Thursday, 29 April 2010

Global Warming to India's Rescue - Part II


So how do we simulate an environment for engineers to innovate? How do we kickstart the companies into trying to innovate? The answer is as simple as it is straightforward: Remove the Petrol Subsidies and add a Petrol Tax.

It is a bold thing to say. But to give you a proper framework into just the magnitude of the things that we are dealing with, here’s our annual oil import bill:

$ 50 Billion – a year (Rs. 2.5 lakh crores – a year!)

We spend the above amount EVERY YEAR trying to buy enough petrol for our nation. Just how much money is $ 50 Billion one may ask? To give you an account of just what it means, here’s a list of some of the things we can build/buy if we save that money (Note- we can pursue any one of these projects)

      162 IIT’s  - a year!
      291 AIIMS - a year!
      24 lakh primary schools - a year!
      16 Delhi Metro like projects - a year!
      Double our Defence budget, double our Health Budget, send 10 Chandrayaan’s to moon and still have money left to construct 3 Olympic sized stadiums.

I find the last fact particularly startling. We can double our defence budget, double our health budget with the snap of a finger and still have money left to do other things!

And therefore, as the cliché goes, we must act as tough citizens and send a message across to our MPs, “that you can take tough decisions, we will support you.”

Already the government was in two minds regarding the roll back of the petrol prices. If your government cannot even stand by its decision to increase the price of petrol by a rupee or two, then you can be sure the option of complete removal of petrol subsidies is something your government does not even know exists.

But it is easier said than done. Because any MP who gets up in Parliament and proposes such a measure will be drowned by the opposition voices saying, “You want to raise the petrol prices and add a petrol tax! Are you out of your mind? As it is the Indian people are burdened with too many taxes and now you want to add another one. Once the price of petrol goes up, the cost of transportation goes up and once the cost of transportation goes up the price of everything goes up – including essential commodities. No, no we cannot have this tax.”

And there is only one answer to that. You say, “You know what friend, let’s get one thing straight. As far as taxes are concerned we are both on the same side. We are both paying taxes. While I am paying taxes to the Indian government, you are paying taxes to the Saudi Arabian government so that they can build more of their palaces. And  I have just this inclination – that I want my taxes to go into building more Indian schools, Indian hospitals, Indian roads and Indian bridges.”

If that argument does not win, nothing will. To understand the above point all you have to do is look at the spectacular growth of the Arab countries. Where do you think they got all that money from?

Ultimately, I am reminded of that famous saying, “A crisis is a terrible thing to waste.” We know the price of petrol will go up in the future whether we like it or not. We also know that India will be among the hardest hit countries by Global Warming. Why not make the most of it?


  1. Pretty true. I was of the exact same opinion on the developed countries- India issue.
    India must set an example to the world, by acheiving economic excellence, without damaging the environment.
    It would be a very bold move to increase taxes on fuels, since as of now there are no backup travel options.
    I believe te government should start working on other travel options, like increasing Buses,metro etc etc and keep increasing the taxes, slowly but proportional to growth of public transport.
    Then like India had national campaigns of Population control and literacy drive, It should have environment awareness drives, to tell the people why they shouldn't act selfish and destroy their future.
    Spreading awareness is very important. We see educated people not giving too hoots to this issue, leave alone the uneducated ones.
    Campaigns like massive usage of cycles etc. will go a long way in cutting the emissions.
    Then even the leadership must learn a lot.
    How many CMs and cabinet ministers do you think would have ever studied the environment in detail. I dont want them to have a degree in EVS, but most of them aren't aware of the basic stuff.
    I lovely post from shreyans, which is very much required today.

  2. Well, although I almost agree with you in that India must tread the green path, I am a little skeptical about your tax raise 'policy'. Moreover, I think you're relying too much on statistics. Let me introduce one more statistic- 'the no. of people who earn less than $2 a day -- 850 million.'... How many people can you guarantee will be behind the government's 'tough decisions'?

    So, I was wondering whether any government would risk giving away 850 million votes. In the recent cut-motion, the Congress discarded its moral principles. We learnt people like Mayawati could get away with corruption charges, and that too quite easily. And, multi-partisan politics remains a distant dream. Tough decisions such as the one you proposed are not this government's thing.

    Your obsession with statistics blinds you. You take pride in the no. of engineers India produces. I laugh at their hollowness. You take pride in the fact that we came up with a small car called the 'Nano'. I feel ashamed at that very fact..... Japan came up with a Toyota IQ - not a cheap small car but a much better and much needed 'green technology'. I cannot imagine Indian engineers even perceive a thing as phenomenal as the Toyota IQ.

    We had to rely on a 'Nuclear Deal' to get access to civilian nuclear technologies. And in all likelihood, India will have to rely on the 'white' developed world to quench its thirst for green technologies just as it relies on the middle east for almost all her oil needs.

    So my freind Mr. Shreyans Jain, how confident are you of your engineers and scientists? I bet out of the 10k engineers that you employ, 10k will leave their job in the middle and opt for an MBA.

  3. Anonymous,

    You say raising oil prices will adversely impact the 850 million people living below the poverty line. But I am sure you agree with the fact that as demand for oil grows globally and the supply reduces, the price of oil will inevitably shoot up. Once it does, do you think we will have to subsidize oil even further so as not to incense the 850 m strong vote bank?

    My point is that since oil prices are going to go up anyway, why not artificially raise its prices now so as to create a strong market demand for green, clean products that will give our companies a headstart in trying to look for solutions while the rest of the world is still indulging in oil.

  4. Raising the prices of oil will be a kick in the stomachs of the 850 million we're talking about, be it now or in the future. I'm only against these kicks. For the time our oil prices are raised, while you and I will be engaged in our cyber rhetoric comfortably in front of our laptops in our AC rooms, we will be depriving a majority of our population of even the most basic necessities (ha! we do that even with low oil prices).

    Since all the government can do is create a market for foreign green technologies (as India coming up with its own technology is inconceivable) my point is, why not create a strong market demand for green products without changing our oil prices? Playing with market forces will be necessary to undertake such a strategy, I agree. But raising oil prices seems a solution too crude and amateurish. Renewable technologies must be given incentives, and not shoved down our throats by means of raising oil prices.

    Let us consider a small example. Honda had introduced a hybrid version of its Civic model in 2007. A promising green solution (but not entirely). The cost of the car was 21 lacs as opposed to the 13 lacs of the normal petrol versions, primarily because it was imported from Japan. Now here the govt. should've intervened. It didn't. Honda slashed its car's prices and was forced to sell it at a loss. My implication is this: we have an unfriendly economic environment for green technologies; by raising oil we'll only create an unfriendly environment for conventional technologies as well.

  5. A solution: Alongside raising the tax on petrol the government can set up a privatised body for the transport of essential commodities to which petrol will be available at cheaper rates. This will stop the rates of essential commodities from shooting up and it being privatised can help increase efficiency( like the airport model.
    For commuters, adequate and punctual public modes of transport must be provided by the government. Public co-operation like using carpools and bicycles will go a long way in helping the tax raise reach its true purpose.