Context :-
- Estimates suggest that India has doubled the electrified rural households, from 55% in 2010 to 96% in 2020.
- And despite greater electrification, power supply is often unreliable in rural areas.
- This, however does not account for connection to public utilities and social infrastructure such as schools, community spaces etc.
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Solar energy as a solution:-
- Recently to address the problems, the Rajasthan Electricity Regulatory Commission (RERC) has ordered the State’s discoms to solarise unelectrified public schools.
- The RERC has also suggested installation of batteries to ensure storage of power.
- Apart from enabling education, this ruling would benefit several other crucial aspects of rural life.
- The RERC order also directed discoms to seek corporate social responsibility (CSR) funds for the solarising drive and allows schools ownership of the power systems in a phased manner.
- This removes the burden of infrastructure development expenses on discoms, while also ensuring clean energy for the schools.
- The power that is generated could also be counted towards the discoms’ Renewable Purchase Obligations (RPO).
- Large-scale projects are generally financed by companies that wish to profit from economies of scale. They are less interested in investing in rural electricity as it is not as lucrative.
- Large-grid based projects add to the supply of power in urban areas, and therefore, only marginally further the greater energy access goals.
Decentralised model of power generation
- While Rajasthan has land mass with vast, sparsely populated tracts available to install solar parks, bulk infrastructure of this scale is susceptible to extreme weather events.
- With climate change increasing the possibility of such events, a decentralised model of power generation would prove to be more climate resilient.
- With battery storage, the susceptibility of grid infrastructure to extreme weather events could be mitigated. This is called climate proofing.
- As solar installations become inexpensive and with rapidly advancing battery storage technologies, decentralised solar power generation has become a reality.
Conclusion
The ruling by Rajasthan’s power regulator not only helps in increasing access to electricity, achieving targets of renewable energy but also suggests solutions that other States can emulate.
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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.