If you have a problem, fix it. But train yourself not to worry, worry fixes nothing. - Ernest Hemingway

Friday, 23 September 2011

Buy shoes and mess up the world

Have you seen this TV advertisement?

A pretty young woman is in a store to buy shoes, along with her husband or boyfriend. She tries out a pair, doesn’t quite like it and decides to go elsewhere. The man drives her to another shop, she isn’t satisfied. Another drive. On the way, the pretty woman takes fancy in a store and asks her partner to stop. Not good enough … another drive. They apparently visit different corners of the town in a smart new car while the sunny day turns into a diffused evening. At the nth store, she decides to go back to the first one.

The ad isn’t trying to sell no shoes. It’s for a new small car that runs on diesel. The punch line is: Drive India, khulke!

A recent newspaper report  said that of the 25 lakh cars sold in India in 2010, 30% were with diesel engines. Industry experts predict that by 2017, when the yearly car sales are expected to cross 56,00,000, 50% will be diesel cars. The share of diesel cars has been increasing over the years because the subsidised diesel is becoming progressively cheaper compared to petrol. (A litre of it costs ₹44 against ₹71 for petrol in my city.) So people prefer to buy diesel vehicles although a mid-size diesel sedan costs Rs.1,00,000 more than its petrol variant.

The government subsidises diesel to keep the cost of rail and road transportation low; and of agricultural products, as farmers need diesel to run irrigation pumps. But the unintended beneficiaries, owners of diesel cars and fuel-guzzling SUVs, are cornering more and more of the subsidy that goes into diesel. According to the report, cars have already become the second biggest user of diesel. Cars use 15% of diesel in the country, as against 12% by buses and agriculture each, 10% by industries, and 6% by the railways. In absolute terms too, the subsidy is astronomically large. The government charges excise duty of ₹14.35 on a litre of petrol, but only ₹4.60 on diesel. This means it pays every Indian, including Mr Mukesh Ambani, ₹9.75 for every litre of diesel purchased. (Whether there should be any subsidy on petrol either is another question.)

Notionally, the poor, many of whom wouldn’t see the inside of a car in their lifetime, are paying the price of the subsidy as otherwise the amount could go to some poverty alleviation programme. Should this go on?

There are two other reasons why this should stop immediately. Diesel is a dirtier fuel than petrol. According to the World Health Organisation (WHO), diesel engines emit toxic air contaminants and human carcinogens. So, the environment too is paying the price for some people buying fancy shoes.

Secondly, global warming is a fact we are living through. Summers are distinctly hotter than what they were in my childhood, that is, fifty years ago. The monsoon rains are erratic, and many more cyclones hit us than earlier.

As automobile emission is a major contributor to global warming, governments (including local governments) are expected to introduce disincentives to reduce the use of personal cars. In an article in New York Times (26 June 2011), Elisabeth Rosenthal writes, “many European cities are … creating environments openly hostile to cars.” Cities like Vienna, Munich, and Copenhagen have closed vast stretches of roads to automobiles. Barcelona and Paris have widened bike lanes to reduce space for cars. If you drive a vehicle in London or Stockholm, you pay huge charges just to enter the heart of the city. And over the past two years, dozens of German cities have joined a national network of “environmental zones” where only cars with low carbon emission may enter. “The methods vary, but the mission is clear – to make car use expensive and just plain miserable enough to tilt drivers toward more environmentally friendly modes of transportation”, writes Rosenthal.

One wonders if Indians live on the same planet. Although queer people like our former environment minister Mr Jairam Ramesh make contrary noise from time to time against fuel-hungry big cars and Sports Utility Vehicles (SUVs), the Indian ruling elite seems deaf and blind to the need to discourage personal vehicles and encourage zero-emission traffic. There are no bike lanes in Indian cities. Forget bike lanes, you don’t even have footpaths in many cities, particularly in the newly developed areas. You are forced to take an auto even for a short distance which you would otherwise walk.

On the contrary, governments offer cheap – if not free – land and tax breaks to car manufacturers so that they may flood our roads with low-priced cars. As small diesel cars become popular – they certainly will – there will be a lot more auto emission. Both central and state governments must make a beginning to turn the tide.

There is a simple way to do so. According to the Centre for Science and Environment, an NGO that has been fighting for the environment, in Denmark diesel cars are taxed higher to offset the lower cost of fuel. And so it is in Sri Lanka. If the Indian government follows suit, it can recover the subsidy paid on the lifespan of a diesel car / SUV upfront. This will also work as a disincentive against environment-unfriendly vehicles.

There was some noise on this issue a few months ago. The government reportedly considered differential pricing for diesel to be sold to cars. Our finance minister declared it was not practicable. He hasn’t told us why diesel cars and SUVs cannot be taxed higher.

[Photograph courtesy Wikipedia]

20 September 2011


  1. One thing i consistently noticed, whenever goverment get involved, it invariably screws things up. Lot of times they do these with good intent, but they are not smart enough to see the unintended consequences. Diesel subsidy was probably implemented to make commodities cheaper(with less transportation cost) which helps poor more. However most of these subsidies are helping car companies to see more cars!.Also in the process, kills the natural equilibrium in so many ways - demand of cars/diesel and so many others.

  2. The lack of political will and our 'chalta hai' attitude is spelling doom for our country. Jairam Ramesh had come as, pardon the pun, a breath of fresh air. But he was shown the door as he had taken his post/task very earnestly. Who needs a Minister who's sincerely concerned about the environment? I don't think it'll be very difficult or impractical to hike the price of diesel for use in all these new SUVs etc. But then, is there a single politician in India who'll suggest this? As if.

  3. Thanks very much, both of you.

    Sujith, your point is pertinent. Any concentration of power seems to corrupt things. Maybe, governments are just illustrations of this inexorable rule. (See the difference between Obama of 2008 and of 2011.) But we have to live with them.

    I too think, from what I read in papers, Jairam Ramesh is the odd man out in the central cabinet. This corrupt government needs people like him to dress their windows. The moment their utility is over, they will be thrown out.


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