Credit Cards, Petrol Price Hike
Read the following two news Items.
(1) ICICI levis fee for payment by Cash !!
ICICI bank has levied a fee of Rs 100 if you make payments for your credit card by Cash !!! Doesnt it sound strange... You use your credit card and end up with a bill and when you try to pay the amount by cash you have to pay Rs 100 extra if you make payment by cash !!!
This has two implications
(a) ICICI bank earns 100 Rd every time. So windfall profits...
(b) Now you are inclined to make payments by cheque. Now in almost all banks you have a drop box for cheques. Most of the pivate banks dont take cheques directly. So they are not directly and bindingly liable if the cheque is lost. Now suppose your cheque is lost then your paymnents dont reach on time and in your next months bill you will see an interest because of non payment of your previous dues...
Hows that for owning a credit card !!!!!
(2) Petrol Price finally hiked
After all the dilly dallying, simmering, ducking behind, the government mustered the courage to rise the price of petrol by Rs 5 and Diesel by Rs 3 and LPG by Rs 50. Better late than never, I felt the quantum of rise was good. Even though the deficit is around Rs 20 for pertrol and Rs 23 for diesel, atleast some positive step to save the oil marketting companies from going bust...
I feel after this hike the following will happen:
(a) There will be a bandth in West Bengal and Kerala.
(b) People will suddenly reduce their usage of vehichles. Then there will be a withdrawal attack and they will come back to normal usage though being cautious of their spendings on fuel.
(c) Many people will start seriously thinking about buying vehicles which run on alternate fuels.
(d) Companies will give more thrust on vehicles run on alternate fuels.
On the fiscal Side I can clearly see 2 things happening
(a) Along with the price rise there is a reduction in customs and excise duty. This cuts into the govts income. Since this has not been accounted in the budget, you will see fiscal defcit rising.
It is not a good sign if your defecits are rising. It means govt is short of money by that much amount. If govt needs that much money then it will have to borrow from external world. Not a healthy sign for a growing economy.
(b) Other than increasing price, reducing Customs and Excise duty, Govt has also issued oil bonds to the company. These oil bonds are like a guarantee from the govt to oil marketting companies that the govt will pay them this amount in future. Now even this has not been accounted in the budget. This is again an off budget liability. This is also not a very healthy sign.
In order to cushion the general public from a steep rise of petrol price, the govt has taken a hit by cutting Customs and Excise Duties and also issuing Oil Bonds.
What was the alternative : I respect the decision of the govt and feel it is a fairly ok decision done. Let me explain why I feel that it is a good decision.
(a) Rising the price was necessary as the global crude price is rising and govt cannot go on issueing oil bonds also it cannot let the oil marketting companies die of lack of liquidity. So no second thoughts on that
(b) I dont have second thoughts on the quantum of rise as well. Oil Marketting comapnies are kaing a loss of Rs 20 on every litre of Petrol. So a hike of Rs 5 (25% of the total loss) is Ok. Lets take an irrational look and say that the govt had increased the price by Rs 20, it would have been catastrophic... Firstly because people cannot pay such a large sum at such a short notice. It would lead to mass unrest. Secondly to transport all our daily needs like milk, vegetables, bread and butter, cloths, stationaries, newspaper the manufaturers need vehicles and hence need petrol/diesel. If we suddenly rise the price of petrol and diesel, there will be a cascading effect on the price of milk, vegetables, breads, atta and other items. So one one hand we cant use our vehicles because of the sudden rise in petrol prices. And then prices of all essential commodities would rise sharply. This will lead to sudden severe blow on the common man. He will definitely come on streets. Mass unrest you bet !!! (Inflation would have crossed 12 - 13 !!!!)
PS: BTW Price of crude oil is around $123 per barrel as of today. It was about $135 per barrel at its peak. So some positive news.
(1) ICICI levis fee for payment by Cash !!
ICICI bank has levied a fee of Rs 100 if you make payments for your credit card by Cash !!! Doesnt it sound strange... You use your credit card and end up with a bill and when you try to pay the amount by cash you have to pay Rs 100 extra if you make payment by cash !!!
This has two implications
(a) ICICI bank earns 100 Rd every time. So windfall profits...
(b) Now you are inclined to make payments by cheque. Now in almost all banks you have a drop box for cheques. Most of the pivate banks dont take cheques directly. So they are not directly and bindingly liable if the cheque is lost. Now suppose your cheque is lost then your paymnents dont reach on time and in your next months bill you will see an interest because of non payment of your previous dues...
Hows that for owning a credit card !!!!!
(2) Petrol Price finally hiked
After all the dilly dallying, simmering, ducking behind, the government mustered the courage to rise the price of petrol by Rs 5 and Diesel by Rs 3 and LPG by Rs 50. Better late than never, I felt the quantum of rise was good. Even though the deficit is around Rs 20 for pertrol and Rs 23 for diesel, atleast some positive step to save the oil marketting companies from going bust...
I feel after this hike the following will happen:
(a) There will be a bandth in West Bengal and Kerala.
(b) People will suddenly reduce their usage of vehichles. Then there will be a withdrawal attack and they will come back to normal usage though being cautious of their spendings on fuel.
(c) Many people will start seriously thinking about buying vehicles which run on alternate fuels.
(d) Companies will give more thrust on vehicles run on alternate fuels.
On the fiscal Side I can clearly see 2 things happening
(a) Along with the price rise there is a reduction in customs and excise duty. This cuts into the govts income. Since this has not been accounted in the budget, you will see fiscal defcit rising.
It is not a good sign if your defecits are rising. It means govt is short of money by that much amount. If govt needs that much money then it will have to borrow from external world. Not a healthy sign for a growing economy.
(b) Other than increasing price, reducing Customs and Excise duty, Govt has also issued oil bonds to the company. These oil bonds are like a guarantee from the govt to oil marketting companies that the govt will pay them this amount in future. Now even this has not been accounted in the budget. This is again an off budget liability. This is also not a very healthy sign.
In order to cushion the general public from a steep rise of petrol price, the govt has taken a hit by cutting Customs and Excise Duties and also issuing Oil Bonds.
What was the alternative : I respect the decision of the govt and feel it is a fairly ok decision done. Let me explain why I feel that it is a good decision.
(a) Rising the price was necessary as the global crude price is rising and govt cannot go on issueing oil bonds also it cannot let the oil marketting companies die of lack of liquidity. So no second thoughts on that
(b) I dont have second thoughts on the quantum of rise as well. Oil Marketting comapnies are kaing a loss of Rs 20 on every litre of Petrol. So a hike of Rs 5 (25% of the total loss) is Ok. Lets take an irrational look and say that the govt had increased the price by Rs 20, it would have been catastrophic... Firstly because people cannot pay such a large sum at such a short notice. It would lead to mass unrest. Secondly to transport all our daily needs like milk, vegetables, bread and butter, cloths, stationaries, newspaper the manufaturers need vehicles and hence need petrol/diesel. If we suddenly rise the price of petrol and diesel, there will be a cascading effect on the price of milk, vegetables, breads, atta and other items. So one one hand we cant use our vehicles because of the sudden rise in petrol prices. And then prices of all essential commodities would rise sharply. This will lead to sudden severe blow on the common man. He will definitely come on streets. Mass unrest you bet !!! (Inflation would have crossed 12 - 13 !!!!)
PS: BTW Price of crude oil is around $123 per barrel as of today. It was about $135 per barrel at its peak. So some positive news.
Labels: Credit Cards, Energy Crisis, Inflation
posted by amitkeerti | 8:31 PM
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