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India: Hitting The Poor, Pampering The Rich - Disaster on four wheels

by Praful Bidwai, 3 March 2014

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“Scorched earth” is the kindest phrase to describe the approach of the last budget (rather, vote-on-account) of the United Progressive Alliance in its inglorious second term. Finance minister P Chidambaram savaged social sector spending, severely cut capital expenditure, pampered the elite, and left an ugly mess for his successor

The Rs 1.5-lakh-crore cut in plan expenditure, which represents productive investment, will impoverish the infrastructure and affect growth. But even more unkind is the 31-percent reduction in the current financial year’s allocation to schemes which benefit the poor and address long-neglected areas like health and education.

The budget for mid-day meals was slashed by 11 percent, school education by 7 percent, sanitation by 46 percent, rural drinking water by 12 percent, and the National Health Mission by 13 percent.

Worse will come in the new fiscal year. The health and education sector allocation will fall by three-fourths, the agriculture budget will be halved, and rural development will get less than one-tenth of what was budgeted for the current year!

True, some money will be transferred to the states, but there will be an overall decrease in social spending. The Centre will have effectively washed its hands of its duty towards the poor.

Deplorable as this is, Mr Chidambaram tried to win middle- and upper-class support by reducing excise duties on a range of consumer durables: from refrigerators and airconditioners to washing machines, DVD players, microwave ovens and vacuum cleaners. Computers/laptops too will become cheaper.

Similarly, Mr Chidambaram tried to please nearly one million middle-class students by waiving interest on pre-March 2009 education loans. He targeted 2.5 million ex-servicemen through the one-rank-one-pension scheme. He also set up a Rs 200-crore venture capital fund for Dalit entrepreneurs—another upper-class target.

However, all these freebies pale beside the generous across-the-board excise duty reductions ranging from 4 to 6 percentage-points on two-wheelers, trucks and cars, including big cars and sport-utility vehicles (SUVs). The duty-structure is regressive: the larger and costlier the vehicle, the higher the cut! Thus, two-wheelers will be cheaper by Rs 1,100-3,000. But an entry-level Nano will cost Rs 4,500 less, a Maruti Alto Rs 10,000-12,000 less, and a Maruti Swift Rs 15,000-24,000 less.

Mid-sized sedans, a fast-growing market segment, will be cheaper by Rs 24,000-36,000. SUVs are favoured even more. A Mahindra Scorpio will cost Rs 24,000-34,000 less and a Toyota Innova Rs 50,000-76,000 less. And upper-end cars like Mercedes and Audi will cost Rs 2-4 lakhs less. Never before has India seen such concessions for the automobile sector—not even five years ago when the Tata Nano was launched, facilitated by a massive excise duty cut.

These cuts are only partially meant to boost the auto industry, whose sales have dropped somewhat over the past year. An equally important motive is to cultivate a middle-class or upper middle-class constituency for the UPA. Cheaper cars can create a “feel-good” sentiment in the elite—although it’s doubtful if that will significantly improve the UPA’s electoral chances.

Indian society will pay dearly for this artificial state-induced automobilisation—through greater road congestion, slower commuting speeds, horrendous levels of air pollution, widespread health damage, and increased fatalities and injuries from road accidents.

India has one of the highest rates of deaths from road accidents, estimated at over 140,000 a year—or about the same as deaths from AIDS-related causes and twice higher than mortality from pulmonary TB. Road accidents in India claim one-fourth as many lives as cancer. India’s mortality rate per 10,000 vehicles is a high 10.5, compared to less than two in the developed world.

Indian cities are among the dirtiest and most congested in the world. The distinction of being the world’s most polluted city no longer belongs to Beijing, but to Delhi. Delhi’s PM 10 (particulate matter of dimensions less than 10 microns) and PM 2.5 (less than 2.5 microns) levels routinely exceed 200 or even 300 units. The World Health Organisation-prescribed “safe” limit is 25 units.

Other Indian cities too have extremely high air pollution levels, especially of PM 2.5 which readily penetrates the lungs. More than a third of children in India’s large cities suffer from respiratory problems or asthma, which lower the quality of life.

