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Abstract
Can growth in India be simultaneously made equitable and environmentally sustainable? The recent pattern of high growth in India has been inequitable even as serious questions have been raised about its ecological sustainability. In contrast to the current growth trajectory, this paper argues that an alternative growth trajectory can be developed which answers the question in the affirmative. We propose an Energy Policy with Equity (EPE), which fundamentally changes the energy mix of the Indian economy towards greener forms of energy as well as guarantees universal access to energy thus generated to the entire population, a feat that almost all the governments since independence have dreamt of but failed to deliver. This policy also fundamentally changes the energy mix of the Indian economy towards greener forms of energy as well as guarantees universal access to energy thus generated to the entire population. This can be done by taxing carbon to control CO2 emissions. A part of the revenue thus generated can be used for a systemic overhaul of the energy mix, which to a large extent addresses the pressing problem of environmental degradation. And the other part can be used for an in-kind transfer of free electricity to the population who contribute less carbon than the economy average and issue universal travel passes to compensate for the rise in transport costs and encourage the use of public transport. The methodology employed in this paper is an Input-Output analysis which involves two steps: calculating the carbon content (IO data) and its impact on the household budget (NSS). The level of carbon tax required for this policy to come into effect is USD 60.4 per metric ton of carbon dioxide. On the one hand, a portion of these taxes mobilized is allocated for the improvement in energy efficiency and expansion of renewable energy. On the other, the free entitlement of fuel and electricity from these taxes for a household comes out to be 2268 kWh per annum or 189 kWh per month, which is 412 kWh per year multiplied by the average size of the household (i.e. 5.5). Universal travel passes with pre-loaded balance amount of USD 17.9 can be used on any mode of public transport. While the energy mix of the growth process changes in favor of clean sources through investment in green energy as well as controlling demand for fossil fuels through a carbon tax/cap, distribution of the tax revenue in the form of universal access to energy makes the process egalitarian.
