Bangalore is famous around the world as India’s technology capital and the birthplace of its most innovative ideas. But visitors to the city are often struck by another side of life there: the awful traffic.
The city is the sixth worst in the world for traffic jams, according to a recent survey. Another showed India’s Silicon Valley was losing 600 million working hours a year to congestion, costing it 37 billion rupees (over $500 million) each year in lost earnings.
It’s a similar story elsewhere in India’s cities, where one study suggests that almost half of all drivers spend more than 12 hours a week stuck in their car. Yet another survey found that three of the 10 worst cities for traffic conditions were in India.
Bangalore and other Indian cities stand at the intersection of a global urbanization trend – by 2050, 70% of the world will live in cities, up from only 13% in 1900. That will put a tremendous strain on infrastructure.
Breaking the gridlock won’t be easy, because even if we invest hundreds of billions of dollars into infrastructure, we’ll struggle to bring mass transit to everyone’s front door. In fact, according to Deloitte, India’s 100 Smart Cities mission will require an investment of over $150 billion over the next few years – a sum of money that governments alone cannot pull together, especially in emerging economies, where urbanization is at its fastest.
But could part of the solution be found in Bangalore’s very streets?
A game-changer for cities
That may sound strange, but it’s not. Ride-hailing apps make it easy for people to share their vehicles, getting more people into fewer cars. Even better: it won’t cost the government any extra money, and it can make an immediate impact.
The Prime Minister has called the Smart Cities project a people’s movement. And to make it a success we have to involve as many people as possible to collectively work on smart solutions.
Of course, carpooling is not a new idea. People in India and elsewhere have been doing it for decades. The difference now is that ridesharing apps like Uber can instantly match passengers heading in the same direction at the same time. Powered by technology, it’s a model that works and can create impact at scale.
Over time, this could become a game-changer for cities, where hundreds of thousands of people drive to work each day on their own. In Delhi, more than 70% of private cars have only one passenger. There are over 2.7 million private cars on the streets, with just 60,000 of them on mobility platforms like Uber.
Smarter cities today
Around the world, outdated rules that distinguish between professional drivers (seen as good) and private drivers (bad) are holding back carpooling. That’s even true when private drivers have been through a background check, proven they are fit to drive and have insurance. By making sharing hard, governments end up forcing citizens into individual car ownership – at huge public cost.
The good news is that there’s increasing momentum for reform, with more and more cities introducing progressive regulations. In just over three years, nearly 70 states and cities in the United States have made the leap, and several states in Mexico and Australia have followed suit.
At the heart of these new rules is the belief that one citizen should be free to give another citizen a ride across town, so long as there are regulations to ensure that important safety and consumer-protection standards are met.
We now have the technology to make our cities more livable and less congested. But reducing our dependence on cars requires a cultural shift as much as a technological one. For decades, cars have been seen as a status symbol. Now attitudes are starting to change, with many Indians rethinking car-ownership and many more simply dropping the idea of buying a second car.
As cities in India consider ways to cut congestion, they should investigate laws that would encourage ridesharing. We don’t have to wait a decade to create the cities of the future. With progressive regulations and the technology already in our pockets, we can build mobility alternatives for smart cities of today.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.