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Confederation of Indian Universities (CIU)

Care for Economy

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Care for Economy : Economic Understanding, Tax, Finance, Debt Management, Global Trading
Economic Understanding

1.1 Principles
We are committed to four pillars of Green Economics:
1.1.1 Ecological Integrity
We affirm the inherent worth and interconnectedness of all living things. Biodiversity is an essential component of human welfare, yielding both utilitarian and existence values. The intrinsic value of biodiversity, in its own right, is also emphasised by we.
Society needs to uncouple the traditional relationship between economic growth and increased resource use, so that irreparable damage to nature is avoided and the depletion of the natural resource base is slowed. The impact of economic activity must be kept within environmental limits, particularly the capacity of ecosystems to process wastes. Integration of economic, social and environmental imperatives must replace the narrow pursuit of economic growth as currently defined. Many environmental problems are global in scale, therefore the maintenance of ecological integrity requires the adoption of a global perspective.
1.1.2 Equity
Social responsibility implies that people should contribute in proportion to their ability and resources, and that the community should ensure that no-one is forced to go without the necessities of life. The phasing out of unsustainable activities should not further deprive people who do not have sufficient means to live. These responsibilities apply at the individual, local, national and international levels.
In ensuring equity within the current generation, we must treat future generations equitably. This implies solidarity with deprived groups in our country as well as with disadvantaged countries and nations elsewhere. It also implies solidarity with future generations. Each generation should receive an endowment of social and environmental assets that allows for human needs to be met and development options to be pursued. Because the negative consequences of human activity on the ability of future generations to meet their needs are not fully understood, the precautionary principle should become an important decision-making tool.
1.1.3 Empowerment and Choice
Social, political and economic institutions must allow individuals and communities to determine their own priorities, while ensuring that we have the ability - as a wider community - to meet our national and international obligations.
We also recognise that the market does not provide sufficient tools for informed rational choice which would maintain a long term perspective and lead to equitable outcomes.
1.1.4 Caring and Cooperation
The fulfilment of human potential and the enrichment of lives are best achieved by people living and working together, and guided by common goals. These goals should respect and enhance the integrity and diversity of human and ecological communities and recognise their global linkages.
Economic activity involves the cooperation of many different individuals and groups in the production, distribution and consumption of a wide range of goods and services. The focus of activity should be on cooperation and opportunities for mutual benefits, rather than on competition and control that typically benefit powerful minorities. Cooperative principles should also apply to the protection and management of the global commons and resources.
1.1.5 Provision of Services by the Public Sector
We believe that a strong public sector is a prerequisite for a healthy civil society and that some services, because of the community service obligations required of them and the essential nature of the services, should be undertaken by public sector agencies. Ownership by the government does not preclude some such agencies being run on a corporatised basis, but does mean that fulfilling of community service obligations may mean that their profits would not be as great as they would be without such obligations. This reduced revenue is accepted as a necessary cost in a civil and equitable society. These community service obligations may include providing services at reduced rates to the disadvantaged in society, for example, the aged or sick, and providing services to rural and remote communities.
Such services, which are often natural monopolies because of the efficiency of having a single or well coordinated distribution system, include, but are not necessarily limited to, water supplies and distribution, electricity services, employment services, social and cultural services, phone and postal services, education, health, judiciary, town planning, environmental management, policing and custodial services, the radio and television services, public transport and interstate rail services, national parks, and defence. Of course public services should continue to provide and to extend its services to the public and to the government executive, with increased public involvement in government decision making and provision of services as an important mechanism for ensuring the appropriateness and effectiveness of government policies and action.
1.2 Goals
We aim to:
(a) keep natural monopolies and other essential public services under public ownership and re-establish such ownership as necessary;
(b) ensure the level of services in rural and remote communities is, as far as practicable, comparable with those provided in metropolitan areas and such as to ensure the vitality and strengthening of rural communities and the quality of life in those communities.
At a national level we are working towards a sustainable society in which quality of life is considered to be of the utmost importance. To this end, policy priorities are:
a) better distribution of work and income;
b) a more equitable taxation system; and
c) an improved social safety net.
