Odisha opposes use of clean cess funds for GST compensation

Wants 60% of cess for coal-bearing states which bear pollution load, environment impact, rehab cost

The Odisha government has opposed the decision of the GST Council to use proceeds of the clean environment cess for GST Compensation Fund meant for all states.

Chief Minister Naveen Patnaik said this decision is disadvantageous to coal bearing states which have to bear pollution load and environment degradation and also the cost of rehabilitation. He has suggested that 60 per cent of the clean environment cess be earmarked for coal bearing states.

Earlier Patnaik had demanded that renewable energy projects in projects need to be funded from National Clean Energy Fund (NCEF) and hydro electric projects having installed capacity of more than 25 Mw, especially the pump storage projects may also be considered as renewable energy projects. These projects, Patnaik felt, would help tremendously in meeting the peak demand of power and also in balancing the grid.

Though the rate of royalty on coal has not been revised for the past four years, the central government has enhanced the clean environment cess on coal from Rs 200 to Rs 400 per tonne in 2016-17 Budget. Proceeds of this cess accrue to the NCEF earmarked for development of renewable energy.

Originally envisaged a carbon tax, the clean energy cess was meant to combat climate change and fund clean energy projects. Over the past six years since its introduction in 2010, the Government of India has mopped up Rs 54,000 crore by way of clean cess. Less than 50 per cent of the proceeds have gone to NCEF and barely 10 per cent has been earmarked  for renewable energy projects. In the April-January period of 2016-17, the Union government had collected Rs 21,129 crore as clean environment cess. In 2016-17 Budget, the cess on coal, lignite and peat was doubled from Rs 200 to Rs 400 per tonne.