TERI flays proposals on energy, transport

By Our Special Correspondent

NEW DELHI, MARCH 7. While commending the Budget proposals for 2001-02 as being `forward looking' and moving towards second generation reforms, the Tata Energy Research Institute (TERI) has been critical of the short term approach taken in the transport and energy sectors. Instead of promoting personalised passenger cars, it feels the budget should have provided incentives for public transport either in the form of lower excise for buses or for local bodies to implement transport schemes.

The TERI Director, Dr. R.K. Pachauri felt that instead of providing an across-the-board excise reduction, the Finance Minister could have provided a differential duty between energy efficient cars and other vehicles. The present system of duties locks the country into a system of pollution-creating transport and continued fuel imports.

Briefing newspersons, he pointed to the dangers of `blindly aping countries of the North' by going in for a system of highway infrastructure oriented to personalised automobiles. The TERI chief also felt the fuel taxation regime should internalise external costs such as the cost of health and non- health impacts of emissions. He said traditionally gasoline had been taxed far more than diesel, which had resulted in diesel accounting for nearly 80 per cent of the total consumption of transportation fuels. This was nearly six times the consumption of gasoline. Another issue was of adulteration of transport fuels with low priced petroleum products like kerosene leading to higher emissions.

Dr. Pachauri noted that the price differential between gasoline and diesel would remain under the new excise duty regime, leading to continuation of the existing consumption pattern. Apart from its impact on the subsidy bill, concessional taxation of kerosene would continue to encourage adulteration of transport fuels.

He described the extension of concessional excise duty on LPG conversion kits as a `confusing signal' given the lack of any clear policy on LPG use in the transport sector. The safety aspects of this fuel have also not been carefully studied, he said.

Railway budget

Similarly, on the railway budget, he underlined the need for unbundling of services which could easily be privatised. He argued that funds for modernisation are not available while the Railways urgently need to improve efficiency levels.

Regarding the power sector, Dr. Pachauri welcomed the latest meeting of state chief ministers on reforms of state electricity boards and maintained that the budget has taken some positive steps towards strengthening the ongoing restructuring of the power sector.

On the possible `green' initiatives in the budget, he said infrastructure status could have been given to pipelines for fuel transportations while income tax concessions could have been granted for individuals investing in renewable energy and energy efficient systems for residential applications. He also felt incentives could have been provided for rural energisation and decentralised renewable energy systems. The `polluter pays' principle should also be introduced in setting user charges, he argued while also seeking a revival of the chapter on sustainable development in the annual Economic Survey.

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