A year with my TVS Wego!

TVS Wego, the scooter of the year 2011. TVS Wego, my first ever vehicle.

The Chits

More than a year ago, I got my hands on this two-wheeler. I was confused between buying a Car and Bike, and was wondering what should I be doing. At home, along with Mom, Dad and my sis, we all made chits to decide what should I do. First chit was written “Bike”, second one had written  “Car”, third one as “Car & Bike” and forth one as “None”.

Well you guessed it wrong, the chit that got picked was “Car & Bike”. Now to my amazement, I was finally able to buy both and the worrying bit was that I would need to look at financing both. I went to all possible Hatchback showrooms in Thane and checked almost every car under the budget of Rs. 3.5 Lakhs which got extended time and again as I was impressed by higher valued cars. One thing I was certain – which ever car I will buy it will have to be the top end model.  (more…)

Petrol Prices in India dip by Rs. 2, but still costly than a beer

Often when elections near, you get some cheer! Here, have some beer!

Beginning Wednesday, the price of petrol will fall in Delhi by Rs 2.22 a litre and by Rs 2.34 a litre in Mumbai.

It is not very clear from all explanations we have got why this price dip now? The Minister of State for Petroleum RPN Singh states that the dip is in line with the crude oil prices and not a political decision. Ever since de-control of petroleum prices, this is the first time ever all three PSU petroleum marketing companies have reduced prices. I still have my own reasons to believe that it is not the prices; it’s the votes that have forced the dip.

While last time around, the oil marketing companies had asked the media not to go by the international crude oil prices but see Indian crude baskets. The minister vehemently defended saying Oil companies have turned up to the media and have made it public that they will not make any profits. Pressure from all corners, including its strong ally, forced government to take this step.

According to a report by a leading Indian News channel, Mukesh Ambani’s Reliance Petroleum sells most of its refined petroleum products out of India, which means its products, are exported rather than used for the domestic consumption. I am not sure about the authenticity of this news report, but if it is any true, I need to understand why?

Globally, crude oil prices have gone up to 110$ per barrel from 80$ per barrel last year. At the same time, Rupee has depreciated against $ to reach Rs. 50 per US Dollar. This hike is caused by reduction of crude oil supply from Libya and other factors. The linked excel sheet will give you a prospective about how the Crude Oil prices have fluctuated.

Global Crude Oil Prices from 1978. (Excel, Size: 387KB)

Now with decontrol is in place, we have to get used to see frequent changes in prices which will reflect (according to Ministry and Oil companies) true value of a one liter of petrol that goes into your vehicle.

Psychological Factor for our domestic market is any hike in fuel prices will in turn inflate prices of all essential commodities. Irrespective of the fact that hike might only be affecting Petrol. We all know that India’s transport sector relies on Diesel for transportation and any rise in petrol should never affect the prices for this sector. But eventually it does. Something I do not understand is how we can allow this to happen when diesel is still subsidized and we, the tax payers pay for it.

Troubled Kingfisher seeks help

This is one of the many times Oil marketing companies have refused fuel to troubled Kingfisher airlines. In the past, they have done and they are doing it now too. The airline is pretty much grounded with 50 to 100 cancellations. I wonder how other airlines are able to cope up.

Vijay Mallya, the face of Kingfisher has even gone out of his way to seek help from government which has assured him of considering any sort of help possible, however not a bailout. I don’t think Kingfisher deserves a financial bailout but yes, any assistance other ways should be considered thinking of the fate of many employees who are at the risk of losing their jobs. It is the last thing aviation industry wants to see. As well, Kingfisher has sought to import fuel directly and use it for its airline operations. Hmm, that way he can save state taxes? I need some law people to help me understand how?

Kingfisher Airlines
Troubled Kingfisher Airlines trying to stay afloat

Having keenly observed the rise of aviation industry, a correction was due and airlines started responding by increasing the prices where possible and then seeking independence in pricing strategy from government. Mandates to fly non-profitable routes from government is hitting all airlines badly given the constant raise in the fuel prices. Plaguing issues like depreciation of rupee making expenditure in US Dollar or Euro terms even more costly.

I don’t think media has the right to sensationalize the issue linking up personal lifestyle of Vijay Mallya. He is the face of the airline, which doesn’t mean he is the only one running the airline. And the state of Indian aviation does not paint a rosy picture at the same time. Linking up to personal lifestyle is like linking up our Politicians to their chairs. Politicians cannot lavish on tax payers money and neither should.

Yes there are airlines which posted profits, like IndiGo. And if anyone asks me personally, I would like to Fly Kingfisher than IndiGo for the pure lure for luxury and something I could afford. After gobbling up Air Deccan and turning it into a Frills Low cost airline, Kingfisher Red, what Mallya has done is to give luxury to middle class. If Captain Gopinath has given Indians an airline to simply fly, Mallya gave it luxury.

