The destruction caused to a significant part of the Chennai coastline from the oil spill that followed a collision between two ships is both tragic and ironic. A large quantity of oil was released into the sea, affecting marine life and livelihoods of coastal communities. What makes the collision ironic is that it comes at a time when there is steadily declining pollution due to such incidents. Ship collisions are less common today because GPS-based navigation systems have made their operation much safer. It is apparent that the first response to the Chennai collision involving an LPG tanker and the fuel carrier off the Kamarajar Port was seriously deficient.
The port initially denied any significant environmental damage from oil, but as the scale of the disaster began to unfold, and a large number of dead turtles and fish were washed ashore, it became obvious that the spill had not been quickly contained. Such failure calls into question the efficacy of the National Oil Spill Disaster Contingency Plan that is updated periodically for all stakeholders, notably ports, under the leadership of the Coast Guard. That the removal of the coastal sludge depended in large part on volunteers wielding buckets does not inspire much confidence in the protocol for mitigation.
An independent inquiry is vital to determine whether the training and acquisition of equipment to handle such accidents for all agencies passed muster. Moreover, pollution response equipment for all major ports and 26 non-major ports is funded to the extent of 50% by the Centre, casting a responsibility on ports to contribute the other half and build the capabilities to handle disasters.
Obfuscation of facts after an oil spill is counterproductive, since the impact is prolonged; moreover, it could erode the confidence of the international community in the country’s ability to fulfil its commitments within the UN system to protect marine life and biodiversity.
Failure to safeguard marine turtle and bird habitats, for example, is a clear violation of the provisions of the Convention on the Conservation of Migratory Species of Wild Animals, and its specific memorandum on the Indian Ocean-Southeast Asian region to which India is a signatory.
Considerable oil pollution is caused not just by catastrophes but through the discharge of ballast, sludge and water used for the cleaning of tanks. On the other hand, the efficacy of chemical dispersants to degrade oil at sea remains controversial. All this underscores the importance of timely advice from agencies such as the Indian National Centre for Ocean Information Services, which is mandated to forecast the course of an oil spill.
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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.