Accounting for India's Forest Wealth - Madras School of Economics

The main reason for resisting environmental fiscal reforms is theperception that it would slow down growth. Growth is energy-intensiveand environmental taxes make energy costlier. However, manyinternational studies (see, Ekins, 2009 for a perspective) have shown theeffect of environmental tax reform with the green shift may havenegligible adverse effect on growth and positive effect on employment.The Central Ministry of Power (2007) notes that in the high growthperiod of 2004-08, an economic growth rate of over 9 percent perannum, which has been achieved with an energy growth of less than 4percent per annum. With subsidy interventions, a steady reduction in theenergy-intensity of growth can be achieved over and above the trend inorder to meet India‟s self-commitment of reducing the carbon-intensityby 20-25 percent by 2020.7. CONCLUDING OBSERVATIONSIn this paper we have highlighted that inspite of efforts for reformingindirect taxes in India over a period of two decades, the system remainshighly segmented where cascading continues between Statevat andCenvat, and between taxation of goods and services. Inter-state barriersof trade also continue because of the central sale tax. Although taxationof petroleum products at high rates serves an environmental purposealso pricing and taxation in this sector suffers from considerable nontransparency.Coal and coal products have also been taxed at relativelylower rates. A systematic policy for many indirect taxes for curbingpollution and promoting environment has not been put in place.Theforthcoming introduction of GST provides the relevant context were theoverall design of GST should incorporate the environmental taxes with aview to imparting a green shift to India‟s tax system in line withcomparable international experience. Although there are considerabledifferences among the three models of GST that are currently underdiscussion viz., the model proposed by the Empowered Committee of the37