The Hindu Editorial Analysis- 17th December 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

The Hidden Cost of Greenwashing the Indian Railways

Why in News?

RITES Ltd. has won contracts to repurpose redundant Indian Railways diesel locomotives for export after gauge conversion, highlighting wastage due to rapid electrification policies.

• The Indian Railways’ Mission 100% Electrification raises concerns about environmental, financial, and strategic implications.
• It underscores the gap between green claims and actual coal-based energy dependency.

RITES Ltd. Wins Contracts for Repurposing Locomotives

• RITES Ltd., a consulting branch of Indian Railways, has secured two contracts to modify six broad-gauge diesel-electric locomotives for sale to railways in Africa.
• These locomotives will be changed from the Indian broad gauge, which measures 1,676 mm, to the Cape Gauge, measuring 1,067 mm.
• Although India has exported locomotives in the past, this is the first time that used locomotives are being exported after undergoing a gauge conversion.
• This engineering project shows a significant achievement, but it also brings attention to the waste of operational diesel locomotives caused by certain policy decisions.

Diesel Locomotives Made Redundant

• Current Status: As of 2023, there were 585 diesel locomotives that were not in use because of railway electrification. This number has now increased to around 760.
• Residual Life: More than 60% of these locomotives have been in service for over 15 years.
• Policy Impact: The increase in idle locomotives is due to the government's goal to achieve 100% electrification of the railways more quickly.

What Is Greenwashing?

• Greenwashing refers to the act of making false or exaggerated claims about the environmental benefits of a product, service, or organization to seem more eco-friendly than it really is.
• This practice includes marketing tactics that hide harmful environmental actions by emphasizing small eco-friendly aspects while ignoring larger environmental harm.
• Greenwashing can confuse consumers and weaken real sustainability efforts by focusing more on appearance than on actual positive environmental actions.

Justifications for Electrification

• Saving Foreign Exchange
  • Low Diesel Usage: In 2014, the diesel used by the railways was just 3.24% of the total diesel used in transportation, and this dropped to around 2% by 2021-22.
  • Minor Impact: While cutting down on crude oil imports helps save foreign currency, the overall effect on the country's diesel consumption is small when compared to other industries like trucking and agriculture.
• Environmental Claims
  • Energy Source Dependency: Close to 50% of India's electricity comes from coal, which the railways transport in large amounts.
  • India's dependence on coal-generated electricity contradicts the idea of creating a "Green Railway."
  • To truly make electrification environmentally friendly, there needs to be a shift to 80% non-fossil fuel electricity generation.
• Implications of 100% Electrification
  • Asset Mismanagement: Many working locomotives are being retired too soon, leading to a huge waste of assets. If all stabled diesel locomotives were lined up, they would stretch 16 kilometers.
  • Disaster Management Argument: The Indian Railways intends to keep 2,500 diesel locomotives for "disaster management and strategic purposes," which raises doubts about why this redundancy is needed.
  • An additional 1,000 diesel locomotives will remain in operation for traffic needs, even after electrification.
  • The financial health of the railways still relies on transporting coal, which questions the environmental benefits being claimed.
• Critique of Electrification Strategy
  • Policy Concerns: The push for 100% electrification seems more about image than effective policy-making.
  • Economic Impact: This rush results in wasting taxpayer money without delivering notable environmental or economic gains.
  • Until renewable energy becomes the main source of India's electricity, claims of environmental benefits from railway electrification are hard to justify.

Practice Question: 
1. Discuss the implications of Indian Railways’ Mission 100% Electrification on asset management, environmental sustainability, and financial efficiency.
2. How can India reconcile green objectives with energy realities? (150 Words /10 marks)

Levy a higher GST rate on tobacco, sugared beverages

Why in News?

India is facing serious public health and economic issues because of the high use of tobacco and sugar-sweetened beverages.

• The suggested increase in the Goods and Services Tax (GST) from 28% to 35% aims to reduce consumption and boost tax income.
• To effectively tackle health problems and differences in revenue, it is essential to implement broad tax reforms, which include raising excise duties.

Background and Context

• In the last seven years since the launch of GST, there have been no major increases in GST rates for harmful products like tobacco and sugar-sweetened beverages.
• There were only small increases in the National Calamity Contingent Duties (NCCD) on tobacco, which has made these products more affordable and has weakened public health efforts.
• The Group of Ministers (GoM) has suggested increasing the highest GST rate on tobacco and sugar-sweetened drinks from 28% to 35%.

Impact of Proposed GST Rate Hike

• India is the second-largest user of tobacco globally.
• 28.6% of adults aged 15 and older and 8.5% of adolescents aged 13 to 15 use tobacco.
• Tobacco is a major cause of non-communicable diseases (NCDs) and results in over 3,500 deaths every day in India.
• In 2017, the economic cost of tobacco use and second-hand smoke was around ₹2,340 billion, which is 1.4% of the country's GDP. This amount is much greater than the ₹538 billion in tax revenue earned from tobacco each year.

Expected Outcomes of GST Hike

• A 35% GSTincrease would result in the following price changes and effects on consumption:
  • A 5.5% price rise for beedis, leading to a 5% drop in consumption and an 18.6% rise in revenue.
  • A 3.9% price rise for cigarettes, causing a 1.3% decrease in consumption and a 6.4% increase in revenue.
  • A 3% price increase for smokeless tobacco, which would reduce consumption by 2.7% and boost revenue by 1.9%.
• The total extra revenue from these changes could reach around ₹43 billion each year, assuming that there is no significant tax shifting by the industry.

Recommendations for Further Reforms

• A 40% GST ratewould:
  • Significantly raise prices, leading to a further drop in consumption, while generating an extra £72 billion each year.
  • Decrease tax differences between various tobacco products and ensure compliance with the WHO Framework Convention on Tobacco Control (WHO FCTC).
• Addressing Industry Concerns about Illicit Trade:
  • Research indicates that tax increases have little effect on illicit trade.
  • Other factors, such as regulatory frameworks and governance, are more important in managing illegal markets.
• The need for a Balanced Tax Framework:
  • Dependence on GST, which is a type of ad valorem tax, makes it less effective as the industry can adjust prices.
  • Specific excise taxes, which are shown to be more effective in lowering tobacco use, should be increased along with GST to improve the overall tax framework.

Significance of Sugar-Sweetened Beverages Tax

• The high intake of sweetened drinks leads to problems like obesity, diabetes, and other non-communicable diseases (NCDs).
• Implementing a 35% Goods and Services Tax (GST) could reduce the demand for these drinks and support public health goals.
• Additional taxes focused on health, such as specific excise taxes, could improve the tax system even further.

Key Considerations for GST Council

• Raise GST rates to 40% for tobacco and sugar-sweetened beverages to improve public health and generate more revenue.
• Add higher excise taxes on these products to create a mixed tax system that has shown to be effective in many countries.
• Decrease the tax differences between beedis, cigarettes, and smokeless tobacco to stop people from switching from one type to another due to lower taxes.
• These actions can help lower health issues and economic problems while also bringing in important funds for development.