An imperative is the adoption of a set of policy guidelines for the costing of environmental impacts and for the movement of the economy towards the sustainable use of India’s renewable resources.
We support continued public ownership and control of public sector enterprises especially services such as power, water and telecommunications.
At the same time, we emphasise the importance of an international approach to addressing social and environmental problems. Global cooperation must be directed at:
l implementing the principle of intergenerational equity in considering social and environmental conditions;
l bringing an end to the profligate use and pollution of the unpriced global commons (atmosphere and oceans), and scarce resources; and
l addressing the problems of poverty and imbalance in resources.
At the same time, however, it is recognised that national sovereignty is important in enabling effective global cooperation.
1.3 Short Term Targets
We are committed to the following :
a) the abandonment of economic growth (as conventionally measured), as the principal index of welfare, in favour of alternative indices, to be developed and integrated at national, state and regional level, and that regularly show:
l changes in the quality of life of the population;
l changes in the distribution of income and wealth; and
l changes in inventories and flows of environmental resources.
b) the adoption of taxation policy as a principal tool for achieving sustainable economic development.
c) focusing on taxing natural resources (ecological taxes) as a necessary departure from the emphasis on the taxing of incomes and labour. These policies include :
l the internalisation of the massive external costs associated with India’s industrial economy; and
l the need for a fair distribution of national income and wealth.
d) the targeting of spending policies to:
l meet the basic needs of all Indians;
l provide incentives for the substitution of renewables for non-renewable resources;
l support the restructuring of industry ; and
e) that trade, and trade agreements, entered into by India, are subject to the priorities of human welfare and ecological sustainability.
2.1 Principles
Our taxation policies constitute an integral part of economic policies. We call for the Indian Government to focus on particular principles to guide taxation policies:
a) the need for a fair distribution of national income and wealth;
b) the fact that environmental resources are community resources;
c) the adoption of incentives for sustainable use and penalties for unsustainable use of natural resources;
d) adequate provision of resources for public services;
e) the support of full employment,
f) the double benefit of reducing taxes on labour and increasing taxes on resource use and pollution; and
g) the discouragement of speculation.
2.2 Goals
Our aim to use taxation as an efficient tool for achieving objectives relating to social equity and environment. This can be carried out either by using tax revenue to finance beneficial reforms or by applying taxation as a steering instrument in itself.
It should be a responsibility of the government to educate the community about the social benefits of the taxation system and the citizens’ responsibility to contribute through the taxation system.
2.2.1 Taxation as a Revenue Instrument
We reject the regressive fiscal policies of the old parties. We see fiscal policy playing a vital role in reconstructing the Indian economy on a socially and environmentally sustainable basis. It is important that the revenue share of Gross Domestic Product (GDP) is raised.
Our fiscal policy aims to raise a sufficient revenue base to:
a) create a sustainable economy with appropriate levels of development in environmentally sound industries;
b) create sustainable communities based on principles of social justice, and ensure equal access to community services such as schools, adequate health care, safe streets and reliable public transport;
c) provide a strong financial basis for effective management of public sector expenditure and debt; and
d) provide revenue for a budget that can sustain healthy programme for third world aid and for nature conservation; and
e) provide a platform for ethical capital investment in community amenities and infrastructure.
2.2.2 Taxation as a Steering Instrument
A Green economy implies that taxation be used as a steering instrument in the following ways:
a) ecological taxation for the protection of nature so that our generation can leave a healthy ecological system to future generations. The tax system should encourage environmentally positive behaviour and penalise environmentally destructive behaviour. It should provide incentives for sustainable use of natural resources;
b) progressive taxation as part of a policy for national equity;
c) the burden of taxation should be levied on the consumption of scarce material resources and financial speculation rather than on labour;
d) tax should provide a mechanism to limit foreign debt and foreign speculation; and
e) tax should encourage domestic savings, employment and productive investments.

2.3 Short Term Targets
We will support tax increases sufficient to support a strong budget with environmental and social goals.
