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The Government is likely to broadbase efforts to curb auto emissions by incentivising through tax concessions technologies other than just battery electric vehicles in the passenger vehicle segment, which includes conventional hybrids, fuel cells and hydrogen internal combustion engine platforms.
Initial groundwork in this direction has been initiated within the administration to pivot from the existing auto taxation structure, which offers incentivises based on the type of powertrain, to a new regime that could be platform-agnostic — and offer incentives based on yardsticks, such as lower emissions or higher mileage.
Based on industry feedback, the Union Ministry of Heavy Industries is learnt to be working on a proposal regarding the broader taxation incentive structure and is likely to relay that to the Finance Ministry — the nodal agency for deciding matters of taxation structure.
If the plan passes muster, a formal proposal could be taken in due course before the GST Council — the statutory body empowered to make recommendations to the Centre and states on taxation aspects under the indirect tax regime.
There is clarity that the emission reduction target cannot be achieved by just (battery) electric vehicles, and other technologies also need to be incentivised. There are discussions within the Government, and the Finance Ministry is involved.
Currently, there is a GST rate of 28 per cent on passenger vehicles, with the only major concession reserved for Battery Electric Vehicles (BEVs), which are taxed at 5 per cent.
On top of the 28 per cent base rate, there are cesses ranging from 1 per cent to 22 per cent. Effectively, hybrid vehicles get taxed at 43 per cent, just 2 percentage points lower than the 45 per cent levied on mid-sized passenger Internal Combustion Engine (ICE) vehicles.
An earlier proposal for a lower tax on conventional hybrid vehicles led to divisions within the industry, with auto companies having no hybrid portfolio opposing the move.
The Government’s move comes at a crucial juncture for the auto industry. It is rapidly upshifting from Internal Combustion Engine (ICE) system to multiple tech platforms: conventional hybrids, flex fuels, fuel cells and even hydrogen ICE, apart from battery electric vehicles.
The fresh discussions on incentives come at a time when the domestic market is seeing a renewed push for new platforms in the mass market — a slew of strong hybrid models starting with the Honda City e:HEV and subsequently, the Toyota Urban Cruiser Hyryder and the Maruti Suzuki Grand Vitara.
Express Network
Murmu: 60 cr people have changed their habit of open defecation (Page no. 6)
(GS Paper 2, Polity and Governance)
India has achieved the UN’s Sustainable Development Goal number 6, 11 years before the deadline of 2030, President DroupadiMurmu said on Sunday.
Addressing an event to celebrate Swachh Bharat Diwas, Murmu said that since the launch of ‘Swachh Bharat Mission-Gramin’ in 2014, more than 11 crore toilets have been constructed and about 60 crore people have changed their habit of open defecation.
Through this mission, India has achieved the UN’s Sustainable Development Goal number-6, 11 years before the deadline of 2030, she said.
Murmu said that ‘Swachh Bharat Mission-Gramin’ is a behaviour-change movement. During the Covid pandemic, everyone realised that toilets, the habit of washing hands with soap, and water supply through taps have acted as a shield against the pandemic.
The event was organised by the Ministry of Jal Shakti. On this occasion, the President presented SwachhSurvekshanGrameen awards in various categories.
“She said that the Government of India is implementing the second phase of ‘Swachh Bharat Mission-Gramin’, which aims to make all 6 lakh villages of the country ODF Plus.
Having achieved success against open defecation, we now have to address more complex and technical problems like solid and liquid waste management.
She was happy to note that since the beginning of the second phase of ‘Swachh Bharat Mission-Gramin’, more than 1.16 lakh villages have declared themselves as ODF Plus and the work of solid and liquid waste management has also started in about three lakh villages.
The President said that along with cleanliness, the Government of India is also working on the goal of providing quality drinking water to every household.
The ‘Jal Jeevan Mission’ has set the target of providing regular and quality drinking water to every household by the year 2024.
She noted that at the time of the launch of Jal Jeevan Mission in 2019, only 3.23 crore rural households had tap water supply, which has reached to about 10.27 crore in the past three years.
She said that ODF as well as access to tap water has led to a significant reduction in water-borne diseases in recent years. But our goal is much bigger. We have to set an example for the world in the field of water management and sanitation.
On this occasion, Union Panchayati Raj and Rural Development Minister Giriraj Singh and Jal Shakti Minister Gajendra Singh Shekhawat were also present.
