A recent report by the National Institute of Fiscal Policy and Research (NIFPR) released in July 2017 reveals that economically backward states like Bihar, Jharkhand and Odisha spend less than half of the desired requirement for each student at the elementary level on an annual basis, when compared to more prosperous states like Tamil Nadu and Uttarakhand.
The NIFPR report estimates requirements for twelve States using the set of norms defined in the RTE Act and other official documents. In the process of doing so, the report created a ‘normative’ frame of reference essential to judge financial adequacy.
There is clear evidence of substantial gaps and under-spending in per student resource requirements. “The obvious implication of these finding is the need for higher allocations with due consideration for equity aspect as the deficit is clearly concentrated in the poorer States of India”, the report reads.
The report sets out to calculate the gap between actual expenditures and ‘ideal’ expenditures on students at the elementary level to provide education for all and achieve the spirit of a right to free and compulsory education.
By calculating this gap, the report concludes that states like Bihar spend only 31 per cent of their what they ought to spend on each student per year. Similarly, Jharkhand and Odisha are spending 44 per cent of the funds they ought to divert to students. This deficit persists in most states such as Madhya Pradesh, which spends a little more than a half of its requirements at 52 per cent.
States with above average per student expenditure are Uttar Pradesh at 78 per cent and Uttarakhand at 91 per cent, yet the prize goes to Tamil Nadu which spends a whopping 108 per cent of its total requirement on students on an annual basis.
Uttar Pradesh performs better than expected, and this could be because of the relatively lower gap between actual and required expenditure due to the prevalence of children in the private unaided sector, which reduces public investment requirements. Another likely reason for the number is the higher pay scale for regular teachers in the state, which conflates the numbers.
The contour map represents the comparison between required and actual expenditure across States.
It can be seen that ‘per student actual expenditure’ lies well within the boundaries of per student requirements. The larger the distance between the red and blue lines, greater the gap. The green line shows the recurrent cost per student in Kendriya Vidyalayas (KVs) in the year 2015-16. At Rs 32,698 expenditure per student in 2015-16, the green line lies outside the other two lines by a large margin , except for Uttarakhand.
Several researchers, according to the report, have noted that the Sarva Shiksha Abhyaan (SSA) treats the better-off States and the backward States equally except the north-eastern or special category States, and all States are to provide equal matching shares under the scheme.
Comparing the per-student expenditure, Geetha Rani notes, “Himachal Pradesh reported the highest per student expenditure of Rs 18,509 and Bihar spent Rs 2,684 in 2010-11. The increase in per-student cost additionally on account of SSA was Rs 2,668 in Himachal Pradesh, while the amount itself was the per student cost in Bihar! The additional per student cost that Bihar could reap was Rs 1,872.
The report concludes by saying that the issue of equalisation needs immediate attention within SSA as well as in the overall framework of Centre-State finances. And careful strategic planning is needed to prioritise public expenditure on elementary education and giving due consideration to equalisation.
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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.