On April 30, Super Galaxy, a huge US military plane, landed in Delhi, bringing oxygen cylinders, hospital equipment and Covid test kits. More flights with aid material are on the way to India. And, thereby hangs a tale.
On April 22, Edward Price, the US state department spokesman, was asked at a press briefing about “the horrible surge” in the coronavirus infections in India and why the US was not lifting the ban on exports of raw materials for vaccine production. He uttered no word of sympathy, while offering a long explanation as to why it was “in the interests of the rest of the world to see Americans vaccinated”.
A storm of protests and criticism erupted in India; influential members of the US political and corporate establishment implored their government to change its position. Four days later, on April 26, a much-chastened Price spoke about the importance of the “Global Comprehensive Strategic Partnership” with India, providing details of how the administration planned to help India address the terrible pandemic.
President Joe Biden’s “America is back” mantra — which, for a moment, sounded more like Trump’s “America First”— re-assumed a liberal and humanitarian patina, thus indicating Washington’s right instincts for enlightened global leadership. In a telephone conversation with Prime Minister Modi, Biden acknowledged India’s assistance to the US in the early phase of the pandemic and expressed his determination to stand with India in times of her need.
After intensive inter-agency consultations in recent days, the US government came up with a positive response to India’s requirements. The package of assistance has several elements:
First, the US Defence Production Act’s provisions are being reconsidered. The authorities have agreed to approve the supply of filters needed for the manufacture of the Covishield vaccine.
Second, it is estimated that the US will have 60 million surplus doses of the AstraZeneca vaccine by June, which it will not use at home. Subject to clearance by the FDA, this will be released for use by other countries. Whether some of them will be sent to India is not clear yet.
Third, a comprehensive plan has been prepared for the supply of oxygen-related equipment, including generation systems, cylinders and setting up of field hospitals with oxygen beds.
Four, a special focus is on stepping up commercial supplies of therapeutics, especially remdesivir. Immediate shipment of 1,00,000 vials by Gilead Sciences has been arranged, with another 2,00,000 vials to be made available by end-May.
Five, the US Development Corporation will fund the Indian vaccine firm BioE to expand its manufacturing capacity. This is covered under the Quad’s Vax Partnership, enabling India and the other three partners (US, Japan, Australia) to produce and distribute at least 1 billion doses by end-2022.
It is noteworthy that the Pentagon has been actively involved in helping India. Defence Secretary Llyod Austin observed that the department of defence has been directed to use its resources to provide frontline health workers with needed materials.
What is of immediate impact is the robust engagement of corporate, mostly Big Tech, America. Google, Microsoft and Apple — as well as others — Amazon, Proctor & Gamble and more — are coming forward to commit their resources.
It’s a mix of altruism and pragmatism: US tech has large, valuable investments in India, especially Bangalore, which need protection. The US-India Strategic Partnership Forum is helping with 12 ISO containers for the transport of oxygen to India. The US-India Business Council has appealed to its members to offer assistance. On April 27, Secretary of State Antony Blinken convened a Zoom meeting of business leaders. An Indian participant reported that “a massive effort and dollars” have been invested in supplying assistance urgently.
It is easy to see behind America’s turn around the benign hand of the Indian diaspora, backed by friendly American public figures and proactive diplomacy by India. Pramila Jayapal, the Congresswoman who riled the Modi government for her criticism of the human rights situation, raised her voice, stressing that it was both the right and necessary thing to assist India.
Even after the havoc wreaked by the second wave became clear, there was a disturbing “stony silence” in Washington, said an expert. The US should realise that the lingering anti-American sentiment (which has a long legacy) has not disappeared.
It would be unwise to underestimate its strength. Fortunately, the India-US partnership is now so multi-faceted, deep and robust that it can withstand minor turbulence. The ease and candour with which communications occurred from the US President down to his Deputy Secretary of State and their Indian counterparts, showcased the vibrance of bilateral ties.
India-US relations are in a good place now. They are set to deepen further. When it comes to health-related cooperation, the US needs to internalise that helping India is really helping the world. Vaccines produced in India are meant not only for Indians but for the people of Africa, Asia and Latin America.
That is why all influential figures in Washington should support the initiative by India and South Africa to seek a temporary IPR waiver under the TRIPS agreement. Many are already doing so enthusiastically — for they know that this is a potential game-changer. Let the magic of how India helped Africa vanquish the HIV/AIDS menace be recreated.
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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.