States May Get Sops For Curbing Pollution

States are likely to be given incentives for pollution control, said 15th Finance Commission chairman NK Singh in an exclusive interview with DNA. This comes amid a raging debate over the causes of pollution in Delhi and other cities.

"One of the issue is whether it will be part of your devolution formula or should it come as part of the conditional grant. And should you broaden the criteria to include not only forest but environmental management where apart from the forest you also bring in the component of pollution as one of the elements," Singh said.

This is for the first time that the pollution is being considered as one of the criteria for finalising the states' share in central taxes and grants. The Commission is considering broadening the criteria to include environmental management where apart from forest as one of the deciding factors for the devolution of taxes.

The Commission is mulling the two-three modalities for including the broader issue of environmental management as a criteria instead of just forest cover. The last Finance Commission gave 7.5% weightage for forest cover.

"One of the modalities is to build it in the devolution formula itself like last finance commission made it 7.5% and other way is to make it a conditional grant," Singh said, adding, "But whether to make it state specific or not we are still debating various options."

The 15th Finance Commission is planning to rework the formula that gave weightage to the forest cover. The commission feels that it is a narrow view and the criteria should be broadened to include pollution and other related factors.

"Yes, I can see that pollution now increasingly a compelling factor and this is not just a metro phenomenon. Patna is one of the most polluted cities in the country. Yesterday, the pollution in Patna was the highest. So the phenomenon of pollution is not only a metro phenomenon. This is something we cannot overlook when we look at the broader issue of environment," said Singh.

The state share in central taxes is distributed among states based on a formula. The last finance commission used forest cover, apart from population, area and income distance as criteria to decide the devolution of taxes to the states.

The current commission has commissioned some studies by Delhi-headquartered The Energy and Resources Institute (TERI) and Forest Research Institute (FRI), Dehradun.

"Studies have been instituted on pollution, urbanisation, environmental degradation and issues connected with orderly urbanisation, clean air. And we will be looking at these issues," Singh said.
"The fact remains that if you look at the foreign investment decisions of any foreign companies, one of the issues that comes up is that they like to go and invest in the places which can give you clean air," he said.