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Should India Implement Carbon Tax?

Posted in Finance Articles, Total Reads: 1713 , Published on October 21, 2016

"Because normal human activity is worse for nature than the greatest nuclear accident in history."

These lines by Martin Cruz Smith aptly nail down the current scenario of our environment. Humans are overexploiting nature for the want of lavish lifestyle, modernity & technology. Every industry burns hydrocarbons like coal and natural gas which leads to the emission of carbon monoxide in the environment. All the combustible energy sources lead to the exudation of such poisonous substances. In India, the rising pollution levels are a matter for concern due to which the government has come up with various measures to curb the pollution. The 2016 mid year pollution index in India varied from 82- 94 which is deadly for all living beings. One such measure formulated by the government is levying carbon tax.

Image: pixabay

Carbon tax is the duty which the government sets on to carbon content of fossil fuels which the majority of the industries are burning. It can be termed as the pricing of carbon, in layman terms. It was initiated in India in 2010 with the rate of Rs. 50 per tonne of coal. This form of ""pollution tax"" is a government initiative for the rising concerns over environmental degradation .Talking on a global level, the minister of environment and climate change,Catherine Mckenna has recently stated that the tax on carbon should rise for it to have a sustainable effect in the environment. Some major nations where the proposition of carbon tax is well in effect are Ireland, Australia, Chile , Sweden etc. Coming to the national level , we have a carbon tax cessed on major combustible fuels and the recent budget is a proof to the situation prevailing.

There are two major directions which the path of the carbon tax imposition in India can take. The first direction points to a very positive outlook.


1. The carbon tax levied on combustible fuels will be able to make a shift from the current non renewable resources to better alternatives which are wind, sun, tides etc. If the tax is too high, maybe it will create a shift in people's outlook and they will move to a more environment friendly way of getting their work done.

2. Also, this will attract people to dwell upon more healthy ways of transportation like cycling , walking and shifting to public modes of transportation.

3. Imposing carbon tax will definitely generate more revenue for the government and it will be good for the economy as well

4. Ultimately, this tax will lead to the increasing social concern and social awareness for the matters related to environmental degradation. The common public of India is too busy meeting deadlines at work that they do not realise that their every step is taking our Earth to a dead end!


1. As is very much evident, any such measure will have a considerable opposition just like any big decision taken in any sphere of life. Most of the industries like glass, fertilizer ,steel , transportation etc. use the combustible fossil fuels for their working and the result is the poisonous carbon monoxide. So, these industries will try to move themselves to an area with lesser amount of carbon tax. They will not permanently shut down their businesses, practically.

2. Also, the industries may try to be deceitful like the Volkswagen so as to trick the system about their fuel combustion. This will give rise to unfair and unethical practices.

3. Another disadvantage associated with levying carbon tax is that the consumers are the ones who are going to get their pockets burdened the most. The people from the low income groups will be affected the most.

4. Moreover, there is a large unknown number of people who have their lives depending on the burning of wood, coal etc. The addition to pollution from their daily activities to sustain livelihoods is huge and thus, carbon tax will have no effect over them . It is a Godzilla task to get a count of such people and thus, imposing carbon tax in India shall not be able to curb a major amount of activities leading to environmental degradation.

So, it can be concluded that imposing carbon tax in India does have attractive benefits like using the revenue in saving the environment, but its major drawbacks are holding it down from being a total hit . This task has to be properly executed for it to be more of an environmental friendly activity and less of a burden for the common public. However, it must be called a good trial on the part of the government to be able to raise awareness towards the hazards of global warming so as a pilot for a greener world.

This article has been authored by Neha Sharma from KJSIMSR

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