Government lost the opportunity of using fiscal signals to discourage polluting technologies and fuels
Notoriety around dirty air, deaths and illness has not made any impression on our Finance Minister. Credit: oatsy40 / Flicker
There is not even a mention of the word pollution–or for that matter even environment—other than the plain semantic language use like agricultural environment or labour environment! Shocking! The notoriety around dirty air, deaths and illness has not made any impression on our Finance Minister Arun Jaitley. So we lose the opportunity of using fiscal signals to discourage polluting technologies, fuels and consumption. There are some green elements though—custom duty cut on LNG and lower levies on solar technologies. Railway will promote clean energy with solar-powered railway stations and also encourage waste-to-energy plants with bio toilets. Crop insurance scheme is important as farmers are now more vulnerable to climate change.
But last year (2016-17), the Finance Minister had at least made explicit reference to the “pollution and traffic situation in Indian cities” as a “matter of concern” and had introduced differentiated taxes based on pollution potential of technologies. But nothing this time; worse, nothing for public transport. In his speech, Finance Minister was only concerned about more people buying cars than paying taxes to underscore the state of non-compliance with tax payment.
Yet another worrying trend is how affordable housing schemes are being made more attractive for builders than making them affordable for economically weaker sections. Tax sops are on offer for real estate without ensuring affordability and wellbeing criteria. Affordable housing will now have infrastructure status to allow developers associated benefits, including tax exemption. Budget 2016-17 had relaxed the cost criteria of affordable housing units. This year, the size criteria of housing units to qualify for incentives have been relaxed. Currently, built up area of 30 and 60 sq metre is considered. But this is now replaced with carpet area of 30 and 60 sq metre, which is a bigger unit. These units may end up as high-end studio apartments for the middle class and not affordable for weaker section. Let us understand that 95 per cent of housing demand in urban centres is from economically weaker sections today and these families earn less than Rs 200,000 annually.
With GST round the corner, more effective and progressive approaches like polluter pays and green economic instruments should have been looked at to make market work for environment and public health! We have missed the bus again.
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