2.3.1 Personal Income Tax
Marginal tax rates for individual income earners need to be made more progressive. At present, the tax payers on low to middle incomes pay more tax in proportion to their income then people on high incomes having a fairly better knowledge and planning skills for tax savings. This is not favourable for the majority of Indians. We recognise that the taxpayers have not been generally responsible for the avoidance of tax which has led to the erosion of India's revenue base.
We also believes that the number of tax payers can increase exponentially if proper education regarding paying income tax is provided to all persons having some earning. This includes individuals, business organisations incorporating proprietary, partnership, cooperative, private as well as public limited companies. There should be simple procedures for paying income tax so that anybody can put the right amount of tax in the government's bank accounts for developmental work. People have a fear that if they pay income tax even at the standard slab fixed by the government, they will be harassed by the tax authorities and that they will have to pay more taxes in the long run.
2.3.2 Indirect Taxation Reform
We propose a reform to improve the existing sales tax system so as to :
a) incourage more efficient resource use e.g. by the reuse of material and equipment;
b) increase the efficiency and transparency with an emphasis on taxes with an ecological component; and
c) make taxation more progressive through higher rates for luxury items;
2.3.3 Eco-taxes
We regard ecological tax reform as the key element of a tax reform package.
Eco-taxes seek to incorporate the costs of resource use and disposal into prices to encourage efficient resource use and to reduce pollution. We support the introduction of eco-taxes, although we acknowledge the fact that environmental values cannot be reduced rupees and paise alone.
Eco-taxes aim to address :
1. the problem of many resources being consumed at an alarming rate; and
2. the problem of increasing pollution, causing deterioration of air, water and soil.
We believe that the application of appropriate tax rates and tax mix will encourage intergenerational equity.
We will work to develop a package of levies to provide incentives and penalties for individuals and industry, to encourage the adoption of waste minimising technologies and the production of recycled and recyclable goods. These include:
a) resource levies to be applied to primary commodities including minerals, coal and timber. Those levies should be calculated on volume of resource extracted rather than on profits sometimes generated;
b) levies on the extraction of forest and water resources to reflect their critical environmental values as well as other, including intrinsic, values;
c) pollution levies on the emission of poisonous substances such as sulphur dioxide, nitrogen oxides and heavy metals into the environment.
We will also :
a) offer tax incentives for the transition to non-polluting processes and technologies;
b) eliminate subsidies and tax exemptions for ecologically damaging activities such as resource consumption and pollution; and
c) ensure that ecotax revenues are used to offset taxes on labour in order to maximise the double dividend obtainable from ecological tax reform and encourage employment and productive investment.
2.3.4 Transport
We will :
a) work towards a change of the current indirect tax system for cars and trucks to favour more energy-efficient vehicles;
b) propose changes to the system of fringe benefits taxation so that driving of employer provided vehicles is appropriately and equitably taxed;
c) propose a shift of charges for motor vehicle registration and compulsory third party insurance to a fuel tax, so that car owners only pay in relation to the amount of travelling they do, with compensation to be assessed on the basis of income and place of residence; and
d) maintain excise on fuels but substantially reduce the rebates to the mining and forestry industries.
2.3.5 Energy
We will propose changes in the taxation structure in the energy sector to support the aims described in the Energy policy framework.
(a) improve and expand public transport;
(b) develop alternative energy techniques such as solar thermal power, photovoltaics and wind power;
(c) reduce taxes, such as payroll tax, on employment; and
(d) compensate low income earners for the regressive impact of the levy.
2.3.6 Agriculture
We will propose changes in the taxation structure for chemical fertilisers and pesticides with the aim of supporting a change to ecologically sustainable farming methods.
2.3.7 Urban Planning
The growth of our cities is often haphazard, with negative consequences for people and for the environment. We will support:
a) tax incentives for environmentally-sound residential developments; and
b) removal of hidden and explicit incentives for urban sprawl.
Finance, Debt Management and Inflation
3.1 Principles
A deregulated financial system is incompatible with social and environmental sustainability. In order to address social and environmental needs, the Indian Government must interact with the international financial system on its own terms. This will require:
a) national economic sovereignty (i.e. democratic control of the economy, not market control;
b) domestic funding of government deficits;
c) an effective system of foreign exchange management;
d) reduction in foreign ownership and debt; and
e) movement towards a sustainable financial system which enables the real economy to be maintained decade after decade at its full employment potential without recurring inflation and over-indebtedness.
