Global transformation is affecting the planet. But there is no uniform transformation across the world. Global temperature increased sharply only after 1981 with little contribution from the developing countries as their industrialisation and urbanisation had yet to begin.
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In 2015, at the UN General Assembly when the Sustainable Development Agenda 2030 was adopted and at the Paris Conference, Prime Minister stressed a reframing of climate change to climate justice, arguing that just when countries such as India were becoming major industrial and middle class nations, they should not pay the price for the pollution caused by the West. The Paris Agreement, explicitly recognises that peaking will take longer for such countries and is to be achieved in the context of “sustainable development and efforts to eradicate poverty”.
This balance is now being upset for a common target and timetable, with non-governmental organisations (mostly foreign funded) in support and negotiators (mostly public servants) opposing the pressure. India will meet its Paris Agreement target for 2030, its per-capita emissions are a third of the global average, and it will in future remain within its share of ecological space. The pressure arises from the way the agenda has been set.
Treaty’s inequity
First, inequity is built into the Climate Treaty. Annual emissions make India the fourth largest emitter, even though climate is impacted by cumulative emissions, with India contributing a mere 3% compared with 26% for the United States and 13% for China.
According to the United Nations, while the richest 1% of the global population emits more than two times the emissions of the bottom 50%, India has just half its population in the middle class and per capita emissions are an eighth of those in the U.S. and less than a third of those of China.
Second, the diplomatic history of climate negotiations shows that longer term goals without the strategy to achieve them, as in the case of finance and technology transfer, solve a political problem and not the problem itself. The focus on physical quantities, emissions of carbon dioxide and increase in global temperature, measures impacts on nature whereas solutions require an analysis of drivers, trends and patterns of resource use. The current framework considers symptoms, emissions of carbon dioxide, and was forced onto developing countries to keep the discussion away from the causes of the problem , the earlier excessive use of energy for high levels of well-being.
Third, models on which global policy recommendations for developing countries are based consider achieving ‘reasonable’ not ‘comparable’ levels of well-being to show that early capping of energy use will not affect their growth ignoring costs on the poor. The different means to achieve the goals are not on the agenda because the rising prosperity of the world’s poor does not endanger the planet and the challenge is to change wasteful behaviour in the West.
Role of infrastructure
The vaguely worded ‘net zero’ emissions, balancing emissions and removals, could be disastrous for development latecomers like India because the current frame fails to recognise that more than half the global cumulative emissions arose from infrastructure, essential for urban well-being.
First, infrastructure has a defining role in human well-being both because of the services it provides outside the market and the way it shapes demand distinct from manufacturing (production) and lifestyles (consumption), which alone are captured in model projections.
Second, the global trend is that in an urbanised world, two thirds of emissions arise from the demand of the middle class for infrastructure, mobility, buildings and diet. There is no substitute to cement, steel and construction material, and worldwide they will need half the available carbon space before comparable levels are reached around 2050, while developed countries use most of the rest. For developed countries, peaking of emissions came some 20 years after infrastructure saturation levels were reached and net-zero emissions are being considered some two decades even later to take advantage of aging populations and technology.
Third, because of its young population and late development, much of the future emissions in India will come from infrastructure, buildings and industry, and we cannot shift the trajectory much to reach comparable levels of well-being with major economies. For example, China’s emissions increased three times in the period 2000-2015, driven largely by infrastructure.
New framework
A global goal-shaping national strategy requires a new understanding. India must highlight unique national circumstances with respect to the food, energy and transportation systems that have to change. For example, consumption of meat contributes to a third of global emissions. Indians eat just 4 kg a year compared with around 68 kg per person for the European Union and twice that in the U.S. where a third of the food is wasted by households. Transport emissions account for a quarter of global emissions, are the fastest growing emissions worldwide and have surpassed emissions from generation of electricity in the U.S., but are not on the global agenda.
Coal use
Coal accounts for a quarter of global energy use, powered colonialism, and rising Asia uses three-quarters of it as coal drives industry and supports the renewable energy push into cities. India with abundant reserves and per-capita electricity use that is a tenth that of the U.S. is under pressure to stop using coal, even though the U.S. currently uses more coal. India wants to eliminate the use of oil instead with renewable energy and hydrogen as a fuel for electrification, whose acceleration requires international cooperation around technology development and transfer.
In the Paris Agreement, ‘climate justice’ was relegated to the preamble as a political, not policy, statement. It needs to be fleshed out with a set of ‘big ideas’. The first is a reframing of the global concern in terms of sustainable development for countries with per capita emissions below the global average, in line with the Paris Agreement. Second, the verifiable measure should be well-being within ecological limits. Third, international cooperation should centre on sharing technology of electric vehicles and hydrogen as a fuel, as they are the most effective response to climate change.
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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.