If governments paid serious attention to the economic geography of India’s cities, they would be doing a lot more to prepare for annual weather events like the monsoon.
UN Habitat estimates that by 2030 India will have 14 major clusters of cities accounting for 40 per cent of its GDP. Other assessments indicate that nearly 80 per cent of economic production will be in urban areas by that year.
What this underscores is the extremely vulnerable condition of cities as economic assets. Proof of this is available from catastrophic events such as unprecedented flooding in Chennai in 2015 and in Mumbai some years ago.
Even with weak insurance cover for the general population, the volume of claims in Chennai crossed Rs.5,000 crore, highlighting the avoidable losses arising out of infrastructure deficits.
Much of the total loss was borne by individuals. On the other hand, cities devote vast amounts of their revenue merely to repair roads after the monsoon rather than create new assets.
This is a colossal planning failure, and governments should draw up integrated plans to make cities and growing towns resilient to weather events and disasters.
This should begin with the creation of information systems that tell administrators about weather patterns, anomalies, flooding data and population impacts.
The Chennai floods exposed the mindless permissions for construction in floodplains, and the high tolerance to commercial encroachment of wetlands.
They also highlighted the indifference among policymakers over providing decent housing for migrants. This approach is eroding the economic gains of urban India.
If megacities that face seasonal storms are to be strengthened, they should be provided with more water harvesting facilities in the form of urban wetlands with connected drains.
Suburban lakes have to be revived. Natural ecological structures are readily available to achieve this. City managers should not commit the mistake of building engineered systems to transfer precious rain flows to the sea, ignoring water security for growing populations.
A transparent building code that alerts buyers to hazard-free property is vital. Equally, governments need to ensure that during the monsoon, basic requirements of urban living such as transport, safe water supply, energy and health systems are not severely disrupted.
On the positive side, city residents have a higher degree of education, capability and financial wherewithal, and these should help administrations find durable solutions. Much of urbanising India is yet to be built, and it can be designed to withstand the vagaries of monsoons and other weather events.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.