3.2 Goals
The objectives of the policy include:
a) reduction of foreign ownership of Indian enterprises; and
b) more equitable employment and income distribution;
c) control of interest rates and debt;
d) low inflation;
e) full employment underpinned by a Guaranteed Adequate Income;
f) well funded public infrastructure;
g) appropriate economic monitoring, measurement, and accounting practices; and
h) reduction of private and public sector debt.
3.3 Short Term Targets
a) detailed monitoring and regulation of foreign capital;
b) investment of foreign capital in import replacement industries and enterprises consistent with national environmental and social priorities; and
c) strict monitoring of export and import prices to reduce transfer pricing by multinationals.
We will support the establishment and use of community controlled investment facilities which direct investments to eliminate reliance on foreign borrowings by both the public and private sectors. Investments in ethical enterprises which emphasise both social and environmental sustainability will be encouraged. We will explore a range of opportunities to assist these measures and support:
a) campaigns encouraging citizens and organisations to place their savings in ethical investment organisations;
b) the right of credit cooperatives to invest in productive enterprises;
3.3.4 Inflation
We will support disaggregating the causes of inflation so that distinctions can be made between cost increases which are socially and environmentally beneficial, such as including the real costs of natural resources like water, and those which are not.
Global Trading and Investment Relations
4.1 Principles
4.1.1 Objectives
We support a policy of managed international trade and foreign investment based on the general recognition that nation states have a right and a duty to ensure that their consumption and production, including both imports and exports, is sustainable.
These principles, which are fundamentally different to the those of the proposed Multilateral Agreement on Investment (MAI), require that international trade and foreign investment support the following objectives:
a) protecting local employment and labour conditions;
b) reducing economic and political vulnerability;
c) encouraging diversification of industry;
d) permitting the development of local technologies; and
e) protecting the environment.
4.1.2 Benefits of Trade
We recognise that foreign trade and investment are beneficial in terms of:
a) transferring skills and technology not normally available in an economy;
b) allowing the importation of strategic goods and services;
c) encouraging innovation and the adoption of new practices and higher standards;
d) encouraging efficiency through the adoption of ‘international best practice’ and the importation of technology which makes the local production of new goods and services possible; and
e) giving developing countries in particular, fair opportunity to trade with developed countries.
4.1.3 Problems with Trade
We, however, are wary of the possible negative influences of poorly regulated foreign trade and investment such as the Multilateral Agreement on Investment (MAI) which may include:
a) loss of national economic sovereignty, particularly with regard to employment, taxation, inflation, tariff and wages policy;
b) a reluctance by nations to take unilateral environmental initiatives for fear that they might unduly erode a nation’s economic competitiveness;
c) making an economy less diverse and more vulnerable through encouraging it to specialise in those industries in which it has competitive export advantage while abandoning those industries that cannot compete against foreign imports;
d) erosion of local culture in the face of imports that have a strong cultural element such as films, electronic media, music and food;
e) forcing countries to adopt environmentally unsustainable or socially unjust practices which damage the global commons in order to be able to earn foreign exchange;
f) forcing many countries, including India, into ever-increasing foreign debt leading to spiralling overseas interest payments;
g) inducing a global increase in transport use which is both inefficient and destructive to the environment;
h) allowing transnational corporations to increasingly dominate global trade and investment which in many cases is anti-competitive; and
i) leaving many developing countries at the mercy of IMF and World Bank required restructuring, often resulting in social polarisation.
We support international trading systems and associated institutions in which nation states work to maximise global equity and ecological sustainability. We also encourage exchange which will enhance the development of economies and societies that are ecologically sustainable, diverse, self-reliant, and therefore less vulnerable to external political and economic pressure.
