CBDR – Common But Differentiated Responsibilities
Background :-
The CBDR principle is a key principle of negotiation on a global forum for a global agenda and to achieve a global target for the developing countries. Recently it has been emphasized by Indian policy makers to include this principle in the “Paris Climate Summit”.
Evolution of CBDR principle:
The concept of Common But Differentiated Responsibilities (CBDR) was enshrined as Principle 7 of the Rio Declaration at the first Rio Earth Summit in 1992.
“In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities. The developed countries acknowledge the responsibility that they bear in the international pursuit of sustainable development in view of the pressures their societies place on the global environment and of the technologies and financial resources they command.”
Similar language exists in the United Nations Framework Convention on Climate Change; parties should act to protect the climate system “on the basis of equality and in accordance with their common but differentiated responsibilities and respective capabilities.”
The principle holds that although all countries are responsible for the development of global society, each has a different set of capabilities that they can contribute to this project. The Stockholm declaration, for instance states that policy makers must consider, “the applicability of standards which are valid for the most advanced countries but which may be inappropriate and of unwarranted social cost for the developing countries.”
CBDR aims to take these differences into account when goals and benchmarks are applied to global development agendas. The logic is that if the expectations levied on countries are more appropriate to their national capabilities (social, economic, environmental, etc.), individual country efforts will more effectively complement each other.
Applications of CBDR:-
Before laying out proposals that more effectively represent the CBDR principle in the context of the post-2015 agenda, it is important to explore the different ways the principle has been manifested in existing policies.
Environment-
We have seen the clearest manifestation of CBDR under the environmental pillar of sustainable development. For example, the 1997 Kyoto Protocol made a distinction between proposed goals for developed and developing countries by requiring “developed countries to reduce their emissions while developing countries only needed to report their emissions.” Certainly, this implication would shift the burden and responsibility to developed countries. This manifestation of CBDR led to the agreement of developed countries to reduce their greenhouse gases (GHG) via a binding agreement. These countries now fall under Annex 1 of the Kyoto Protocol and are committed to reducing the GHG emissions in compliance with certain pre-agreed targets.
Poverty Eradication:-
This differentiation is manifested via Millenium Development Goals . LDCs (Least Developed Countries) and other developing countries argue that they have much more work to do in the area of poverty eradication while developed countries can accept that they have less
Financing:-
CBDR can be identified in the area of development financing most clearly in the Monterrey Consensus. In this document, the first clear responsibility that falls on developed countries is “the objective of duty-free and quota free access” to developed country markets for LDC exports
Analysis of the Principle:-
- With respect to the environment, the greatest impacts of climate change are felt by developing countries, whilst the greatest per capita GHG emissions are concentrated in developed countries. So, the principle holds that if developed countries have the highest rates of GHG emissions (which is representative of their contribution to climate change) and they have the greatest capacities to reduce their emissions, they should also take on the greatest brunt of the performance of climate change mitigation
- Though,this is a very valid stand on part of the developing countries, yet it is the developing countries that face the wrath of climate change and does not have enough capacity to fight it.
- Hence , it is equally important for the developing countries , on their pursuit of development , they must try to go “GREEN” as far as possible. To realize this goal, financing and technology transfer from developed world is a must.
- One might think this principle as – “You do your bit , I will do mine” , however this does not work that way . No country works in isolation and hence this principle should not be looked upon as give and take , instead , it is reduce and let reduce, achieve and let achieve and do and help us do principle.
Recent Posts
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.