Waiving off coal Tax- good or disastrous?

Narendra Modi and his government have put forward a proposal to cancel the usual tax on coal of Rs.400 per tonne. They have come up with this idea to improve the financial situation of the utilities and power companies so they can afford to buy equipment that reduces pollution.

However, this move can completely backfire. Those using renewable sources might be tempted to switch to coal because of the cheap prices and those using coal might not switch. The worrying part is also that India is already one of the most polluted places on earth and has pushed back the deadline to cut emission levels to 2022.
Half of our thermal power plants have already missed deadlines to cut emissions of sulphur oxides which contribute significantly to particulate matter. Power plants are also big emitters of greenhouse gases and account for 80% of industrial emissions. The abolition of this cess will also lead to 3 % decrease in indirect tax collections which is worrisome for government with the general economic slowdown. The government is also considering subsidy to help power producers if the waiver doesn’t happen.

Do you think this waiver is a good idea? Will it help India’s pollution levels in the long run or will it backfire? Tell us in the comments below…

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