Intergovernmental Panel on Climate Change’s (IPCC) in its Climate Change 2014 Synthesis Report published in 2015 states that increase in anthropogenic greenhouse gas emissions together with other anthropogenic drivers such as aerosols, land cover and solar radiation are extremely likely to have been the dominant cause of the observed warming since mid-20th century.
To cater to this the Indian government launched National Action Plan on Climate Change (NAPCC) in 2008, which outlines India’s strategy to meet the challenge of Climate Change.
Two of the eight National Missions, i.e., National Solar Mission and National Mission on Enhanced Energy Efficiency relate to mitigation of emissions and include ambitious programmes aimed at generating solar power and conserving energy.
Energy Efficiency mission envisages setting norms for achieving energy efficiency with perform, achieve and trade scheme. Further, public and private sector entities participate in the Clean Development Mechanism (CDM) of the Kyoto Protocol, which helps in reducing emissions.
These initiatives have the effect of reducing carbon emissions. In addition, the government has initiated a range of policies and programmes to respond to the challenge of climate change. Some of them are:
a) More than five times increase in renewable capacity from 35 GW (upto March 2015) to 175 GW by 2022.
b) National Solar Mission scaled up five-fold from 20 GW to 100 GW by 2022. Kochi Airport is the World’s first airport to fully run on solar power.
c) Solar powered toll plazas envisaged for all toll collection booths across the country.
d) Green energy corridor projects being rolled out to ensure evacuation from renewable energy plants.
e) Nationwide campaign for energy conservation launched with the target to save 10 per cent of current energy consumption by the year 2018-19.
f) Smart Cities Mission to develop new generation cities by building a clean and sustainable environment.
g) Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is a new urban renewal mission for 500 cities across India.
h) ‘Swachh Bharat Mission’ (Clean India Mission) to make country clean and litter free by 2019 and promote waste management.
i) Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME India) to promote faster adoption and manufacturing of hybrid and electric vehicles.
j) Under ethanol blending programme, the government has scaled up blending targets from 5 to 10 per cent to promote blending of ethanol with petrol and its use as an alternative fuel.
k) Leapfrogging to BS-VI emission norms by 1st April 2020.
l) Eight-fold increase of coal cess in a short span of two years.
m) Initiation of project green ports to make major ports cleaner and greener
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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.