Archives for July 2018

Consumers may have to burn a larger hole in their pockets to keep their vehicles running as retail prices of petrol and diesel are set to hit all-time high levels all over again soon. Rising oil prices and the reluctance on the part of the government to cut taxes are two factors responsible for the certain spike in auto fuel prices.

The retail price of petrol in Delhi is Rs 76.61 a litre now. Going by the price rise of up to 20 paisa per day over the last week, petrol would breach record high level of Rs 78.43, touched on May 29, in about 10 days.

Diesel is within the sniffing distance of all-time high of Rs 69.31 a litre, again recorded on May 29. Diesel is retailing at Rs 68.61 a litre in Delhi.

Uncertainty in global oil markets has increased post US sanctions on Iran and call for its strict compliance by president Donald Trump. The price of benchmark Brent crude was hovering over $75 a barrel, while the Indian basket was just a tad lower at $73 a barrel last month.

“But prices are rising now with expectation that it could even breach $100 a barrel post-November 24 when energy sanctions on Iran kick in. This could take petrol and diesel prices to new highs with the auto fuel even breaching Rs 100 a litre mark,” said an oil sector analyst, who did not wish to be named as he was still completing his calculations.

The government’s reluctance to cut excise duty on petrol and diesel has become a bigger worry for auto fuel consumers. This has made retail prices higher even with lower levels of crude oil prices.

Petrol breached its previous all-time high level recorded on September 14, 2013 (when it stood at Rs 76.06 a litre in Delhi) in May this year when crude oil prices were around $80 a barrel. Interestingly, crude oil was at $109.47 a barrel level in September 2013.

With crude reaching closer to $100 a barrel mark soon, retail price of petrol, which has already reached Rs 84.33 a litre in Mumbai, would easily cross Rs 100 a litre mark, making history.

“This is insane as the government is letting consumers suffer even though it has pocketed higher revenue from the sector with the understanding that this will come to their rescue when oil prices rise. If this is not the right time for excise duty cut on petrol and diesel, then one fails to understand what would be one,” said a former oil secretary asking not to be named.

The government’s fiscal concerns have prevented any duty cuts on petrol and diesel. With rising inflation and slowing factory output, revenue from the oil sector is key for the centre and states. This is also probably the reason why petroleum products have yet not been included in GST.

Prices of petrol and diesel rose to all-time high levels in the last week of May this year after oil companies resumed daily price hikes of the two products post Karnataka assembly elections. During elections, oil marketing companies kept petrol and diesel prices untouched for a record 19 days.

The daily increase in petrol and diesel prices again is higher now as OMCs are regularly holding the price line for few days under government instructions to prevent a public backlash.

Even though crude oil prices are rising again, they are still well off the highs of September 2013, when retail prices were at all-time highs. At that time, the price of the Indian basket of crude oil had shot up to $110 per barrel, almost 44 per cent more than what it is today.

“The need of the hour is to immediately cut excise duty on petrol and diesel not by mere Rs 2 per litre as was done on October 3, but to provide full relief to consumers by effecting a Rs 4 per litre cut in duties. This would rob the government of over Rs 50,000 crore in revenue but would save the country from higher inflation and demand squeeze,” said another oil sector expert who wished not to be named.

As per government estimates, India’s import bill could rise by up to $50 billion, impacting the current account deficit severely, if the present surge in oil is maintained. This would take oil import bill to about $140 billion in FY19, up from $88 billion in FY18.

The expectation for continuation of higher oil price this year has gained ground due a series of global developments, including continuing production cut by Opec and Russia, and forthcoming public offer proposed by world’s largest oil producer Saudi Aramco.

The BJP-led NDA government has increased basic excise duty on petrol and diesel nine times ever since it came to power (between November 2014 and January 2016) that more than doubled government’s excise mop-up to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre. It has been reduced only once — in October, 2017 — by Rs 2 a litre.

In February, the government reduced basic and additional excise duty on petrol and diesel by Rs 8 per litre but re-imposed a new road cess of Rs 8 per litre, negating any advantage.

It is the third year since Swiss banks made public a list of accounts lying dormant without any trace of owners and no claimant has come forward for those with Indian links, even as a political slugfest continues in India over alleged black money parked there.

