurting the consumer.

Further, since November 2020, the prices of non-subsidized cylinders have increased from Rs. 594 to Rs 819 in Delhi, a substantial increase of Rs. 255 er cylinder. The data on DBTL (Direct Benefit Transfer for LPG) indicate that the subsidy amount has sharply plunged to merely Rs. 3,363 crores in April-December 20220 period from Rs 22, 635 in Financial Year 2020. There is negligible or no difference between subsidized and non-subsized cylinder.

Price hike in lpg cylinders by sbi report

The report also said that though the government has announced to give one crore more free connections to the needy over the next two years, affordability barriers still exist. The government should focus on the affordability issue and to achieve this, the SBI researchers have suggested a set of measures.

Separately, for the LPG cylinders, the report proposed an increased and graded subsidy to provide to poor consumers which can be tapered off over a period of, say, five years. For this, the Government can create a comprehensive merged database using database of Ayushman Bharat, PM-KISAN, PMJDY, PMUY and MUDRA and then provide these people with maximum four free cylinders in a year. Even if five crore people are eligible for this then the total cost to exchequer per year will be maximum Rs 16,000 crore.

Besides, the report suggested that the Government might cancel its borrowing planed in the last two weeks of March 2021, totaling Rs. 49,000 crores.

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Mandi Hooch Case: HP Police Claim Bursting Large-Scale Illicit Liquor Trade, Nabs Kingpin

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mandi liquor hooch case

Mandi-Mandi hooch case has brought shocking facts to light. An organized illicit liquor trade flourished in a village of Hamirpur district right under the nose of the Excise and Taxation Department and the police. It wasn’t a minor business but had inter-state links too. Named ‘Rainbow Café, a factory was operating in a building in a village of the district.

According to the initial police investigation, it was believed the deaths were caused by either improper mixing of the ingredients, or because a part of the spirit procured for the production of liquor may be impure and contained methyl alcohol instead of ethyl alcohol.

It raises another crucial question; can such an organized, large scale illicit business flourish without political patronage? 

Shaken by the death of seven persons due to consumption of spurious liquor in the Salapar area of Sundernagar Tehsil, the State Police formed a Special Investigating Team to investigate the case. According to the police, as the scope of the investigation had expanded, the state police included Arjit Sen (SP Una), Mohit Chawla (SP Baddi), Arvind Digvijay Negi, ASP Kangra and Yogesh Rolta (SDPO Parwanoo) in the SIT.

The police raided different places in different districts, collected evidence and seized a large amount of incriminating material.

The police had nabbed four persons in this connection. On Saturday, the Director-General of Police, Sanjay Kundu, held a press conference and claimed to have busted the illicit liquor business by arresting the prime suspect who was identified as Narender alias Kalu – a resident of village Maloh in the district. He was on the run following the deaths.

During the questioning, Kalu revealed that the main supplier of this illicit liquor consignment was one Gaurav Manhas alias Goru of Palampur. A police team traced his location and apprehended him from a hotel in Zirkpur on Friday.

On being questioned by the SIT, it was found that Goru belonged to the Panchrukhi area of Kangra. According to the police investigation, Goru was running an illicit bottling unit at Hamirpur in collusion with Praveen Thakur. It was also revealed that the raw material for production and packaging was received from other persons belonging to different states.

One Sagar Saini, who belonged to Delhi, supplied the spirit drums and AK Tripathi, who hailed from Samba, Jammu and Kashmir, provided the formula, the police said.

Further, it was revealed that the bottling unit in Hamirpur was run by two persons who belonged to Uttar Pradesh. The duo was responsible for mixing ingredients for the manufacture of liquor. Empty bottles were procured from ‘kabaddi’ in Hamirpur and bottles, caps, boxes and cartons were supplied from Parwanoo. VRV Santra stickers were created by a graphic designer.

Following Seizures Were Made from Hamirpur

1. More than 6000 bottles filled with illicit liquor labelled as “VRV Fools Pvt. Ltd.”,
2. five plastic tanks (300 Its each),
3. seven boxes containing bottle caps marked “VRV foods Ltd.”,
4. nine plastic drums (50. Its each),
5. one carton containing 136 strips of labels marked “Santra, VRV Fools Pvt. Ltd.”
6. 124 sheets containing more than 2500 holograms,
7. 18 plastic tag rolls marked VRV Foods,
8. one carton containing four bottles (500 ml each)
9. one jerry cans (5 Its) containing flavour,
10. three aluminium katchhhi, two bottle sealing machines,
11. one plastic jerry can filled with coloring material for the illicit liquor,
12. 56 plastic bags filled with more than 2500 empty bottles,
13. more than 2000 empty cartons marked “VRV Foods Ltd”,
14. one bottle filling machine,
15. seven stamps marked with impression of Batch No. 61, 62 and 361; 33 distilled water plastic containers (20 Its each)

These items were seized from the illegal premises busted at Panyala village, Hamirpur. The premises was marked as “Rainbow Café”.

At the instance accused Goru, another bottling plant was located under Station Nalagarh which was subsequently raided by police in Baddi.

The suppliers of holograms, labels, cartons, used bottles, spirit, bottles caps and material for the illicit production have been identified and apprehended during searches in the neighbouring districts Kangra, Solan, Hamirpur.

According to the SIT investigation, the illicit liquor factory was operating in Hamirpur District and raw materials were procured from both within and outside the State. The police said that Gaurav Manhas appears to be the kingpin of the illegal trade. Gaurav, with the assistance of Praveen, Pushpender and Sunny from UP, was running this illegal bottling plant at Hamirpur building owned by Praveen.

