Fight against Climate Change : Managing Funds

  • Economic Survey 2018 published by the finance ministry has some insights about climate change fight
  • Climate change can dent farm incomes by as much as 25% in rain-fed areas over the medium term.
  • Roughly 50% of India’s workforce is employed in agriculture, which is a big risk factor.
  • India’s ability to mitigate the impact of climate change depends partly on global action to fight climate change.
  • It also depends on what actions the government takes to fight climate change, and to invest in climate mitigation efforts.
  • Over the past few years, the government has been very successful in imposing new taxes to protect the environment.
  • But it has been easy going in utilizing proceeds from such taxes for fighting climate change, an analysis of budget documents show.
  • What makes matters worse is that the resources to fight climate change are under threat since most of these were in the form of fuel taxes.
  • Given the rise in global oil prices and a possible political backlash against further rise in fuel prices, the headroom for the government to raise carbon taxes seems to have shrunk considerably.
  • Taxes, which penalize the use of fossil fuels and automobiles, are an effective weapon to fight climate change as the 2015-16 Economic Survey pointed out.
  • These taxes discourage carbon emissions even while raising revenues.
  • Government spending on environment and renewables has been consistently low, despite the twin bonanza of increased revenue from carbon taxes and reduced burden of petroleum-related subsidies.
  • The actual spending of the renewable energy and environment ministries and that of the power ministry on energy conservation has been lower than budgeted over the past few years.
  • Moreover, funds earmarked for fighting climate change have often been unspent and are at the risk of being diverted for other purposes.
  • Consider the example of cess on coal, which was introduced in 2010 by the United Progressive Alliance (UPA) government, amounting to Rs50 per tonne. Subsequently, the National Democratic Alliance (NDA) government raised it to Rs400 per tonne by 2016. However, only 34% of coal cess collections were transferred to the National Clean Energy and Environment Fund (NCEEF) between 2011-12 and 2017-18.
  • The standing committee on finance in 2014-15 had recommended transferring the unutilized funds for financing other unrelated schemes, as noted in a recent report by the Comptroller and Auditor General.
  • The government reportedly plans to divert the un­spent funds for GST compensation to states, said a Scroll report.
  • The government has also failed to efficiently utilize the penalties received from industrial projects for using forest land.
  • India’s fight against climate change cannot be sustained unless there is a coherent framework to deal with this challenge backed by adequate resources.
  • It is in India’s economic interest to take the threat of climate change more seriously, and it is in India’s strategic interest to take leadership on this issue on the global stage.

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