IBRD,
CII for making industry more environmentally compliant
Sanjay Thapa
New Delhi, June 11: The World Bank will be conferring with
the Confederation of Indian Industries (CII) over the acceptability
of a novel ‘economic instruments’ as policy intervention for the
Indian industry and corporates, to make them more environmentally
compliant.
The instruments are sought to be finally implemented by the Union
ministry of environment and forests under a Bank funded project.
Internationally acceptable economic instruments for environmental
compliance include tools like tax incentives, bank guarantees, performance
bonds, liability insurance, prices based on social scarcity values
and ’green rating’, which have found a growing acceptance in the
developing economies the world around, according to the Bank.
“Quite against the concept of ‘market based instruments,’ economic
instruments are more generalised and more internally controlled,”
sources in CII told The Financial Express.
The move comes as part of the environment management and capacity
building technical project aided by the World Bank, which is currently
underway with the ministry of environment and forests as the nodal
agency for the final implementation.
“Public disclosures of eco-ratings can alter polluters’ behaviour
via capital, labour and commodity markets,” said CII sources.
Economic instruments have been successfully used in many developing
economies and are thought to be more acceptable than a similar concept
of market-based instruments, which are more to do with access to
public funds.
As compared to this, economic instruments are used for rating as
well as penalising erring corporates and industrial units based
upon several aspects like economic efficiencies, cost effectiveness,
environmental effectiveness, information intensity, transaction
costs, dynamic efficiency as well as equity. For developing economies
with over one-third of the population below the poverty line, intra-generational
equity is most important.
The economic evaluation as equity or fairness refers to distribution
of net profits to different sections of the society.
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