Subsidy cuts and differential taxation are energy options, says proposal
Let's look for energy options
An alternative pricing mechanism for transport fuel in India is currently being proposed by experts. The key benefits of the new methodology, Fuel Saver, comes from the checking of fuel adulteration and its unlawful use. It is possible to check adulteration by real-time monitoring of supply and off-take of fuel through the supply chain believe proponents. They suggest mandatory presentation of identity tags to help check spurious and unauthorised use of fuel.
Discontinuation of the unwanted diesel subsidy is also proposed as a measure. The government presently offers a subsidy, which is availed mostly by private cars and sports utility vehicles (suvs). This only happens because of the absence of an alternative method for consumers to pay the full price. This is likely to be done away with. Eight of the political parties currently supporting the United Progressive Alliance (upa) government are demanding the withdrawal of subsidy.
More and more taxis around the world, especially those in San Francisco, London, and Vancouver, are now hybrid electric vehicles. New York, which is considered the cab capital of the world, is readying itself for a hybrid revolution.
The proposal favours improved vehicle occupancy by offering incentives for higher fuel-efficient and shared-use vehicles during registration for private vehicles, as well as parallel measures to improve load factor in public transport services. This will go a long way in managing fuel demand in the country.
Environmental protection is also taken care of in the proposal. Vehicular emissions and other transport sector pollution will significantly reduce if the recommendations are put into place. The rigorous check on fuel adulteration and measures to improve fuel efficiency can be accomplished only by focusing on the use of appropriate fuels for vehicles -- such as hybrid/plug-in-hybrid, cng and electric-solar. This will also improve affordability.
Progressive taxation benefits have also been highlighted in the proposal. It is suggested that the government implement differential fuel taxation based on the vehicle index, which accurately reflects the cost-to- road infrastructure, to traffic flow and to the environment. Vehicle index factor and vehicle characteristics are to be used as the basis for fuel tax calculation. This means, suvs and other big cars pay more taxes on account of their fuel consumption when compared to motor-cycles and small cars and space efficient vehicles such as buses and trucks.
The proposal calls for a public debate on differential fuel taxation but government authorities believe that a public debate would prove to be an invitation to black marketers and corrupt fuel providers to charge different prices for the same commodity.
It is clear, however, that tough measures are needed for energy security and to check vehicular pollution.
Chandra Vikash is CEO of TEN Systems & Services Pvt Ltd
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