Cars, which account for less than 10 percent of commuter trips in Indian cities, contribute roughly three-fourths of the urban air-pollution load. Car sales have been rising by 10 percent or more every year for the past two decades.

The proliferation of cars is driven by consumerism, the elite’s search for a “status symbol”, neglect of public transport, and relatively low-interest bank loans. Thanks to proliferation, most Indian cities suffer high and rising levels of traffic congestion, which impedes the movement of buses and private vehicles, causing an enormous waste of social time.

Traffic speeds have slowed down by 30 to 55 percent over the past decade. Soon, vehicles will crawl at an average speed of 5 to 10 kilometres per hour (kmph) in many cities. This doomsday scenario is forecast by a host of agencies such as the Central Road Research Institute, Centre for Science and Environment, and Railway Infrastructure Technical & Economic Services.
The government is promoting cars as part of its Automotive Mission Plan 2006-2016, which wants India “to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components”. This flies in the face of all rational urban transport priorities.

Cars are the most inefficient, expensive and polluting mode of road transport ever invented. In India, their ownership is under 10 for every 1,000 people. Yet they occupy the lion’s share (75 percent) of road space but meet only about 5 percent of the travel demand. Buses, by contrast, occupy 5-7 percent of space but deliver 45-60 percent of commuter trips.
This is unacceptably iniquitous. But the government refuses to recover the full cost of ownership and use of cars. The cost of the land on which roads and flyovers are built, and the expense of their construction and maintenance, add up to several thousands of rupees per square metre. But car owners get to use them virtually for free.

In India, the lifetime road tax on cars works out to a laughable annual average of Rs 300. The government taxes buses 43 times more heavily. According to a World Bank report, the total tax burden per vehicle-kilometre is 2.6 times higher for buses than for cars. This is doubly perverse because a car consumes almost six times more energy than a bus per passenger-kilometre.

The government grants free parking space to cars, usually 20-25 square metres, but treats poor slum-dwellers occupying even less space as trespassers worthy of summary eviction. If the true costs of parking space were to be recovered, a car-owner would have to pay at least Rs 50,000 annually. Worse, car-owners are increasingly enclosing and privatising pavements meant for pedestrians.

Nothing could be more unjust. Yet the government has recently aggravated these injustices in four major ways. First, it has encouraged SUVs, which have truck-level emissions, and cause a disproportionately large number of accidents. These should be banned altogether.

Second, the government has allowed cars to use diesel—and steal the subsidy given to this supposedly goods-transport fuel. Private vehicles now guzzle 50 percent more subsidy than public transport vehicles. About half the cars sold in India have diesel engines because diesel is priced cheaper than petrol. Diesel is far more polluting than petrol. Private vehicles should not be allowed to use it. Yet, a diesel-powered motorcycle will soon enter the Indian market!

Third, India is delaying to 2021 the imposition of stricter (low-sulphur) emissions norms called Bharat Stage-V which were to be in force by 2016. Besides, India’s car safety standards are extremely lax. Four out of five of India’s highest-selling small cars, including the top-selling Maruti Alto and the Nano, recently failed crash-tests based on UN norms. All this spells even less road safety.

Fourth, India will soon have a new flimsy breed of four-wheelers called quadricycles, which won’t undergo even the minimal safety tests that cars are expected to pass. This is a suicidal move. The government claims the hard-top quadricycles, with a maximum speed of 70 kmph, will only be allowed to ply in the cities to replace three-wheelers. But it’s hard to believe that these cheaper vehicles won’t proliferate, invading highways and causing more accidents.

India must correct course at once by adopting policies similar to those tried out in Singapore, Shanghai and Beijing, including taxing cars heavily, limiting/auctioning the additional licence plates issued annually, restricting sales only to those with proof of parking-space ownership, banning use of even- and odd-numbered cars on alternate days, levying high deterrent-level parking fees, and creating and extending vehicle-free zones and days.

There’s no alternative to such tough measures—and to promoting safe, efficient, affordable, non-polluting and reliable public transport, including Bus Rapid Transit. Automobilisation is a dangerous distraction from this—and a recipe for death, ill-health, iniquity and urban chaos