Friday, February 22, 2008

Sunita Narain on the many ways we subsidize cars

She makes a convincing case in her Down To Earth editorial:

... The fact is that cars—small or big—are heavily subsidized. [...] The subsidy begins with the manufacture of cars. When we read about the Singur farmers’ struggle to stop government from acquiring their land for the Tata car factory we don’t join the dots. We don’t see this as the first big subsidy to motorization. The fact is, in Singur the manufacturer got cheap land, interest-free capital and perhaps other concessions ... The car owner (and I am one as well) pays a one-time road tax, which is between 0.5-5 per cent of the cost of the vehicle in most states.

But this is only one part of the subsidies to car owners—there is also the cost of regulating traffic; of installing traffic signals; the cost of building flyovers, overbridges and subways; the cost of pollution control measures; the cost of pollution to our health. Since cars take up over 75 per cent of the road space, even though they move less than 20 per cent of the people, it is obvious whom this expenditure benefits the most. [...] The subsidy bill does not end here. There is also the cost of parking, which we refuse to pay any or full cost for, and which the government refuses to impose.

The question is should we discount the price of motorization so that some (and maybe a few more) can drive a car or a two-wheeler? Or should we pay the real cost of our commute so that the government can invest in mobility for all? ...

There were people who insinuated that Narain's complaints about cars were directed at Tata Nano, the world's cheapest car that was unveiled last month. This is grossly unfair. The total cost of ownership of a car is something that she has been talking about for quite sometime (at least since December 2006); her organization has also studied the hidden parking subsidy -- a subsidy whose burden falls on everyone. These studies have also been given wide publicity by folks like Swaminathan Aiyar.


  1. Anonymous said...


    She makes a good point. but what about the many ways we subsidize/ incentivize autos? how they are allowed to get away with faulty meters and overcharge, defy all pollution norms?

    What about the many ways we make our roads unsafe for motorbikes and bicyclists? By having buses and water tankers that don't stop at red lights or have brakes that are perennially close to failing? By buses that are dangerously overcrowded? By trains that are noexistent in many cities, or are also overcrowded?

    If a family of four wants to travel, what is the safest alternative?

    I would consider the subsidies to cars the costs the government has to bear because of the poor infrastructure and the government's own bad rules.

  2. Abi said...

    Lekhni: Narain is not against an individual's choice to buy a car. Her complaint is about government's choices: a subsidy that make it easy to own one. And this is only a part of the argument; the other part argues strongly in favour of public transport, so that everyone gets to enjoy mobility, a bit of comfort and a lot of safety. This second part appears just briefly in the linked article when she bemoans how buses are subject to a whole bunch of levies, while the car owners pay so little. She does have an extended critique that I remember reading somewhere, but I am not able to find it online ...

  3. Dilip Rao said...

    The government wants people to buy cars because it sees the car industry as important for the generation of jobs - that is also the reason why subsidies are offered for the construction of car plants. Sunita Narain's argument that you should raise car taxes will kill the car industry. The problem is not with owning them but with driving them for reasons of road space and pollution as she points out. So if there is a tax, indeed it ought not to be on car ownership but on driving during peak hours - anyone who enters a commercial area during peak hours may be forced to pay toll. While higher parking fees is certainly justified and will benefit the government, it is wrong to suggest that lower parking fees is the cause of traffic congestion. The amount of parking space being the same in both cases, they are just two different ways of rationing it, i.e., based on money or time. In the former case, some folks may choose other forms of transport to avoid paying the fee; in the latter instance, they will do the same in light of experience and anticipation of the fact that parking space will not be available at that time.

    As you have probably read, there has been a lot of discussion in the New York Times city blog regarding Mayor Bloomberg's efforts to alleviate traffic congestion (click here, here, here and here). It might be worthwhile considering and incorporating some of the suggestions made therein for Indian cities as well.

  4. nisha said...

    Sunita is right in her critique. Existings wrongs are no excuse for continuation of a wrong.