The Editorial Page
Our bodies, ourselves (Page no.8)
(GS Paper 1/2, Social Issues /Governance)
While in the US reproductive rights are being rolled back for women, our Supreme Court is racing ahead, not only affirming the right to abortion for all women irrespective of marital status, but attempting to remove hurdles for women and girls to get access to safe and legal abortion.
The judgment of September 29, 2022, which was symbolically pronounced just after International Safe Abortion Day, has made a huge leap for women’s reproductive rights.
It has shown us this is a court that is evolved and aware of the emerging issues around gender equality. For starters, the judgment mentions that all references to “women” and its interpretation of the Medical Termination of Pregnancy Act, 1971, would include persons other than cis-gender women who may also require access to safe medical termination of their pregnancies.
Access to safe reproductive health services, including termination of pregnancies is required by trans persons, and there is no recognition of the complete denial of sexual and reproductive healthcare services to trans persons, especially transmen.
On the question of abortion access, the Supreme Court takes the bull by the horns in the new amendment to the Medical Termination of Pregnancy Act (MTP Act) and the Rules.
The 2021 amendment to the MTP Act extends the time limit for termination of pregnancy from 20 to 24 weeks. This extension is provided only to certain categories of women as prescribed under the Rules.
The 2021 Rules list out the women eligible for termination of pregnancy up to 24 weeks and this includes women who are survivors of sexual assault/rape/incest, minors, women with disabilities, women with foetal malformation, women in disaster or emergencies and women who have had a change of marital status during the pregnancy (widowhood and divorce). Thus, technically, single or unmarried women would not get the benefit of the extension of the 24-week window for abortion.
This has been a long-pending issue that women’s rights activities have been raising over the last several years. Single women who need abortion services are subjected to shaming, harassment and violation of their privacy by medical practitioners before being provided abortion services, and in many cases are even denied an abortion even up to 20 weeks.
This is due to the stigma that women face in Indian society, even today, on account of being single, unmarried, divorced or widowed. The single status of women is not recognised as being worthy of equal respect and dignity and they are not considered of equal worth.
The young and the willing (Page no. 8)
(GS Paper 2, Human Resources)
Mahatma Gandhi said of our youth, “If I was to be their real teacher and guardian, I must touch their hearts….I must help them to solve the problems that face them…and I must take along the right channel the surging aspirations of their youth.”
The youth are leading global movements for change, with their energy, aspirations and fresh perspectives. India’s real wealth is its youth (15-29 years), a staggering 27 per cent — over 320 million people.
The is the largest youth population in any country, as per the International Labour Organisation. The significance of this is underscored in the UN Secretary General, Antonio Guterres’s message at an India@75 event, ‘Showcasing the India-UN Partnership in Action’, where he stressed that, as home to the largest youth generation in history, India will be decisive in the success of the Sustainable Development Goals.
Given this, how are we building our wealth? Today, there is a gamut of academic avenues and skilling opportunities for our youth, with the government also establishing volunteering avenues.
It is appreciable that, at a time when the average age of India is 28 years, the government is reviewing the National Youth Policy for the next 10 years to unlock the potential of youth to advance India, with entrepreneurship, youth leadership and development being the priority areas.
This includes strengthening the youth volunteering ecosystem and developing 21st-century skills like inter-personal communication, collaboration, critical thinking, dealing with change and more.
Our education system, as it is right now, is not adequate for this time of exponential change. School education largely focusses on acquisition of literacy and numeracy, while higher education is creating technocrats and bureaucrats of the best and brightest minds.
Against this backdrop, learners rarely get opportunities to reflect on what is most meaningful to them and the purpose of their lives, so that they can embark on self-transformation, act on their purpose and make a difference in the lives of others.
The need of the hour is to tap into the hearts and minds, the passion, compassion and innate spirit of service within the youth so that they evolve into humane, ethical leaders of tomorrow, imbued with the spirit of sewabhaav, creating ripples of change in a dramatically different future.
Acknowledging this, the National Education Policy 2020 stresses that “the purpose of the education system is to develop good human beings capable of rational thought and action, possessing compassion and empathy, courage and resilience, scientific temper and creative imagination, with sound ethical moorings and values.”
Idea Page
Inflation and climate change link (Page no. 9)
(GS Paper 3, Economy)
Even though the RBI has raised the repo rate by 50 basis points, the probability of inflation, as measured by the consumer price index (CPI), remaining higher than the central bank’s tolerance band is increasing by the day.
