India's Inalienable Self-Destructing Rights!

Those who blame India for subsidising fuel used by the poor by taxing the rich can now eat crow.

A study by the International Monetary Fund [IMF] has unearthed a startling fact: The United States of America Government subsidies of gasoline, electricity and other energy sources amount to about US$ 1.9 trillion a year and thereby contributes to global warming!

Top energy users such as the United States and China to the poorest of the poor, IMF recommended, should be more aggressive in developing energy tax and pricing policies that reflect the true cost of fossil fuel use, including such externalities as pollution and the steps needed to mitigate the effects of a warming climate, says a report in today’s Washington Post.

Global warming can be controlled by use of renewable sources of green energy.

The most easily available power is from the sun or Solar Energy.

A few hours before this was written, at least 3 major firms in the US of A, Germany and in China whose main vocation is creating panels to harness solar energy filed for bankruptcy.

There are many who firmly believe that this fall from grace of the green energy makers is being masterminded by agent provocateurs working for those who produce and market fossil fuels.

I seriously believe this allegation.

Here is my reasoning:

In India, a litre of petrol costs roughly Rs.73.

In India, a litre of pure alcohol – or rectified spirit produced from sugarcane costs a mere Rs.24 – at the retail level.

Several nations in South America and some parts of the US of A use pure alcohol instead of petrol and the cars run as efficiently.

Yet, as a nation we spend huge sums of money to import crude, drain our wealth, poison the atmosphere even more and blame the whole thing on the public’s use of vehicles!

The cost to tune the ordinary engine in any vehicle to accept alcohol as a fuel is a mere Rs.500!

Is this a huge state secret?

No!

Public Sector firms like Indian Oil and Bharat Petroleum are using fuels with 30% alcohol content in several outlets.

Engineers working for the companies know that they can knock off the deficit on account of the fuel imports in one go and create factories that would make alcohol from sugarcane to benefit the rural poor.

The move, I had added, would bring the price of sugar down as the alcohol fuel could be priced a little extra to subsidise the edible product.

I had personally sent this information to some of the nation’s top politicians whose whims can be the nation’s writ.

In one go, within some 9 months, India’s rural areas would become richer … life-styles would improve, we can use the wealth spent on importing crude for other developmental work and the whole thing would help any government win elections for an eternity.

But, no sir!

Political parties’ movers and shakers have chosen to ignore it.

Why did they do it?

Here are a few internationally known reasons – courtesy – a story published today in The Washington Post [TWP] that quotes the same IMF report:

The United States is enjoying an energy renaissance with the development of new drilling and other technologies, and the focus has been on how that might revive the country’s economic fortunes — not on how to calculate news taxes that ought to be applied.

In developing countries, the trade-offs are more elemental: between inefficient electricity supplies or none at all, between social stability and the riots that sometimes accompany efforts to impose market prices.

The IMF study did not analyze all aspects of the energy industry — and explicitly excluded tax breaks for drilling or exploration. It also did not look at government support for the alternative energy industry, which the fund said had only a minor effect globally.

What does this mean in a nation like India?

Why are the politicians not interested in this scheme at all?

Simple!

If the rural poor kept perennially poor by political machinations are able to improve their lives, their votes cannot be purchased by flinging the odd Rs.500 rupee note.

The poor farmer would no longer be led astray to vote as per caste formulae.

That would change the fortunes of the idle, lazy, feudal political parties in India for the worse.

Hence, they do not want the ‘rural bastards’ [choice usage of an urban politician] to progress.

“Rural poverty is the root of my prosperity and power, Hari Bhai! Am I mad to implement something that will benefit the rural bastards, upset my party’s applecart and those of other outfits that may be carrying mangoes or oranges?”

That was a poser from a political acquaintance.

As a nation, are we really energy deficit?

NO!

Gujarat state is a power surplus state.

It produces nearly 68% of its energy through solar power panels.

The panels, in many places are placed strategically over irrigation and water supply canals to prevent large scale evaporation!

Chief Minister Narendra Modi is able to convince textile companies located in faraway Tamil Nadu’s Tirupur and the Tata automobile plant in West Bengal to shift to Gujarat despite the state being dry in terms of liquor!

And producing solar power isn’t rocket science.

It merely involves applying a particular chemical to a certain kind of poly-propylene or poly-ethylene or some such sheet, mount them on frames and draw wires to the points where the electricity is needed.

It is so simple that the whole thing can be made into a cottage industry!

But, no sir!

The policies of the Government of India will not encourage something as simple as this!

Why?

Excerpts from the TWP story reveal more:

For the United States, the IMF estimated that would require a $1.40 levy per gallon of gas and other fees totaling more than $1,400 per person each year — around $500 billion in total, or more than 3 percent of the country’s annual economic output.

Not recognising those costs, the IMF argues, has had profound consequences for energy markets and the world economy: encouraging overconsumption; leaving some nations short of funds to address health, education and other needs; and distorting investment decisions worldwide.

