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Friday, 03 June 2016 03:41
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SC mustn’t overstep, plus look at taxes, not bans

 

Given how the automotive sector contributes around a tenth of the country’s manufacturing, the Supreme Court (SC) and the National Green Tribunal’s (NGT) judgments are unfortunate, prompting finance minister Arun Jaitley to reassure Japanese investors by calling them ‘transient’. What is unfortunate is not just that the judgments seem to be based on thin scientific evidence, they represent a fairly substantial inroad into the domain of the executive and they also impose large costs on common citizens. In the case of Delhi where the SC has put a ban on registering diesel vehicles of 2,000cc and above, for instance, the IIT-Kanpur report makes it clear that vehicle pollution accounts for 9% of all PM10 pollution and, among this, 4-wheelers account for a tenth—while the share of diesel would be even less, it is important to note that large diesel vehicles of more than 2000cc are a very small fraction of the total. So, if diesel cars are, at all, to be banned, it should be the smaller ones that comprise 70-80% of the population.

Also, since it is true that some larger vehicles have lower emissions than smaller ones, it is only logical that the emission standards be the yardstick, not the size of the engine. And to the extent pollution depends upon fuel standards—PM norms were reduced from 80mg in BS-II diesel cars to 25mg in BS-IV and will fall to 4.5mg when BS-VI is introduced—the deadlines for introduction have to be determined by the executive and not the judiciary given the investments required to be made. Indeed, while the NGT has banned diesel cars that are more than 10 years old in certain Kerala cities—transport minister Nitin Gadkari is working on taking this national—since it is the stock of older cars that need to be tackled more than the more emission-efficient newer ones, there are significant costs for car-owners that need to be kept in mind.

It has to be recognised that the sharp rise in diesel vehicles—for decades, Maruti Suzuki has remained a petrol-engine firm—has been almost entirely driven by government policy subsidising diesel heavily, on grounds this was used to transport food and other articles for the poor and farmers. In 2002, for instance, diesel was a third cheaper than petrol. While the government is trying to fix this now with diesel decontrol, the fact is that, in Delhi for instance, while there is a 60 paise difference in the refinery transfer price, petrol is around R11.7 more expensive at the retail level due to excise duties being R4.2 higher and VAT around R6. On the other hand, the excise duty rate is such that buying a petrol car with engine capacity of over 1,200 cc would attract nearly double the excise duty that buying a 1,500 cc diesel car would. While the courts need to try and encroach less upon the domain of the executive, the latter needs to fix such distortions if it wants its eminence to not become the subject of courtroom drama.

 

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