The risks are primarily from three sides: The depreciating rupee, fast-depleting grain stocks, especially of wheat, and vagaries of weather as a result of climate change. Let me explain these in detail, and then list the policy options before the government.
On the fast depreciating rupee, one thing is clear: As the US Federal Reserve raises its interest rates, there is going to be pressure on the Indian rupee and many other currencies around the world.
We may draw some consolation from the rupee holding out relatively better than many other major currencies, such as the yen or the pound.
But even a 10 per cent depreciation in the rupee since January 2022 poses a risk of imported inflation, especially through crude oil and gas and fertilisers and edible oils.
The RBI has already spent more than $80 billion to support the rupee, and there are limits to which it can go. And, if RBI tries to hold the rupee artificially high, it will adversely hit Indian exports, widening the current account deficit and putting further pressure on the rupee.
The best that RBI can and should do is to avoid a sudden and abrupt fall in the rupee, but also let it find its natural level given what is happening globally, especially in the currency markets.
The bottom line is that the risks of higher inflation from the falling rupee remain and are likely to continue for at least one year, if not more.
On this, one should read not as much from what the RBI or Ministry of Finance says, but more importantly what Jerome Powell, the Chair of Federal Reserve of the US is saying.
He is committed to bringing down inflation in the US to 2 per cent from the current levels of more than 8 per cent. Although the time frame he has in mind is two to three years, indicating it will not be a hard landing, yet he is increasing interest rates by 75 basis points each time.
The writing is on the wall for Indian policymakers. If they have to circumvent this, they have to have innovative policies to promote exports and attract more foreign direct investment (FDI).
The natural Price (Page no. 9)
(GS Paper 3, Mobilisation of Resources)
My last column set out a 10-point road map for energy atmanirbharta (Building the future, IE September 5). In this article, I will elaborate on one of them:
The importance of natural gas as the bridge fuel towards that goal. The trigger for this elaboration is the announcement at the end of August by the ministry of petroleum that they had constituted a committee, headed by energy expert Kirit Parikh, to review the domestic natural gas pricing regime.
My attention (rather concern) was triggered by three factors.
One, the committee’s terms of reference suggested it was tasked to square the circle between “market-oriented pricing” and “administered” pricing.
The committee was directed to develop “market-oriented, transparent and reliable pricing regimes” to facilitate “India’s long-term vision for ensuring a gas-based economy”. And, examine the issues related to ensuring “a fair price to the end consumer”. I was not clear how the committee would reconcile the two.
Second, there have been several committees in the past. Their combined impact has been to create a landscape dotted with a potpourri of gas pricing regimes.
This is because the recommendations made by one committee have not replaced those made earlier. I am concerned this latest initiative might add a further layer to this already “notoriously complex” stack.
Third, the composition of the committee suggests the government has plans to further tighten controls over natural gas pricing. Four of the six members are from the public sector.
I have high regard for public sector expertise but I do not expect them to recommend steps that will diminish their role. I wondered, therefore, about the negative impact of the move on the government’s objective to move forward “towards a gas-based economy”.
The committee was required to report back in 30 days, and it is possible their recommendations have already established that my line of thinking is exaggerated and unwarranted. Still, given its wider relevance, I elaborate below the reasons for my thought process.
India has natural gas reserves. Of that, there is no doubt. IHS CERA has estimated India has undiscovered gas resources of approximately 64 TCF.
The bulk of this is, however, in harsh topography and complex geology. These reserves are difficult to locate. Furthermore, even if located, they are difficult to bring to market on economically viable terms.
This is because the cost of creating the development and production infrastructure is massive. BP and its coventurers have, for instance, spent about 5 billion dollars over the period 2011d and 2019 to produce 3 TCF of gas. They expect to spend a further 6 billion dollars to produce an additional 3 TCF.
Explained Page
Fast-melting Arctic ice is turning the ocean acidic, threatening life (Page no. 12)
(GS Paper 3, Environment)
A team of researchers has flagged the changing chemistry of the western region of the Arctic Ocean after discovering acidity levels increasing three to four times faster than ocean waters elsewhere.
The team also identified a strong correlation between the accelerated rate of melting ice and the rate of ocean acidification.
The study, published on Thursday in ‘Science’, the journal of the American Association for the Advancement of Science, is the first analysis of Arctic acidification that includes data from 1994 to 2020.
