UPSC 2022 Ethics Case Study and Perfect Solution:
You are appointed as an officer heading the section in Environment Pollution Control Board to ensure compliance and its follow-up. In that region, there were large number of small and medium industries which had been granted clearance. You learnt that these industries provide employment to many migrant worker. Most of the industrial units have got environmental clearance certificate in their possession. The environmental clearance seeks to curb industries and projects that supposedly hamper environment and living species in the region, But in practice. most of these units remain to be polluting units in several ways like air, water and soil pollution. As such, local people encountered persistent health problems.
It was confirmed that majority of the industries were violating environmental compliance. You issued notice to all the industrial units to apply for fresh environmental clearance certificate from the competent authority. However, your action met with hostile response from a section of the industrial units, other vested interest persons and a section of the local politicians. The workers also became hostile to you as they felt that your action would lead to the closure of these industrial units, and the resultant unemployment will lead to insecurity uncertainty in their livelihood. Many owners of the industries approached you with the plea that you should not initiate harsh action as it would compel them their units, and cause huge financial loss, shortage of their products in the market. These would obviously add to the sufferings of the labourers and the consumers alike. The labour union also sent you representation requesting against the closure of the units. You simultaneously started receiving threats from unknown corners. You however received supports from some of your colleagues, who advised you to act freely to ensure environmental compliance. Local NGOs also came to your support, and they demanded the closure of the polluting units immediately.
(a) What are the options available to you under the given situation?
(b) Critically examine the options listed by you.
(c) What type of mechanism would you suggest ensuring environmental compliance?
(d) What are the ethical dilemmas you faced in exercising your option?
(Answer in 250 words) 20
Check the Explanation Video: –
Receive Daily Updates
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.