The runaway growth of automobile sales in India, now a million units a year, spells bad news for the economy, the environment and public health. There is a need to reclaim the roads for pedestrians, bicycles and buses.
THIS past April, sales of passenger cars made in India (including those exported) crossed one million units over the previous year - for the first time ever. Exports in the last fiscal year clocked $1 billion - another landmark. The automobile industry is now celebrating the crossing of the one-million car barrier in annual domestic sales too, which are growing at 20 to 30 per cent.
Yet, for the larger public, this may be cause not for celebration, but anxiety and distress. India's growing automobilisation will seriously distort and corrode our already over-stressed urban transport system, raise our import bill at a time of record-high oil prices in the international market, impose a heavy burden on the environment through pollution, and lead to a deterioration in public health, which, in turn, will impose a further burden upon society. This column argues that we must stop promoting and under-taxing passenger cars and instead consciously encourage public transport - if we are to avert disaster.
First, consider a few salient facts. India is now producing more than three times the number of cars it made eight years ago. The number of models of sedans, jeeps and sports utility vehicles (SUVs, those abominations, on which more below) has increased about 10-fold over as many years. Today, a new car model is being introduced every couple of months.
The fastest growing segments are B and C, including mid-sized sedans, not segment A sub-compacts like the Maruti-800, as in the past. Diesel car sales - which should be strongly discouraged on grounds both of pollution and of that fuel's inappropriate use - are rising at 50 per cent, according to industry estimates.
This has happened not so much because the economy is booming (it is only growing at 6 to 7 per cent, or about a quarter of the rate of growth of car consumption), as because of a combination of factors: maldistribution of income and a spurt in the disposable income of the rich; a steady reduction in taxes and duties on cars (the latest being the pruning of the excise duty from 24 to 16 per cent in the last Union Budget); and a softening of interest rates and easier availability of car loan finance. The perversity of the automobilisation phenomenon is starkly captured by one figure: a Maruti-800 car costs the same as it did 10 years ago (Rs.2.20 lakhs or so), and prices of mid-sized and big cars have fallen. But foodgrain prices have risen by over 140 per cent over the same period.
The single greatest reason for this is not some techno-economic phenomenon like economies of scale, but a conscious attempt by successive governments to promote private cars by lowering taxes on components, ancillaries and assembled units. After the salary bonanza for government employees - who account for three-fourths of our organised workforce - through the Fifth Pay Commission, cars suddenly became affordable for lakhs of families. Easy finance at zero interest, and the extension of bank loan availability to rural and semi-urban areas has since brought cars within or close to the middle class family's reach. Today, one can put down a moderately small sum like Rs.40,000 and take home a small car, the rest of its price being paid through monthly instalments.
The Indian middle class is borrowing more and more to feed its consumerist appetite. The Central Statistical Organisation (CSO) estimates that retail loans as a percentage of personal disposable incomes have grown from 3.5-4 per cent in 2000 to around 8 per cent in March 2004. Apart from low interest rates, this growth is driven primarily by the purchase of consumer durables and housing.
The point is simple. If the "external" props of low taxes and cheap finance are removed, the car boom will disappear. Yet, the government has absolutely no intention to do so. Why, just the other day (September 1 to be exact) Planning Commission Deputy Chairman Montek Singh Ahluwalia, while addressing the annual convention of the Society of India Automobile Manufacturers (SIAM), declared that the duty and taxation structure that governs the automotive sector needs radical changes, not marginal fiddling. Ahluwalia lent support and legitimacy to the industry's specific complaint that the reduction of Central excise duty on cars had been "more than offset" by an increase in the road tax and registration fees in some States.
Only seven out of every 1,000 Indian own a car. But they are among the richest people in the country. The automobile industry has emerged as a powerful lobby, the clout of which has grown at least in the same proportion as car sales. If experience elsewhere - in particular, the United States and Western Europe - is anything to go by, it can be expected to push hard for more concessions and mobilise itself against perfectly sensible measures to discourage automobile abuse of road-space in the public interest.
For instance, the Delhi government in July took the eminently reasonable step of levying a 2 per cent (a mere 2 per cent) additional cess on the price of non-commercial private diesel vehicles. SIAM has been lobbying against it as a "discriminatory" step - although there is a strong case, argued by the Centre for Science and Environment, among others, for discouraging, indeed banning, diesel-driven automobiles because they pollute more than petrol vehicles. The objective of the cess, as declared in the Delhi Budget, was primarily environmental: "to encourage people to opt for non-polluting alternative-fuel vehicles." The Delhi government, under SIAM pressure - and no less a person than Ratan Tata met Chief Minister Sheila Dixit - is reportedly reconsidering its decision.
Similarly, the car lobby has recently launched a major assault on proposals to raise parking fees in the highly congested central business districts of our big cities. For instance, in Delhi, the reasonable move to raise parking fees in such areas to Rs.100 for five hours or more is likely to be reversed. (Currently, the fee is only Rs.10 for the first two hours.) Similarly, the proposed Rs.1,250 monthly fee - a real bargain for car-owners - is also likely to be reduced. As we see below, there is a market-based case, as well as a powerful environmental and urban-planning argument, for raising parking fees several-fold.
