Tunnel Vision Approach
once again, the Union Budget has failed to break new ground or provide direction as far as environmental policy is concerned. Yet, there was reason to hope that this time, things would be different: for the first time, the pre-Budget Economic Survey of the government included a chapter on sustainable development and environmental policy. While the analysis left much to be desired, at least it was a beginning. The environmental community in the country viewed it as a signal that at long last, the mandarins in the finance ministry had recognised the economy-environment linkages, and were ready to do something about environmental degradation that threatens the very viability of economic growth.
Eminent economist Ashok Lahiri aptly likens the relation between the Economic Survey and the Budget as that between the diagnosis of an illness and its treatment, respectively. In terms of this metaphor, one can argue that the government's diagnosis of environmental problems is flawed and the treatment absent. Indeed, one has to search high and low in the Budget proposals to find any clue to the government's intentions to address the environmental problems described in the Economic Survey in graphic detail. It is, therefore, reasonable to conclude that when it comes to the environment, the government's rhetoric is once again not matched by action.
One may, of course, cite the additional duty of Re 1 per litre on diesel as an example of an environmentally friendly measure. It is evident, however, that this move was primarily motivated by revenue considerations. The benefits of this levy in terms of reduced air pollution and traffic have not been worked out. Also, given that air pollution varies spatially, this is perhaps not the best way to address the problem in the first instance. While the government may try to garner environmental kudos ex post through this move, one must remember that serendipity does not sound economic policy make!
With respect to direct taxes, the only significant proposal from an environmental perspective is a tax holiday for processing of biodegradable wastes. While this is laudable, one wonders why similar concessions have not been extended to other types of wastes such as fly ash.
In sum, the Budget displays a remarkable lack of vision on the revenue side vis-