Sunday, April 12, 2015

Why can't economists in India think beyond raising taxes?

In an opinion piece in a Sunday paper a well known economist blames the terrible pollution in Delhi on subsidies provided by the government on kerosene, electricity and on car parking. Kerosene is a petroleum product derived from imported crude. Instead of providing subsidised kerosene, which causes severe lung disease in poor women who use it for cooking, the government should provide them with cooking gas which is also imported and subsidised. To discourage the use of diesel, taxes on petrol should be reduced while those on diesel increased so that they cost the same. In the US diesel is slightly more expensive than petrol. The price of diesel is kept low because food is transported by trucks. It is stupid to say car ownership should be discouraged because there are only about 20 cars per 1000 people in India while the US has over 500. The automobile industry provides about 5% of industrial production and employs millions of people so it is essential for the economy. Is there really a subsidy on electricity? We know that the government levies vast number of taxes on every service, much of it hidden from us, just as the Congress was earning more from taxes on petrol while constantly complaining about how much money it was losing from fuel subsidies. The whole of UK could fit into the state of Bihar and yet they discovered oil under the North Sea and recently next to Gatwick near London. How is it possible that with over 7000 miles of coastline we can find no oil or gas? Perhaps they do not want to discover oil in India, as a former oil minister, Veerappa Moily claimed. However, India has unlimited supply of sunshine, except for brief periods during the monsoon season. Most electricity use is in summer when it is impossible to survive without air conditioners. Every building should have solar panels on the roof and on walls facing east and west. This will keep the building cool by preventing direct heating by the sun, reduce the need for cooling and produce free electricity at the same time. Over a few years the cost in savings on electricity bills will pay for the solar panels. The same can be used for heating and hot water in winter. As for subsidised parking, that is not true. There is very little proper parking for cars in Delhi. Because land is so expensive every inch is built over with no space left for parking. Amid much excitement the Congress passed a bill for multi-brand retail in India, hoping that the likes of Walmart will open mega stores, as in the US, and result in massive employment opportunities. Not a single store came. These people frequently travel abroad. Do they have their eyes closed? Have they seen a Walmart without huge parking? Mostly free. We need people with new ideas, not those with ossified brains, trotting out the same old drivel. 

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