“It is time for subsidies to end and carbon taxation to be put in place,” IMF First Deputy Managing Director David Lipton said in an interview Tuesday, before the release of a study researched or reviewed by about 30 staff members and vetted by the IMF’s executive board. “You don’t want overconsumption based on getting something for less than it costs and forcing someone else to pay.”

The “someone else” in this case is either taxpayers left with the bill for direct government subsidy programmes or those harmed by pollution, climate change and other side effects of energy use.

Both the IMF and the World Bank, its sister agency, are intensifying their attention to climate change, an issue officials believe is one of the world’s key long-term economic challenges.

The issue has become central to the emerging agenda of new World Bank President Jim Yong Kim, who now routinely presses national leaders in meetings for their climate change plans, and compares the effort needed with the U.S. race to the moon in the 1960s.

The bank last year released a report forecasting what the world would look like if average temperatures rise 4 degrees in coming decades, instead of the 2-degree increase set as an international goal.

The consequences, the bank said, would be catastrophic for some nations.

‘A welcome development’

While the IMF’s day-to-day business focuses on more nuts-and-bolts issues that affect the financial stability of its member nations, IMF officials said energy subsidies have become an immediate concern.

“Climate change has long term implications for economic development,” said Carlo Cottarelli, head of the IMF’s fiscal affairs department. “But in the short run, you see the impact on public finances. . . . It takes away resources that could be used to reduce deficits and public debt or increase public spending on more useful purposes.”

Although a new world climate treaty has proved elusive since the 2009 Copenhagen talks, increased analysis and resources from the IMF and World Bank could make a difference as nations set policies with climate effects in mind, and try to put together a $100 billion-a-year climate-fighting fund, said Andrew Light, head of international climate policy at the Center for American Progress.

The bank and IMF “jumping on this could actually close the gap between what countries have said they are going to do and where we need them to be. . . . It is a welcome development.”

The IMF study reviewed energy policies in 176 countries. The conclusion, the IMF said, is that each year a massive annual transfer takes place that devotes some 2.7 percent of world economic output to keeping energy prices lower than they should be.

In poorer nations, the subsidies usually involve direct efforts to keep gasoline cheap at the pump and electricity rates low.

Globally, those types of direct subsidies cost about $480 billion and have overwhelmed public finances in nations such as Egypt and Pakistan.

Throughout Africa, an IMF official noted, governments spend as much on energy subsidies as they do on health care, and prices are so misaligned that they have undercut investment in new power sources. Eliminating those subsidies, the IMF estimated, would reduce energy use and trim perhaps 2 percent from the world’s annual carbon dioxide emissions.

In the developed world, the IMF says the subsidies are even larger but less overt, reflecting that government tax policies do not capture the costs of pollution and other externalities. Using economic models and other studies performed as part of the larger global warming debate, the IMF puts those indirect subsidies at $1.4 trillion — $25 for each ton of carbon dioxide produced — and suggests they be offset through an “efficient” tax that makes energy users pay the full cost of the product.

The IMF has often criticized the subsidies wired into the government budgets of many developing countries, arguing, as Lipton said, that they benefit the person with “three cars and four air conditioners” more than the poor.

He said cash transfers to the needy would be cheaper than mispricing power for everyone, and government savings could be directed to health and education programmes or deficit reduction.

But the call for a broad recognition of the externalities of energy consumption injects the IMF directly into the climate change debate at a time when developed countries are fighting to keep their manufacturing firms competitive and reduce unemployment.

So, what is the way out?

Solar panels and wind energy that are per se green.

Solar is the cheapest and the Sun God never goes on strike.

Wind energy can be harnessed but its plants are capital intensive.

Nuclear power plants will fatten nations like Russia and France at the cost of stupid third world nations like ours.

Else, they would hit advanced countries like Japan!

And then, nuke plants also give nations like Iran the opportunity to fool its public in the name of Islamic power by saying that it is attempting to generate power from a nuke plant for peaceful purposes and to reduce costs when Iran is floating in oil that can keep the nation warm for the next 200 years and would cost next to nothing when used!

Rogue nations like Pakistan and North Korea can use the nukes to threaten leviathan economies like the US of A or neighbours India, South Korea etc by rattling its nuke weapon sabres.

By citing nuke and other threats from our neighbouring nations, we in India would keep our poor poorer, import choppers at exorbitant prices to ferry our corrupt political class and when the choppers end up being flying coffins, the blame would be shifted to the pilots and the maintenance companies.

The same nukes would be used by Pakistan to threaten the probable prosperity of the US of A by carting away the natural wealth in Afghanistan worth some US$ 18 trillion at current market prices through the northwest route extending right up to the Mediterranean ports and divert its Taliban terrorists stymied in their northwest front eastwards into Kashmir, Punjab, New Delhi Mumbai and even Hyderabad.

That would impoverish even the urban sector as tourists would stop coming.

Do we not have a right to self-destruct?