SC’s suggestion of Pollution Cess may tempt government to initiate action in the next budget

The Supreme Courts ratification of ban on Diesel cars above 2000 CC and suggestion of a pollution cess on those below 2000CC demands action by the central government’s on the matter.

In the last few months, pollution damage control exercises are experimented by the Delhi government and the odd-even car rationing system is one among them.

The SC verdict on banning diesel car registration with 2000 cc above engine capacity will trigger more actions.  Equally powerful is the suggestion of pollution tax.

But the two measures are notable for their absence of neutrality. They are in effect against the business plans of the diesel car producers at the same time helping the petrol car producers.

The diesel car producers who made large investment in the context of widening price difference between diesel and petrol couple of years ago are going to make their representation to the SC.

For the centre, some sort of action on the climate damage control front is essential in the next budget. When the whole world and sub-national entities like the Delhi government are trying to make emission and pollution control measures, the new budget is the occasion to initiate central government action.

Already, there is high excise duty on diesel engines. Hence the scope for a pollution cess is limited to increasing excise duty on diesel. Already, the government has increased excise duty on diesel by Rs 2 last time compared to just 37 paise in the case of petrol.   

So in the next budget, if the centre raises excise duty on diesel, calling it as a pollution cess and allocating the revenue for promotion of some environmental protection measure, it will be an apt measure. Here, companies and consumers may not complain much.