I don’t align with the theory of Mallya’s decision to shut down Kingfisher Red. One business where you have volumes, where you have more opportunities to cut costs, gets much better efficiencies. Extracting profits, leveraging your prime slots, get back to the fight with medium fares to low fares. If I was in Mallay’s shoes and I had to shut down Kingfisher Red, I would have done that differently.

Kingfisher Inside
Kingfisher Inside

I would have brought back Captian Gopinath and ask him to manage this business separately with keeping 51% stake for myself and giving rest of the 49% for his company. And from the money I gain from the sale of 49% stake, I would have bailed out my airline. Or Captain Gopinath would not agree, I would have gone for someone else who is able enough.

From the recent news I hear, Kingfisher is in talks with an Indian Company for a stake sale. Yay, why did it took so long?

Fuel Prices and its illeffects

Everyone is up in arms with the back to back hike in fuel prices. To be precise, the Petrol prices.

India is among large importers of crude oil and price of which is so volatile. All Oil PSUs in India are running into losses because of the various subsidies given by the government for all petroleum products. In a way, India is trying to liberalize its economy. The subsidy is basically nothing but the Taxes we pay which comes back as a ‘fake’ relief to us.

Ideally, removal of the subsidy should help government in many ways. One of them, it should end up saving subsidy money which can be diverted to Infrastructure development (and not govt. officials’s pockets). If the funds are properly channelized, I think we can still keep growing as a country in terms of economy and people.

How it is linked to Inflation?

It sounds simple but it is not, trust me. Food products’ prices are the first to go up the moment there is a hike in petrol prices. Reason often cited is the rise in Petrol prices increases transportation costs. One should remember that Government has only raised the prices of petrol and not diesel on which all trucks run and in that sense, it should not affect the food prices at all. It is the middle men who are cashing on the petrol hike opportunity to steal. Manipulating the situation, they make the hay when the Petrol price rise sun is shining.

They bloat up the prices of essential commodities which earn them good money and dupe all of us. Those who are employed do not get a hike in their annual pay on monthly basis and this makes it even tougher for upper and lower middle class. So, what do we say about people who live below poverty line or on it?

Today, for a family of four, a day’s meal can cost anywhere from 150 to 600 depending upon various purchases they do. Fruits costing almost double in last 3 years. And government comes out with a report that an average Indian needs only Rs. 32 a day to eat and live peacefully.

Beware of hikes and reductions!

Every time we see a hike, we start fearing see our food bill going up. Cutting down on other spending is often seen as a way to counter the hike in our food expenses. One thing we should all force and apply is when fuel prices reduce, these bloated up prices should come down too.

A liter of milk now costs more than Rs. 30 and can range from Rs. 22 for a low grade (read more water adulterated milk and vice versa) to even Rs. 35 for the higher grade in certain areas. Cost shouldn’t keep spiraling upwards every time the fuel hike is affected. There should be effective controls placed on essentials commodities.

As an aside, ration supply in India is dogged with serious quality issues. The owners of these ration shops often buy adulterated and low quality commodities from open market and sell it in place of good quality commodities they receive from Government’s Food Corporation of India. The good quality commodity is sold at premium in open market. In the process they steal our right and money. No wonder in India, many do not even pay taxes.

I have heard one of my colleagues from Netherlands once saying that they are happy to pay taxes because their government is giving them enough in returns. Ample and quality infrastructure, good life style opportunities, more people friendly initiatives etc.

So getting back to the topic, any hike and reduction should correctly reflect in our day to day budget.

Petrol pricing shouldnt be free

If this had happened, the petrol price would have set us back by INR 90 for a liter when the crude oil touched $150 per barrel.

In India, Petrol and Diesel prices are subsidized so that common man can affort it. But a free market will mean boom for petrol companies than for the Common man. With food prices already sky high, this would add much to the misery of a Common man. He would have more burden to share and more hours to put at his work.

Issues with the Common Man

  1. Poor Salary rise in the wake of recent recession
  2. Hikes ranging from 4% of CTC to just 5% of Basic salary component.
  3. Saving rate down by 23% (an estimate based on my own calculations)
  4. Prices of Essential commodities have increased
  5. Food prices increased; sugar, toor dal etc. heavily affected
  6. Job security issues
  7. Limited spending – which in turn effects the overall economy.

All this is just a small snippet of what could be a much more worse scenario. Why the sudden price hike is being debated madly between the names that be, but over all scenario has put all the politicians to blame.

Its been circulated in the internet media that politicians are using this price manipulation technique to fill up their coffers and  also to ensure their votebank also stays loyal.