CO2 Emissions reduction strategies and economic development of India

This paper examines the consequences of alternative CO2 emission reduction strategies on economic development and, in particular, the implications for the poor by empirically implementing an economy-wide model for India over a 35-year time horizon. A multi-sectoral, inter-temporal model in the activity analysis framework is used for this purpose. The model with specific technological alternatives, endogenous income distribution, truly dynamic behaviour and covering the whole economy is an integrated top-down bottom-up model. The results show that CO2 emission reduction imposes costs in terms of lower GDP and higher poverty. Cumulative emission reduction targets are, however, preferable to annual reduction targets and that a dynamically optimum strategy can help reduce the burden of emission reductions. The scenarios involving compensation for the loss in welfare are not very encouraging as they require large capital inflows. Contrasted with these, scenarios involving tradable emission quota give India an incentive to be carbon efficient. It becomes a net seller for the first 25 years and because of reduction in carbon intensity it would demand less in later years when it becomes a net buyer. The results suggest that for India, and other developing countries, the window of opportunity to sell carbon quotas is the next two decades or so.

A comparison of calculations of investment and savings requirements for India's fourth five year plan

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Energy subsidies, public investment and endogenous growth

We consider impacts of fossil fuel subsidy reforms on economic growth, focusing mostly on the Middle East and North Africa (MENA) countries. The main empirical result is that a country that initially subsidizes its fossil fuels, and then eliminates or reduces these subsidies, will as a result experience higher economic GDP per capita growth, and higher levels of employment and labor force participation, especially among the young. These effects are strongest in countries whose fuel subsidies are high at the outset, such as in the MENA region. Our model predicts that a 20 US$ cents average increase in the gasoline and diesel prices per liter, through removal of subsidies, increase the GDP per capita growth rate by about 0.48% and 0.30%, respectively. In the MENA countries, governments’ savings from reduced subsidies seem to be earmarked mainly to health expenditures, education expenditures and public investment in infrastructure. These channels appear to be strong contributing factors to higher long-run growth when fuel subsidies are reduced

Sustainable Development and the Role of Tax Policy

The need for sustainable development is felt in all countries. An operational definition of sustainability is given to provide a framework to determine the extent to which the environment should be protected. The paper examines sources of environmental problems and then discusses various policy options to deal with them. Alternative policy instruments of both command and control policies and incentive-based policies such as taxes, subsidies, and tradeable permits are examined. The benefits, costs, efficiency, effectiveness, distributive implications, implementability, and appropriateness of alternative policy instruments for different types of problems are discussed

Groundwater Management and Ownership: Report of Expert Group

It is time India recognises its dependency on groundwater resources, which is only going to increase in the coming years, partly because of growing urbanisation and industrialisation. In view of the growing seriousness of the problem, it is necessary that a political consensus build up quickly on a management strategy, which takes into consideration domestic and international experience. Delay in this matter could spell crisis of a much larger scale than has been experienced so far. The Expert Committee Report makes extensive policy and programmatic recommendations.water management, gropundwater management, groundwater resources, urbanisation, industrialisation, groudwater extraction, agriculture, demand for water, water markets, irrigation, wells, water tables, water distribution, Environment Studies

The Enron story and its lessons

When economic reforms in India opened up the power sector to foreign private power plants, the Enron corporation of the USA was the first foreign firm to offer to build a power plant at Dabhol, a coastal town 250km south of Bombay. In spite of public criticism, Maharashtra State Electricity Board signed a power purchase agreement. Subsequently, even though construction had started, a new state government first cancelled the deal and then renegotiated a new power purchase agreement. The paper tells this story, assesses the economics of the original and renegotiated agreements, examines various objections against the original agreement, speculates on the political economy of the episode and draws lessons for power policy as well as for the various actors involved namely, the central government, state electricity boards and private investors.Enron, Dabhol, private power, political economy, power purchase agreements, optimal load factor, power policy,