Population explosion has resulted in manifold increase in demand for energy. The conventional, non-renewable sources of energy, such as coal, petroleum, natural gas, etc. are experiencing extensive pressure, resulting in an urgent need to switch to non-conventional sources of energy which are renewable and ecologically safe.
For instance, solar, geothermal, wind, biomass, tidal and wave energy fall under non-conventional sources. Maximum utilisation of renewable sources will facilitate generating energy without harming the environment and its surroundings.
The role of new and renewable energy has been assuming increasing significance in recent times with the growing concern for the country’s energy security. Energy self-sufficiency was identified as the major driver for renewable energy in the country in the wake of the two oil shocks of the 1970s. The sudden increase in the price of oil, uncertainties associated with its supply and the adverse impact on the balance of payments position led to the establishment of the Commission for Additional Sources of Energy (CASE) in the Department of Science & Technology (DST) in March 1981. The Commission was charged with the responsibility of formulating policies and their implementation programmes for development of renewable energy apart from coordinating and intensifying research and development in the sector.
There has been a visible impact of renewable energy in the Indian energy scenario during the last five years. Renewable energy sector landscape in India has witnessed tremendous changes in the policy framework with accelerated and ambitious plans to increase the contribution of solar energy. There is a perception that renewable energy can now play a significant role with access to improved technologies. According to the Ministry of New and Renewable Energy:
The total power generated, as on March 31, 2016, from various renewable energy sources is 65.76 GW, bifurcation of which is – wind (33.03 GW), solar (7.45 GW), small hydro power (up to 25 MW) (8.33 GW), bio power (16.95 GW).
- The Indian government has up-scaled the target of renewable energy capacity to 175 GW by the year 2022 which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro power.
- The capacity target of 100 GW set under the National Solar Mission (JNNSM) will principally comprise of 40 GW Rooftop and 60 GW through large and medium scale grid connected solar power projects. With this ambitious target, India will become one of the largest green energy producers in the world, surpassing several developed countries.
- The total investment in setting up 100 GW will be around INR 6,00,000 crore. Several states are already witnessing silent revolution on rooftop solar power generation with the launch of net metering in the country.
- The new initiatives announced by the government during the financial year 2016-17 include setting up of two Light Detector and Ranging (LIDAR) at identified locations to study the offshore wind speed profile which would help in establishing techno-economic feasibility of the sites for installation of offshore wind power projects, schemes on energy storage, deployment of mini grid for meeting energy access and strengthening biodiesel activities in the states.
- The Jawaharlal Nehru National Solar Mission (JNNSM) was launched on the January 11, 2010 by the Prime Minister. The Mission has set the ambitious target of deploying 20,000 MW of grid connected solar power by 2022. It is aimed at reducing the cost of solar power generation in the country through long term policy, large scale deployment goals, aggressive research and development and domestic production of critical raw materials, components and products, as a result to achieve grid tariff parity by 2022. The Mission will create an enabling policy framework to achieve this objective and make India a global leader in solar energy.
- The Special Area Demonstration Project (SADP) Scheme was started in 1992-93 with the objective to demonstrate the New and Renewable Sources of Energy (NRSE) systems and devices and also to provide training facilities for meeting the energy needs in special areas.
- The renewable energy systems being set up under SADP include mainly solar power plants, solar water heaters, solar lights, biogas plants from kitchen waste and battery operated vehicles.
- SADP Scheme is being continued during the 12th Plan Period. The scheme comprises of the following two components; energy park scheme and demonstration of renewable energy systems at places of national and international importance to illuminate these places to supplement the energy requirement through clean and green energy.
Since India is running one of the largest renewable capacity expansion programmes in the world and there is a need for corresponding grid stability. Regulator will frame norms for ancillary services to support power system or grid operation especially with expanding renewable energy.
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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.