4.2 Goals
We recognise that trade and investment issues must often be dealt with on a case-by-case basis. Given the diversity of social and environmental costs and benefits that can apply to each trade and investment issue, and recognising the risks and benefits of foreign trade and investment, We will pursue policies to achieve the following goals:
a) to limit trade in goods and services that are produced by methods that are environmentally unsustainable or socially unjust;
b) to promote trade associations and participate in international trading systems in order to enhance the achievement of this goal;
c) to increase India’s self-reliance by limiting net foreign debt and current account deficits; and
d) to promote the regulation of transnational corporations.
The achievement of these goals will be facilitated not only through international trade policy but also by supporting the following short term targets.
4.3 Short Term Targets
4.3.1 International Context
International trade and investment can be positive in terms of countries benefiting from the initiatives and lower production costs of other countries and generally promoting greater global cooperation, but they can be negative in terms of fostering economic vulnerability and consuming a large amount of global transport and communications energy. Countries like India should never be isolationist in their global trade and investment policies and should always be prepared to negotiate at international forums. But countries like ours should not negotiate from a position of weakness; they should not be so dependent on the global economy that they will take whatever terms are offered. Instead they should negotiate from a position of strength where, if needs be, they can be economically self-reliant. We believe that international trade and investment should always be transparent and fully accountable and should not be controlled by trading blocks.
We also believe that international trade and investment should generally be carried on within a global environmental imperative to make the consumption of resources sustainable. Trade liberalisation should never be allowed at the expense of the environment.
4.3.2 Fair Trade and Reform of the WTO
We support reform of the World Trade Organisation (WTO) and the International Labour Organisation to ensure:
a) full recognition of the overriding necessity of environmental and social agreements;
b) the modification of multilateral trading agreements to allow nation states to impose internationally acceptable environmental and social practices;
c) the promotion of moves at the WTO and other relevant organisations which increase the food security of poorer countries and help them stabilise and improve prices for their commodities;
d) the support of poor countries for growing their own food as a priority over growing tobacco and other products for export to industrial countries;
e) trade agreements on Intellectual Property Rights that support the right of developing countries to acquire the technology they need at a cost they can afford and receive fair remuneration for the genetic resources found in their territory or developed or conserved by their people;
f) a revision of WTO processes and procedures to ensure transparency and include participation by non-governmental organisations (NGOs) and other representatives of civil society;
g) the encouragement of the use of counter-trade in the form of swap arrangements between two or more countries that do not have sufficient foreign exchange to pay for imports; and
h) the development of preferential trading status based on principles of ecological sustainability and social justice and aid.
We will also support :
a) a comprehensive ban on the movement of hazardous waste (including nuclear waste) and hazardous waste recyclables;
b) the development and transfer of technologies needed to achieve this; and
c) a review of agriculture subsidies in developed countries, in terms of their adverse social and environmental impacts on other developed and also developing nations.
4.3.3 Transnational Corporations
Transnational corporations now control about two-thirds of all international trade and most international investment and with the introduction of the Multilateral Agreement on Investment their power of domination would further increase. They have become a powerful force in the world economy, and often play one country off against another to secure maximum financial advantage.
We will:
a) promote the regulation of transnational corporations in terms of environmental impact and sustainability, social impact, labour relations and democratic participation;
b) promote the import of only those goods from developing countries that satisfy basic criteria of decent wages, working conditions, sufficient food supply and environmental sustainability in the country of origin;
c) support the prohibition of the import of goods that are produced through the exploitation of children; and
d) investigate means through which both the Government and the United Nations can improve the business practice of transnational corporations including regulation through anti-monopoly legislation in India.
4.3.4 National Context
We believe that the current liassez-faire attitude to international currency transactions needs to be reformed and that the government has a role in limiting national foreign debt for having a better image of India. Researches should be conducted with the help of universities as well as institutions of national importance for having a national policy of development without taking international loan with a view to reducing the foreign debt. We will institute an inquiry into the means available to achieve a regulated limitation of the national foreign debt which may include the following :
a) tigther control by the Government of India, including the establishment of an independent regulatory authority that would scrutinise all foreign investments with a clear mind for essessing such investments and their different types of consequences;
b) the introduction of import taxes and customs duties; and
c) work to be done at the international level to achieve reform of the financial system.

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