India cannot be car country like the US. When you have four times the population living in a third of the land area, you cannot be.
While people will always aspire to own cars or motorbikes, state policy must encourage public transport, buses and taxis, not cars and motorbikes.
India is motorising personal transport at a rate it simply cannot afford. In 2016-17, it produced nearly 20 million passenger vehicles – including cars and two-wheelers, but not three-wheelers – taking the country’s total registered non-commercial vehicle population to around 220 million.
The vehicles on the road (especially if you add three-wheelers and commercial vehicles) are now comparable to the total number of households in India (around 250 million). It implies, in theory, that every household has a vehicle, though averages will deceive because a few people and organisations may own multiple vehicles while millions of poor households may have nothing. But the implication is clear: since Indians rarely scrap vehicles before they are 10-15 years old, we are reaching saturation point in terms of our infrastructure’s ability to handle such volumes.
If our rapidly urbanising country is not to fall apart under traffic congestion and vehicular pollution, we have to reverse this trend, particularly in cars.
India’s car sales crossed the three million mark in 2016-17 despite the demand crunch of demonetisation. While this is a cause for celebration for the domestic automobile industry, it signals the total bankruptcy of public policy in human transportation.
India cannot be car country like the US. When you have four times the population living in a third of the land area, you cannot be. While people will always aspire to own cars or motorbikes, both for status and convenience, state policy must encourage public transport, buses and taxis, not cars and motorbikes.
Of late, there has been a tendency to tout metro railway projects as the answer to urban commuting woes, but here too the reality is different. The huge success of the first phase of the Delhi Metro, which was completed well before time and with minimal cost over-runs, has made some urbanised states believe that metros are the answer. They forget that Delhi is unique, where the central government deals with land and substantially bankrolls a high-cost metro. This situation does not exist in other states, whose metropolitan centres need to obtain substantial commercial funds for both land acquisition and construction in congested spaces. Delhi has lots of road spaces under which metros can be built; but can Mumbai or Kolkata do so with their more limited road spaces?
Experience from metro projects the world over suggests that not only do costs inflate hugely, but the required traffic to sustain a viable metro is far lower than estimated. Tariffs are never high enough to make metros viable in most cases.
Given this context, one cannot see metros as the panacea for urban mass transportation. They can, at best, be a part of the solution in some cities with enough land available. The focus needs to be on augmenting the fleet of public and private bus services, which are not only cheaper to acquire, but can also use urban roads more economically. Metros surely need to be built, but they may often not be viable. They should be built only in places where traffic may be extraordinarily dense and the cost of land is reasonable – not an easy combination to find. Put simply, metros may work better in connecting city centres with satellite towns than inside existing urban megalopolises. Buses must take up the job where metros terminate.
A sensible public transport policy must have two crucial legs: one is to disincentivise private ownership and daily use of cars and two-wheelers; and the other is to promote bus travel, by making many types of buses (basic, luxury, standees-only) available at frequent intervals, if needed with state subsidies. These subsidies can be financed by taxing cars much more heavily than they are now, and by introducing road usage fees and congestion surcharges, not to speak of higher yearly registration fees. The current system of one-time registration fees is too little, and offers no deterrence to widespread ownership and use of cars on urban roads.
Put another way, no public transport policy can work without disincentivising personal transport vehicles. Those who need cars should be encouraged to use app-based taxi services like Uber and Ola, not to speak of regular state-licensed radio and non-radio taxis. Taxis, by plying several trips during the day, reduce the overall volume of cars on roads.
Disincentivising ownership also means levying high parking fees and user charges for private cars plying on busy roads. If London has a congestion surcharge, why not Mumbai, Kolkata or Bengaluru? The remedy is not to build more roads and more parking lots – though these are also needed – but to favour public transport in the use of this infrastructure. The purpose of levying high charges on cars and two-wheelers is not necessarily to earn more revenues for the exchequer, but to cross-subsidise buses and, where reasonably viable, even metro projects.
Any policy must also start taxing two-wheelers. The current tendency is to treat two-wheelers as some kind of poor man’s vehicle, but given the huge growth in two-wheelers on city roads, two or three of them occupy as much road space as cars, especially when they are moving fast. Moreover, given the speeds at which they are driven, they are accident-prone, and impose costs on society that we do not even begin to calculate. Any increase in motorised transport taxes, including highway tolls, should not exclude two-wheelers.
A country of 1.3 billion people, and with rapidly congesting urban spaces, cannot privilege private vehicle usage.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.