One of the main tasks of the Parliament is to frame laws through debate and discussion on the floor of the House. However, there have been repeated instances where Bills introduced by the government have been passed without substantive discussion (For news reports, click here and here). Even where Bills are debated extensively, occasions where the government introduces changes in the Bill directly as a response to Parliamentary debate are hard to find.
One recent exception is the list of amendments introduced to the National Green Tribunal Bill, 2010 by the Minister for Environment and Forests directly in response to issues raised on the floor of the House.
The Bill
The National Green Tribunal Bill, 2009 aims to set up specialised environmental courts in the country. It will hear initial complaints as well as appeals from decisions of authorities under various environmental laws. The Tribunal shall consist of both judicial and expert members. Expert members have to possess technical qualifications and expertise, and also practical experience.
The Tribunal shall hear only ‘substantial question relating to the environment’. Substantial questions are those which (a) affect the community at large, and not just individuals or groups of individuals, or (b) cause significant damage to the environment and property, or (c) cause harm to public health which is broadly measurable.
PRS in its analysis of the original (unamended) Bill, had raised the following issues (for detailed analysis, clickhere) :
The Debate
In the debate on the Bill in the Lok Sabha on April 21, 2010 a number of MPs raised substantive issues with respect to the Bill. Some of the issues raised were (From the news article quoted above):
1. The Bill fell short on parameters of “scope, efficiency, and access to justice”.
2. Setting up five benches while barring the jurisdiction of courts will “create huge distance for the poor community members and tribals to seek justice”.
3. Offenses under the Wildlife Protection Act and the Wildlife Protection Act will not be heard by the Tribunal.
4. “Section 15 puts an embargo against [persons] other than retired Judge of Supreme Court or Chief Justices of High Court. The other clause puts 15 years of administrative experience, which would open the path for packing the Tribunal with bureaucrats of the kind who did not enforce the environment related laws in their time in service.”
The Minister acknowledged the contribution of the members by stating that: “The members have made important suggestions. Even though their exact demands may not be part of the official amendments moved by the government… but I am open to their suggestions…I will remove all objectionable clauses or sections in the proposed law and keep the window of discussion open.”
The Minister’s response
In response to these issues, the Minister Mr. Jairam Ramesh introduced 10 amendments to the Bill on April 30, 2010. Though not all the issues raised were addressed, a number of changes were made. In addition, the Minister also assured the House that issues regarding access would be addressed by the government by following a “circuit” approach for the benches of the Tribunal i.e. the benches would travel around the area within their jurisdiction to hear complaints. (To read the response, click here, page 15250)
Some of the main amendments are:
1. Now any aggrieved person can can approach the Tribunal. Earlier limited access was provided.
2. The whole Act will be operational by notification at the same time. Different provisions will not be enforced separately at different points of time.
3. There is a procedure for direct appeal to the Supreme Court from the judgement of the Tribunal.
4. The number of expert and judicial members is clearly specified.
In addition, the Minister also assured that the Selection Committee for picking the members of the Tribunal will be transparent and will ensure that members are not “a parking place for retired civil servants”.
