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Home News Power Sector News Himachal CM urged finance minister for generation tax on hydro power

Himachal CM urged finance minister for generation tax on hydro power

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DhumalPrem Kumar Dhumal, Chief Minister of Himachal pardesh has urged the Union Finance Minister,  Pranab Mukherjee, to include provision of generation tax on hydro power in the hilly states in the Union Budget likely to be presented in the Parliament during ensuing Monsoon Session.

In a letter written to the Union Finance Minister, he said that it was his vision conceputualised way back in 1984-85 when he had made a statement on Generation Tax and withdrawn the duty of 2 paise per unit on electricity imposed since 1978. You had supported the legitimate claim of the small states rich in hydel potential of levying tax on generation of hydro power under article 288(2) of the Constitution of India.

He said that the Rangarajan Committee had acceded to the demand of Himachal Pradesh and specifically recommended imposition of Generation Tax over the hydel potential available for power generation in the State. He said that the report had also been accepted by the Planning Commission of India as well. He said that the State had negligible mineral resources while hydel potential and forests were the major natural resources available with the State.

He said that the State had been getting 12 percent free power only on the hydro projects commissioned after September 7, 1990 and not from the projects which had been generating electricity prior to the date. He said that many States in the country were rich in mineral resources and availing of various incentives for this whereas the hilly States which does not have mineral resources are deprived of such incentives.

He said that equation of Generation Tax with 12 percent free power or with the rate of royalty on minerals was unjust, illogical and unfair. He said that the revenue which would accrue to the State on account of the proposed Generation Tax would be simply insignificant compared to the royalty on minerals being disbursed to the mineral rich states.

Dhumal said that suo moto ban on green felling of forests had been depriving the State of substantial revenue. He said that the State possessed forest wealth estimated at about Rs. 1.50 lakh crore. He said that Himachal Pradesh had never been adequately compensated for such recurring losses although the State had been preserving the ecology in the larger interest of the country.


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