Tuesday, 6 December 2011

Uttarakhand to tax on companies using its water to generate Power

Written by Anil Singh

Uttarakhand Government has decided to generate revenue by levying companies using its water in power generation.

Aimed at tapping its water resources to pep up its economy, the Uttarakhand Government has decided to impose taxes on the water used in power generation.

If implemented properly, the move is in a right direction for a state which has limited avenues with respect to industrialization or agriculture as the main source of income, courtesy its difficult topographic conditions and mountainous terrain.

In the Cabinet note, the Government said this regarding its plans:

“Maximum area of Uttarakhand comprises mountains and hills which provide rare possibilities of setting up industries or practicing agriculture. Therefore, since the state is the source of major rivers, water can be the basis of Uttarakhand’s economic prosperity.”

Of the water used in producing 3500 megawatts of electricity, the state can earn Rs 1700 crore per year.

One exception in this implementation will be the Vishnuprayag and Srinagar hydro power projects. In a tripartite agreement of the state with Uttar Pradesh and private companies, the government has decided not to charge any tax on water used in Vishnuprayag and Srinagar hydro power projects.

Notably, a similar question is raised by the experts in October this year, gathered under the International Centre for Integrated Mountain Development (ICIMOD). The question raised is:

Should there be a financial cost to the services provided by mountain ecosystems?

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