The list of all such accounts of Swiss citizens and foreigners including from India was first published by the Switzerland Banking Ombudsman in December 2015 and it keeps getting updated as and when an account is declared dormant.

This is to allow real owners of the accounts or their legal heirs to stake a claim with necessary proof.

The details get deleted from the list when a successful claim is made and this was the case for as many as 40 accounts and two safe deposit boxes in the year 2017 itself, as per the latest information shared by the Ombudsman.

However, the list of over 3,500 such accounts continues to have at least six with links to India since December 2015, as no successful claimant has come forward for them.

Switzerland was perceived to be among the safest havens globally for financial assets for many years before a global crackdown on alleged tax evasion by using such strong banking privacy practices as prevalent in Swiss banks led to Switzerland agreeing to tighten its rules.

Subsequently, Switzerland has framed new laws for greater cooperation with several other countries on an exchange of information and for a stricter clampdown on illicit activities like money laundering and tax frauds.

India is one of the countries with which Switzerland has inked an automatic exchange of information pact on financial matters, while the Alpine nation has already been providing details on bank accounts in cases where Indian authorities have been able to provide proof of wrongdoings.

As per the latest data released by the Swiss National Bank (SNB), funds parked by Indians with Swiss banks rose 50 percent to CHF 1.01 billion (about Rs 7,000 crore) in 2017.

The funds, described by SNB as ‘liabilities’ of Swiss banks or ‘amounts due to’ their clients, are official figures disclosed by Swiss authorities and do not indicate to the exact quantum of the much-debated alleged black money held in the famed safe havens of Switzerland.

The official figures, disclosed annually by Switzerland’s central bank, also do not include the money that Indians, NRIs or others might have in Swiss banks in the names of entities from different countries.

It has been often alleged that Indians and other nationals seeking to stash their illicit wealth abroad use multiple layers of various jurisdictions, including tax havens, to shift the money in Swiss banks.

Also, with Switzerland putting in place an automatic information exchange framework with India and various other countries, the famed secrecy walls of Swiss banks are said to have crumbled. India will start getting this automatic data from next year.

However, the increase in Indians’ money in Swiss banks has already triggered a sharp opposition attack on the government, which in turn has said that it would be wrong to assume that all funds deposited in Swiss banks were ‘black money’ and strong action would be taken against wrongdoers.

The funds officially held by Indians with banks in Switzerland accounts for only 0.07 percent of the total funds kept by all foreign clients in the Swiss banking system, as per the SNB data.

In terms of the dormant accounts, at least three individuals from India and three others of Indian origin — but the resident of other countries — continue to figure on the list of unclaimed bank accounts made public by Switzerland since December 2015.

While specific figure for India-linked dormant accounts is not known, the total holding in all such accounts is estimated at about 44 million Swiss franc (about Rs 300 crore).

Of the six with Indian links, place of residence of three has been mentioned as India, while it is Paris (France) for one and London for another. The place of residence for the sixth person was not disclosed.

These are Pierre Vachek and Bernet Rosmarie from ‘Bombay’, the earlier name of Mumbai, Bahadur Chandra Singh from Dehradun, Dr Mohan Lal from Paris, Suchah Yogesch Prabhudas from London. Kishore Lall is the person whose place of residence was not disclosed.

The date of birth has also been disclosed in one case ? that is for Vachek as January 1, 1908.

All these accounts were added to the public list in December 2015 and would remain there till December 2020, unless a successful claim is made for the money.

There are also some such accounts from Pakistan, including of one Nawaz Haq of Wazirabad, which was added to the list in November last year.

The list is aimed at giving their owners or their legal heirs a chance to claim the funds in these accounts. Only those accounts form part of the list which have got at least 500 Swiss francs and have remained unclaimed for at least 60 years.

The list contains a large number of people from Switzerland itself, as also from Germany, France, the UK, the US, Turkey, Austria and various other countries.

If no legitimate party claims the assets that have been published within one year of publication, the banks can transfer the assets in question to the government.

The claim deadline for potential legitimate claimants is five years if the assets in question have been dormant since at least 1954.