WHAT is wrong with private cars? To start with, they are an extremely inefficient form of transportation and use of scarce urban space. They also consume imported fossil fuels, the costs of which are bound to rise. (Mass transportation modes are far more flexible in the choice of fuel.)
Secondly, for the private commuter, the real advantage of automobilisation is limited. A U.S. researcher has found that the average American spends so much time in looking after, maintaining, parking, or repairing his car, and stopping it at signals, and so on, that the average speed is of the order of 10 to 12 kmph - barely faster than a bicycle! Cars have limited utility in short trips, for instance, from home to public transport nodes like rail or bus stations. But there could be good substitutes for them, including auto rickshaws (even cycle-rickshaws), and electric mini-buses.
* Cars are individually six to eight times more polluting than auto rickshaws, which typically carry about the same number of passengers as them on commuter trips (as distinct from family outings).
* Cars pollute at least twice as much as buses per passenger-kilometre as do buses, and 8 to 10 times as much as light rail systems.
* Cars consume 14 times more fuel than buses, and almost 60 times more than railways, to transport a person.
* Cars worldwide cause eight times more deaths in accidents than do buses. They are over 100 times more lethal than railways.
* India accounts for 15 per cent of the 500,000 road accident-deaths worldwide, despite having only a tiny fraction of the globe's vehicular population. In India, there is one road accident every 100 seconds and one person is killed on the road every seven minutes. The proportion of fatalities claimed by cars is rising sharply.
Cars pose a problem not just when being driven, which represents less than a 10th of their average use, but when being stationary too. Each car occupies about 100 square feet of space. Now consider the true social cost of parking a car in the city centre, where prices of land are tens of thousands, if not lakhs, of rupees per square foot. If the parking fee were to be charged at the market rate for using such prime space, it would be upwards of Rs. 1,000 a day!
If car-owners were to really pay this, their cars would become unaffordable. At Mumbai's Nariman Point, where land costs are upwards of Rs.1 lakh a square foot, the market price of the parking-space per car would exceed its value by 20 times or more.
Society effectively subsidises car-owners, although they are among India's most privileged people. This is grossly iniquitous. The absurdity of this is further compounded by the fact that we are encouraging the use of fossil fuels, just when the prospect of their depletion and of climate change stares us in the face. Global oil production has now more or less peaked at 82 million barrels a day. Over the next 15 years or so, agree most experts, it will start decreasing significantly. Prices, now around $45 a barrel, could then shoot up further.
Our oil import bill surged 15.9 per cent in 2003-04 to $20.4 billion. There was some cushioning of this impact because of the appreciation of the rupee vis-a-vis the dollar. But this is unlikely to last. More recent trends are even more worrisome. Thus, oil imports rose by a huge 62 per cent in April-July this year to $9.9 billion (over the same period in the last financial year). This spells serious trouble for the economy in the middle and long run.
INDIA, unlike the Organisation for Economic Cooperation and Development (OECD) countries, but like many other profligate developing countries, has adopted an extremely energy-intensive growth path. To achieve a one per cent increase in gross domestic product (GDP), we burn twice as much energy as the rich countries. Take another number. Western Europe and Japan consume 40 to 60 tonnes of oil to add $ 1 million to their GDP. (The U.S. burns 84 tonnes). In India's case, the quantity is 189 tonnes. Of this, 128 tonnes is imported.
This growth trajectory is obviously irrational and wholly unsustainable. There is a clear imperative for us: reduce oil consumption, and use more non-fossil sources of energy, including renewable and biomass-based sources. Automobilisation directly militates against this rational imperative.
That is not all. Automobilisation spells a horrendous abuse of resources in an already unequal society - which does not even charge the car-owner one-eighth as much in road taxes as, say, capitalist America proportionately does. In our cities, road space occupied by a bus carrying 60 to 100 people is being replaced by five or six cars carrying between eight and 12 passengers. The proliferation of cars is significantly slowing down the speed of the movement of public transport, indeed all transportation, leading to an enormous waste of social time and resource. It is also discouraging mass transport.
But consider the impact of congestion, besides increased commuting time: health problems caused by vehicular pollution (which accounts for 60 to 70 per cent of the pollution load in our cities), and the time and money lost through illnesses and their treatment. A 1992 World Bank study estimated that urban air pollution alone claims 40,000 premature deaths a year and produces diseases to treat which huge sums of money are needed. The damage on this account added up to an estimated Rs.4,500 crores a year. Today, this cost could amount to 2 per cent of GDP.
We must adopt corrective policies. These are fairly straightforward: higher taxes and levies on cars, steeper parking fees and road taxes, banning of the plying of cars with even and odd number on specific days of the week, and higher taxes on people who own more than one car (as suggested by the Parliament Standing Committee of the Ministry of Road Transport and Highways). We must altogether ban SUVs that exit truck-level pollutants and are obscurely wasteful of fuel. They are proving to be a millstone in the West and a major source of dust storms in Africa's desert regions.
We must invest heavily and wisely in public transport, including electronic trolley-buses, trams, high-capacity low-sulphur diesel buses, light rail and other modes of mass transport. And we must encourage the use of cycle-rickshaws and bicycles (through exclusive lanes for them) and create more zebra crossings for pedestrians. It is time for us to reclaim our roads from cars - and prevent disaster.