In addition, the DGP informed, Manu and Gagan were his partners in the bottling plant busted under the jurisdiction of Police Station Nalagarh. Gaurav has a strong network of distributors and supply chains for raw materials and finished liquor. The racket included the following major partners:

1. Gaurav Manhas alias Goru (kingpin),
2. Praveen (owner of the building used as an illegal bottling plant)
3. Pushpender and Sunny (workers in the plant)
4. Manu and Gagan (prime suspects in Nalagarh case)

The DGP said that further investigation is underway and a clearer picture will emerge after the collection of evidence and interrogation of all accused.

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Adi Badri Dam in Himachal Pradesh to be Constructed for Rs. 215.35 crores, MoU Signed

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Adi Badri Dam in Himachal Pradesh

Shimla-Adi Badri Dam in Himachal Pradesh would be constructed near the Adi Badri area of Yamuna Nagar district of Haryana at Panchkula on 77 acres. Rs 215.35 crores would be spent on the rejuvenation of the Saraswati River. This is what an MoU signed by the Himachal Pradesh and Haryana Government proposes.

The HP Government claimed that Himachal Pradesh would be benefited from the project as 3.92-hectare metre water per annum would be earmarked for the state for drinking water requirement and 57.96-hectare metre for irrigation water demand of the project affected habitations.

The entire funding of the Project would be arranged by the Haryana Government. Both the Governments would be free to prepare the Tourism Projects as well as any other infrastructure facilities from their own resources, the state government said.

According to the HP Government, only 21 families of the State would be displaced and they would be properly rehabilitated. The cost of rehabilitation package for oustees and environmental protection package in accordance with prevalent policies of Himachal Pradesh as well as any other prevalent laws or any other unforeseen cost/ expenditure in this regard related to Adi Badri Dam in future would be borne by the Government of Haryana and no liability on this account would be passed on to Himachal Pradesh

The state government also claimed that on completion of this Project, River Saraswati would again come alive. Out of the total proposed area, 31.16-hectare land falls in Himachal which include 0.67-hectare private land and 30.49-hectare forest land. The Dam would get 224-hectare metre water from the Somb River of Himachal Pradesh that falls in Yamuna near Adi Badri in Yamunanagar district. The HPPCL would be executing agency for the construction of Adi Badri Dam and its related infrastructure. 

The Haryana state government said that Adi Badri Dam Construction Monitoring Committee has been constituted for planning, supervising and monitoring of Adi Badri Dam works which comprise of Additional Chief Secretary Irrigation Haryana, Secretary Jal Shakti Vibhag Himachal Pradesh, Engineer-in-Chiefs and other representatives of both States.

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Mandi Hooch Case: Death Toll Rises to 7 as 2 More Die, 4 Arrested

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Himachal Pradesh HOoch case sundernagar

Mandi-The death toll in the hooch tragedy in Sundernagar, Mandi district, has risen to seven after two more persons died on Thursday. One of the patients died at Lal Bahadur Shashtri Government Medical College and Hospital (LBSGMC), Nerchowk, while the other died at his home. Further, three more persons have been admitted to LBSGMC. One of the patients was referred to PGI, Chandigarh in a serious condition.

The district administration has now taken to mobile public addressing system ( 10 vehicles) to identify more such victims who fell ill following consumption of spurious liquor.

On Wednesday, five people had reportedly died after consuming a spurious liquor, which was suspected to have some sort of chemical adulteration to amplify the effect. Following these deaths, the police came to action after receiving information about these deaths. The liquor was identified as  ‘Santra brand’ country liquor, manufactured by VRV Foods Limited in Kangra, and ‘999 Power Star Fine Whiskey’—made by Empire Alcobrev, Chandigarh—near Salapper in Mandi district

Shalini Agnihotri, the Superintendent of Police, Mandi, confirmed that four-person were arrested in this connection. These accused are believed to be involved in supplying spurious liquor and all belong to Sundernagar Tehsil.

Two of the accused were said to be Jagdish Chand -former Pradhan of Salapad panchayat – and Achhar Singh – son-in-law of the current Pradhan. Two others were identified as Sohan Lal and Pradeep Kumar. All four have been booked under Sections 308 (punishment for culpable homicide), 304 (culpable homicide), and 120B (criminal conspiracy) of the Indian Penal Code.  The police said it has seized two dozen bottles of ‘Santra brand liquor from one of the accused.

These accused were produced before the court in Sundernagar that granted seven-day police custody of all four.

Caught off-guard in checking smuggling and sale of illicit liquor, the HP Government has formed a Special Investigation Team and deputed the Director General of Police, Sanjay Kundu, to personally supervise the investigation. According to the official statement issued by the HP Police, the DGP is camping at Sundernagar.

Arvind Digvijay Negi, IPS, who is a seasoned police officer and has worked in the National Investigation Agency, has also been included in the SIT, the HP Police said.

“The SIT is undertaking investigation in an earnest way which inter-alia includes visitation of the scene of the crime, raids on suspected places, seizure of incriminating material and interview of other suspected persons, “ the police said.

 The SIT headed by Inspector General (southern range) Madhu Sood, includes Shalini Agnihotri-SP Mandi, Kushal Chand Sharma – Superintendent of Police, Kangra- and Virendra Kalia- SP (Crime) CID Shimla.  

It is yet to be ascertained what chemical agents were used in the spurious liquor that caused the death of the victims.

Meanwhile, the case has taken a political colour as the opposition Congress alleged the current government of sheltering persons involved in the illicit liquor trade. Congress chief Kuldeep Rathore on Thursday raised questions over the deteriorating law-and-order situation.

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