Economic Survey 2015 - From Carbon Subsidy to Carbon Tax: India's Green Actions

Introduction

• Recent decline in oil prices has provided the opportunity to rationalize energy prices by getting rid of distorting subsidies whilst shifting taxes toward carbon use. 
• decontrol of diesel prices while at the same time increase in excise duty on petrol and diesel periodically to match the declining global prices.
• the coal cess was doubled from Rs 50 per ton to Rs 100 per ton.

Excise Duty on Petrol And Diesel As An Implicit Carbon Tax

• Excise duties on petrol or diesel also act as an implicit carbon tax—by putting an effective price on emissions.
• role in raising substantial revenues for social redistribution.
• The striking feature is that India has moved from a  carbon subsidization regime to one of significant  carbon taxation regime—from a negative price to a positive price on carbon emissions.
• there will be net reduction of 11 million tons of CO2 emissions in less than a year.