Return of Cauvery crisis and the way ahead:-
With the Southwest monsoon falling short this season, the story of any other monsoon-deficient year is being repeated: Tamil Nadu rushing to the Supreme Court citing the crisis faced by its farmers, the court ordering release of some water, and protests erupting in Karnataka.
The reason for this endless cycle of sporadic litigation and ad hoc adjudication is that the two States continue to avoid any mutual engagement to share the shortfall during distress years. And there is no permanent, independent mechanism to ensure this.
The Cauvery Water Disputes Tribunal, which gave its award in 2007, has asked the parties to share the deficiency on a pro rata basis.
However, a major problem in implementing this aspect is the absence of a ‘Cauvery Management Board’ and a Regulatory Authority, which the Tribunal had wanted created to oversee implementation.
Instead, after notifying the final award in 2013, the Union government set up a Supervisory Committee comprising officials from the Union government and the Central Water Commission and representatives of both States. The court has now asked Tamil Nadu to approach the committee, which will decide on further releases.
The Supreme Court’s direction, when implemented, will ensure about 13 thousand million cubic (tmc) feet of water to Tamil Nadu over 10 days. This will not be adequate to save the entire samba crop, Tamil Nadu leaders argue, while their Karnataka counterparts contend that this itself is a huge burden, given the State’s own storage deficit.
It is understandable that the political leadership of any State would not want to be seen as betraying the interests of its farmers. Yet, the desire to protect one’s own interests should not shut out empathy for one’s neighbour.
Ideally, any distress-sharing formula should come from a technical body. It would have helped if the Centre, which dilly-dallied for six years before notifying the final award under a judicial direction, had set up the Cauvery Management Board and Regulatory Authority.
In the longer term, experts will have to devise a sustainable agricultural solution for the Cauvery basin, as the river does not seem to have the potential to meet the farming requirements of both sides.
In a world of depleting water resources, fewer crop seasons and lower acreages, a resort to less water-intensive crops and better water management hold the key. Non-political initiatives, such as the ‘Cauvery Family’, a body formed a few years ago covering farmers of both States, could help disperse the clouds of hostility that gather over the border whenever the Cauvery crisis erupts. Politics and passion should not be allowed to hold sway
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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.