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ON AN EQUAL FOOTING
What the article is about?
- Talks about the need for a uniform energy strategy.
Syllabus: GS-III Issues relating to growth and development,
Inequality among states:
- High Income States- HIS (Maharashtra, Tamil Nadu, Gujarat, Karnataka, Andhra Pradesh and Telangana) together account for 56.4% of factories and 54.3% of the net value added to the country, while their share in population is only 32.3%.
- Have higher credit and financial accessibility (55% of total institutional credit and 56% of total industrial credit went to these 5 HIS) at the credit-deposit ratio.
- Maximum benefit of the Atmanirbhar package (Rs 20 lakh crore) also went to the HIS as they have a higher share in the industry.
- Low-income States (LIS) are deprived on many fronts.
- (Bihar, Jharkhand, U.P., M.P., Odisha, and Rajasthan) access only 15% of total institutional credit and barely 5% of total industrial credit, while their share in the population is 43%.
- Have low accessibility to credit, low investments, low power availability and accessibility, and high energy costs.
- Among other reasons, the availability of adequate quality power at the cheapest rate attracts investments, either private or public, in a particular location.
- Energy India Outlook 2021 concludes: “Electricity prices vary not just among end-users, but also between states, where a complex patchwork of different taxes and subsidy regimes can leave consumers in some states paying 5 times more for their electricity than their counterparts in neighbouring states.”
Way Ahead:
- Eliminate price discrimination in the power sector by synchronising all the regional grids.
- The Central Electricity Regulatory Commission is in the process of implementing a framework of the Market-Based Economic Dispatch and moving towards ‘One Nation, One Grid, One Frequency, One Price’.
- Inclusion of electricity duty under the GST
- Apart from uniform cost, the power sector also needs uniformity in electricity duty charged by different States.
- Electricity duty should be redistributed among the States under the ambit of GST equally shared by the CGST and SGST.
Conclusion
- In order to attain higher economic growth, States should raise the issue of uniform energy tariffs and the inclusion of electricity duty under GST.
- This decision will benefit the whole nation through rational tax devolution and, therefore, provide the opportunity to attain higher growth.
