Background
The long-running drought in southern India appears likely to continue into the early months of 2017. All 32 districts in Tamil Nadu have been declared drought-affected with annual rainfall between 35 and 80 per cent below average in 2016.
Both the south-west monsoon, between July and September, and the north-east monsoon, between October and December, failed. Kerala, a state to the west of Tamil Nadu, has struggled through its most severe drought in 115 years.
In Karnataka, a state to the north of Tamil Nadu, the drought is now in its third year. It is rare, but not unheard of, for both monsoon systems to fail in the south of the country. In times of drought, farmers in southern India tap into reservoirs to meet the shortfall. In some areas, however, these reserves are only expected to last for another 90 days. Preference has been given to using the remaining water for drinking, household use and industry instead of the very thirsty agricultural sector.
Analysis
Competition over water resources in southern India is likely to grow in coming years. Southern states, such as Kerala and Tamil Nadu, have embarked on industrialisation projects with mixed levels of success. These states are competing with China to become major textile producers. These ambitions are built on the relatively cheap cotton that is grown in the country, but recent years of erratic rainfall and low yields could threaten these plans.
Tamil Nadu relies on rain-fed rivers from Karnataka and Kerala for its surface water supply, but this arrangement has come under increased pressure in recent times. In September 2016, there were widespread protests as tensions rose between Karnataka and Tamil Nadu over the sharing of water from the Cauvery River. There are also fears that Kerala will withhold water from the Periyar River. Tamil Nadu has requested that Andhra Pradesh release more water from the Krishna River to service the drinking water needs of Chennai, a large city on the east coast of the state. Of the four south Indian states, Tamil Nadu is at the greatest risk of water insecurity due to its heavy reliance on the goodwill of its neighbours.
Chennai has experienced extreme water insecurity in the recent past. In 2003/04, its four reservoirs went dry and, as the city turned to groundwater reserves, these also declined. The city’s piped water supply was turned off and, apart from sporadic service, did not function for the best part of a year. During this time, the 4.5 million residents of Chennai required 600 million litres of water per day. To meet demand, water was transported from aquifers 150 kilometres from the city on trains and trucks.
As the failure of two consecutive monsoon seasons was blamed for the water shortage, the city turned to climate independent water sources. Three desalination plants have been built in Tamil Nadu since 2009, with a fourth, and possibly fifth, in the pipeline. City residents are worried about construction, maintenance and operating costs while the state’s high reliance on coal-powered electricity plants have also fuelled concerns about the effect additional desalination plants could have on Tamil Nadu.
The Minjur and Nemmeli desalination plants have operated since 2010 and 2013, respectively. Together, the two plants provide Chennai with up to 200 million litres of water per day. The third plant, commissioned in 2009, was built by the Chennai Petroleum Corporation to provide water for a local oil refinery.
A new plant at Perur will have a capacity of 150 million litres per day while a fifth will be able to produce up to 400 million litres per day. If all the planned plants are built, Chennai’s desalination capacity would increase to 750 million litres per day. Unless per capita demand for water has declined since 2003/04, this will not be enough to satisfy the 8.2 million people now living in the city in times of water scarcity.
As water levels in dams diminish, the region also faces a looming electricity crisis. Water reservoirs in Tamil Nadu are reportedly 82 per cent lower than normal. Poor water management is partly responsible for the state’s dire situation. In 2015, parts of the state, mainly around Chennai, flooded. Due to poorly maintained rainwater harvesting infrastructure, much of the water, which could have been harvested and stored for later use, was lost.
Desalination plants alone will do little to strengthen Tamil Nadu’s water security. While they will improve the resilience of Chennai in times of drought, and possible serve as a model for other Indian cities to emulate, they will not resolve the problems that arise when the city floods. Neither will they be capable of producing enough water at a cheap enough price to sustain the industrialisation of the region. If the state is serious about resolving its water security challenges it will also need to focus on demand-side solutions and repair and maintain its rainwater harvesting and drainage infrastructure.
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.