Petroleum Secretary S Sundareshan, while addressing a press Conference on Friday, announced the government’s decision to deregulate prices of petrol. Petrol prices shall now be subject to periodic revisions based on fluctuations in market prices. An immediate hike of Rs. 3.50 per litre has already been affected. Prices of diesel shall be deregulated in stages while those of kerosene and LPG shall continue to be regulated by the government. For the moment, diesel has been hiked by Rs. 2 per litre, kerosene by Rs. 3 per litre and LPG by Rs. 35 per cylinder. Crude to retail: Pricing and under-recoveries India imports about 80% of its crude oil requirement. Therefore, the cost of petroleum products in India is linked to international prices. The Indian barrel of crude cost $78 in March 2010. Once crude is refined, it is ready for retail. This retail product, is then taxed by the government (both Centre and State) before it is sold to consumers. Taxes are levied primarily for two reasons: to discourage consumption and as a source of revenue. Taxes in India are in line with several developed nations, with the notable exception of the US (See Note 1) Before the current hike, taxes and duties in Delhi accounted for around 48% of the retail price of petrol and 24% of the retail price of diesel. (Click Here for details) Ideally, the retail prices of petroleum products should then be determined as: Retail prices = Cost of production + taxes + profit margins However, in practice, the government indicates the price at which PSU oil companies sell petroleum products. Since these oil companies cannot control the cost of crude (the primary driver of the cost of production) or the taxes, the net result is an effect on their profit margins. In cases where the cost of production and taxes exceeds the prescribed retail price, the profit margins become negative. These negative profit margins are called ‘under-recoveries’. When international crude prices rose above $130 in 2008, under-recoveries reached an all-time high of Rs. 103,292 crore. Even at much lower prices in 2009-10 (averaging at $70 per barrel), under-recoveries totalled Rs. 46,051 crore. (See Note 2) The latest move is an effort to reduce these under-recoveries. The government cited the recommendations of the Kirit Parkih Committee while announcing its decision (Summary - Kirit Parikh Committee report). Any alternatives to price hike? As is evident from above, under-recoveries can also be reduced by decreasing taxes. In fact, one might argue that by both taxing the product and offering a subsidy, the government is complicating the situation. Usually whenever subsidization coexists with taxation, it serves the purpose of redistribution. For example, taxes might be collected universally but subsidy be granted to the weaker sections only. However, this is not the case in the current situation. What needs to be noted here is that these taxes are a very significant source of revenue. In fact, the total taxes paid by the oil sector to the central and state governments were around 3% of GDP in 2008-09 (See Note 3). Reducing taxes now might make it difficult for successive governments to raise taxation rates on petroleum products again. Moreover, though taxes are levied both by the Centre and the States, the subsidy is borne only by the Centre. Hence, the current arrangement is beneficial to the States. Possible future scenarios The opposition has voiced concerns that the hike in prices is likely to lead to even higher inflation and will further burden the consumer. The Chief Economic Advisor to the Finance Ministry, Dr. Kaushik Basu, however, told the media that these changes would have a beneficial effect on the economy. According to him,
"The (decontrol of petrol prices), coupled with price increase for LPG (cooking gas) and kerosene, will have an immediate positive impact on inflation. I expect an increase of 0.9 percentage points in the monthly Wholesale Price Index (WPI) inflation".
However, he added, that since the hike in fuel prices would push down fiscal and revenue deficit,
"they will exert a downward pressure on prices… More importantly, from now on, if there is a global shortage and the international price of crude rises, this signal will be transmitted to the Indian consumer. It will rationalise the way we spend money, the kinds and amount of energy we use, and the cars we manufacture. It is an important step in making India a more efficient, global player”.
It remains to be seen how the actual situation pans out. Notes 1) Share of tax in retail price (%)
| Country | Petrol | Diesel |
| France | 61% | 46% |
| Germany | 63% | 47% |
| Italy | 59% | 43% |
| Spain | 52% | 38% |
| UK | 64% | 57% |
| Japan | 48% | 34% |
| Canada | 32% | 25% |
| USA | 14% | 16% |
| India (Del) | 48% | 24% |
Source: Petroleum Planning and Analysis Cell, PRS (Data as of Feb, 2010) 2) Under-recoveries by oil companies (Rs Crore)
| Year | Petrol | Diesel | PDS Kerosene | Domestic LPG | Total |
| 2004-05 | 150 | 2,154 | 9,480 | 8,362 | 20,146 |
| 2005-06 | 2,723 | 12,647 | 14,384 | 10,246 | 40,000 |
| 2006-07 | 2,027 | 18,776 | 17,883 | 10,701 | 49,387 |
| 2007-08 | 7,332 | 35,166 | 19,102 | 15,523 | 77,123 |
| 2008-09 | 5,181 | 52,286 | 28,225 | 17,600 | 103,292 |
| 2008-09 | 5,151 | 9,279 | 17,364 | 14,257 | 46,051 |
Source: Petroleum Planning and Analysis Cell, PRS 3) Contribution to Central and State taxes by Oil Sector (2008-09)
| Category | Rs (crore) |
| Sales tax | 63,349 |
| Excise duty | 60,875 |
| Corporate tax | 12,031 |
| Customs duty | 6,299 |
| Others (Centre) | 5,093 |
| Other (State) | 4,937 |
| Profit petroleum | 4,710 |
| Dividend | 4,504 |
| Total | 1,61,798 |
Source: Petroleum Planning and Analysis Cell
