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Government Subsidies For Coal Nearly 400 Times More Than Environment Ministry Budget

Coal News - Published on Thu, 14 Feb 2019

Image Source: IndiaSpend
India Spend reported that Indian government subsidies for fossil fuels, including oil and gas, have decreased by 76% over the three years to 2017, but subsidies for the coal industry have remained stable over the same period, a new study by think-tank International Institute for Sustainable Development has found.

India, the world’s second largest consumer of coal and the fourth largest emitter of carbon dioxide, accounts for 7% of global emissions and continues to subsidise the loss-making, polluting coal industry. Burning of fossil fuels, such as coal, is the largest source of greenhouse gas emissions warming up the planet.

Subsidies for oil and gas decreased from INR 1.5 lakh crore (USD 21 billion) in 2014 to INR 36,900 crore (USD 5.1 billion) in 2017, while coal subsidies increased by 2%, from INR 15,650 crore (USD 2.20 billion) to INR 15,900 crore (USD 2.23 billion), according to the December 2018 IISD study.

The biggest chunk of coal subsidies was on customs and excise duties, to reduce input costs for coal-fired power generation. In 2017, the coal industry received concessions worth INR 7,523 crore (USD 1 billion) on customs duty on imports. The same year, the coal sector also received concessions on excise duty amounting to INR 6,913 crore (USD 960 million). Together, these formed 91% (INR 14,436 crore) of coal subsidies in 2017, said the IISD study.

India’s demand for coal in financial year (FY) 2017-18 was 908 million tonnes (MT), but domestic production, at only 676 million tonnes , fell short by 34%, according to the ministry of coal.

Despite these concessions and high demand, investors have seen their holdings in key Indian coal-mining and coal based power companies underperform the Bombay Stock Exchange’s Sensex by an average of 10% a year since 2013, costing INR 25,000 crore (USD 3.5 billion) in forgone returns, according to a December study by the non-governmental environmental organisation Greenpeace.

Government policies on coal subsidies saw major changes in 2017, with the introduction of the goods and services tax a unified tax which subsumed several indirect taxes, including customs and excise duties. The net value of coal subsidies, however, was unlikely to reduce significantly in 2018, said the IISD report.

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Posted By : Rabi Wangkhem on Thu, 14 Feb 2019
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