New Delhi: The committee headed by Anwarul Hoda to frame public transport policy has recommended using fiscal sops and fines to provide a big push to public transport and at the same time encourage green transport.
Long trip: A July 2007 picture of an overcrowded bus in New Delhi. In order to develop a viable alternative to private vehicles, the committee suggests removing excise duties on buses to make them cheaper.
The proposals include cutting the 17% excise duties on buses to make them cheaper, higher parking fees for cities’ congested areas and low taxes on green vehicles.
“Taxes should be brought down on buses and passenger taxes. At present around 30-35% of the cost of buses is on account of taxes. Reducing taxes will make the buses cheaper and in turn incentivize the public transport system in the country. The policy will be submitted to Prime Minister Manmohan Singh shortly,” said a committee member, who did not want to be named.
The committee was set up on the recommendation of the Prime Minister’s Council on Climate Change and will be part of the national action plan on climate change. It is chaired by Hoda, member (infrastructure) of the Planning Commission, and includes R.K. Pachauri, head of the Intergovernmental Panel on Climate Change, and director-general, The Energy and Resources Institute (Teri).
The policy’s emphasis is to take measures that will result in lowering the use of fossil fuels by encouraging a shift from personal vehicles to public transport. Energy consumption in motorised individual traffic is 10 times higher than demand-oriented public transport system. On a per-passenger basis, a car uses six times more energy than a bus, according to the draft policy on public transport.
“Reducing excise tax on bus transport is the most important transportation issue in the country today. Every bus passenger is taxed heavily and this increases expenses for bus companies. Forty per cent of the price of a bus ticket goes to taxes consisting of excise on buses, tyres, import duty of components and local taxes,” said Dinesh Mohan, the Henry Ford Professor of Transportation Safety at Transportation Research and Injury Prevention Programme in the Indian Institute of Technology, Delhi.
In addition to the 17% excise duty, buses also have an additional Rs10,000 duty on body building. Apart from this, value-added tax, central sales tax and local taxes are levied on a bus buyer and these could add another 15% to the cost, depending on the state.
“I completely endorse this recommendation as it is an important requirement and will help in reducing the bus prices. Unfortunately, people do not have a viable choice for public transport,” said R. Seshasayee, managing director of bus-maker Ashok Leyland.
The Petroleum Conservation Research Association (PCRA), a quasi-government body, had also recommended similar measures for an overhaul of the transport policy.
“We had recommended leveraged taxation for effective implementation of fuel efficiency at three levels. One is at the production level, with higher excise duties for vehicles with lower efficiency, encourage hybrids, no taxation on battery-operated cars. At the state level, policy should elaborate on higher registration tax and at the local level and municipal level, there should be higher parking, congestion and entry taxes for (fuel) guzzlers,” said Ravi Capoor, former executive director at PCRA, who has been spearheading the need for fuel efficiency norms. He added it is illogical to have public finance freely available for private transport and have such an excise burden on public vehicles.
The Hoda committee report, too, recommends that there should be higher parking fees for congested parts of cities.
The panel also recommends that low-powered, low-emission and hybrid vehicles should be taxed less. It has shot down the recommendation to link financial payments for development of cities under the Jawaharlal Nehru National Urban Renewal Mission to the ability of state governments to raise a dedicated “transport fund” by imposing an additional cess on automobiles when they are registered by vehicle owners.
Padmaparna Ghosh and Ravi Krishnan contributed to this story.