Scientists have predicted that by 2050, Arctic sea ice in this region will no longer survive the increasingly warm summers. As a result, the ocean’s chemistry will grow more acidic, creating life-threatening problems for the diverse population of sea creatures, plants and other living things that depend on a healthy ocean.
Crabs, for example, live in a crusty shell built from the calcium carbonate prevalent in ocean water. Polar bears rely on healthy fish populations for food, fish and sea birds rely on plankton and plants, and seafood is a key element of many humans’ diets.
Seawater is normally alkaline, with a pH value of around 8.1.The first author on the publication was Di Qi, who works with Chinese research institutes in Xiamen and Qingdao. Also collaborating were scientists from Seattle, Sweden, Russia and six other Chinese research sites.
They point to sea-ice melt as the key mechanism to explain this rapid pH decrease, because it changes surface water in three primary ways.
First, the water under the sea ice, which had a deficit of carbon dioxide, now is exposed to the atmospheric carbon dioxide and can take it up freely.
The seawater mixed with meltwater is light and can’t mix easily into deeper waters, which means the carbon dioxide is concentrated at the surface.
The meltwater dilutes the carbonate ion concentration in the seawater, weakening its ability to neutralise the carbon dioxide into bicarbonate and rapidly decreasing ocean pH.
Tokenisation for card transactions: What is it, how it helps you (Page no. 12)
(GS Paper 3, Economy)
The Reserve Bank of India’s card-on-file (CoF) tokenisation norms have kicked in, which aim at improved safety and security of card transactions.
Now, for any purchases done online or through mobile apps, merchants, payment aggregators and payment gateways will not be able to save crucial customer credit and debit card details such as three-digit CVV and expiry date.
After multiple extensions, the RBI decided not to give any further relaxation in implementing these norms.The RBI’s Deputy Governor T Rabi Sankar said on Friday that many extensions were given to the system for a comfortable switchover.
“We just wanted to make sure that the customer’s safety doesn’t get compromised because of problems faced in the implementation of tokenisation. The feedback we have from all stakeholders is that it is perfectly ready and the system can go on,” he said.
Close to 35 crore tokens have already been created. In September alone, 40 per cent of transactions, valuing around Rs 63 crore, were done using tokens, Sankar said.
Tokenisation refers to the replacement of actual card details with a unique alternate code called the ‘token’, which shall be unique for a combination of card, token requester, (i.e. the entity which accepts requests from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and the device.
In September 2021, the RBI prohibited merchants from storing customer card details on their servers with effect from January 1, 2022, and mandated the adoption of card-on-file (CoF) tokenisation as an alternative.
Following a series of representations from several industry players and digital payment platforms who anticipated disruption in online transactions from January 1, 2022, the RBI extended the implementation date of card-on-file (CoF) tokenisation norms by another six months to June 30, 2022.
The June 2022 deadline was further extended as the RBI felt that although considerable progress had been made in terms of token creation and transaction processing based on these tokens had also commenced, the concept was yet to gain traction across all categories of merchants. Subsequently, the deadline was extended till September 30, 2022.
Deputy Governor Sankar said that ever since the regulation on tokenisation was issued, the central bank was constantly talking to all stakeholders to ensure that the transition to the tokenisation framework was smooth.
Economy
Windfall tax on crude reduced, export duty on diesel halved (Page no. 13)
(GS Paper 3, Economy)
The government cut the windfall tax on domestically-produced crude oil to Rs 8,000 per tonne from Rs 10,500, and halved the levy on export of diesel to Rs 5 per litre.
It also scraped a levy of Rs 5 per litre on export of jet fuel, at the sixth fortnightly review of the one-off taxes on oil companies.
The taxes were introduced on July 1, as the Centre felt that elevated crude prices were allowing oil companies to make windfall profits, and that the exchequer must get a share of such gains. The reduction in tax rates follows the easing of crude oil prices in international markets.
In the previous review a fortnight ago, the Centre had slashed the windfall tax on domestic crude by 21 per cent and cut the special levies on export of diesel and ATF by 37 per cent and 44 per cent, respectively, citing a moderation of refining margins.
While private refiners Reliance Industries and Rosneft-based Nayara Energy are the principal exporters of diesel and ATF, the windfall levy on domestic crude targets producers like state-owned ONGC and Vedanta-controlled Cairn.
The benchmark Singapore’s gross refining margin (GRM) was trading in the range of $8-12 per barrel since August. Diesel cracks have been in the range of $25-50 per barrel and ATF cracks were around $25-50 per barrel.