Thursday, January 10, 2008

tata small car: cheap answers to big problems or cheap copies of worst habits?

Tata Motor's launch of the small car (Nano from unconfirmed reports in the media) has caught the attention of the world with everybody throwing in an opinion whether its good or bad? This includes articles like the ones below..

Being part of the young generation of Indians who can afford much more than the small car, I have the moral responsibility to join this debate. And when I start to think of it, I just cant seem to make up my mind. There is no one answer to the analysis. It even becomes a moral dilemma at one point to say that lower middle class Indians cannot drive a car that they can afford only because it affects the environment (while the present gas guzzling cars already do that!!).

On the one-end there is the rising economic power that India is and am proud to be part of the country which has been innovative by producing products for the masses (from the Re.1 shampoo satchets to technology enabled fisherman and so on). However, this is the first time I am at crossroads with this practice of 'inclusiveness'. Maybe because it is loggerheads with major and very real issues like environmental sustainability and global warming.

First of all, I have a lot of respect for somebody like Ratan Tata. He is just inspiration beyond mention. And he did what he thought was right - to expand his business while also considering the common man. This has been how the Tatas do their business - there is a lot of social responsibility, morality and patriotism in what they do. There is no questioning the righteousness of what the Tatas did and in no way matters to the issues on the discussion table. If they dint, some other manufacturer would have done it. And they already have, including Bajaj, Renault-Nissan et al.

The question is now thats its here, how do we deal with it? Or does the government even take a different outlook to this issue? How should the urban authorities of major cities deal with the new influx of four-wheelers on a mass-scale? Where do we draw the line in 'dealing' with this issue? Does the govt draft a policy to deal with similar problems in the future? And what would they possibly be? Here is my two cents...

The car should not be looked at as a single component. It should be looked at a 'luxury' good which has to be taxed based on its impact on the roads/environment/society/etc. The tax should be an equation of this impact. For example:-

Car tax = f (weight+pollution discharge+size+no. of cars/no. of adults in the household+neighborhood of owner)
...maybe am missing a few more components in this idealistic equation!!!

Now I would like to elaborate on the last two aspects of the equation:
# of cars/# of adults in a household - this would discourage wealthier families to minimize the purchase of cars just because they can afford it. it would help to rationalize the purchase and make it one of necessity. just take the instance of chennai and delhi that have huge differences in the way people think and make purchasing decisions. in chennai, most households have just one car and share it among the family. however, in delhi you have more motor cars per household. this could be attributed to cheaper car prices and longer distances to work also. but foremost, it is the mentality that affects a purchasing decision or lifestyle!! so its important for the government to consider this - so delhites (and likes) make rational decisions while purchasing four-wheelers and chennaites (and likes) dont get lured into the manufacturers' trap of low-interest cars/etc when there is an efficient transportation system that connects a good part of the city (MRTS). The same holds true for traffic congested urban metropolis like Mumbai, Bangalore, etc.

The second point I would like to discuss is quite controversial but I hope I can justify why it is important.
Neighborhood of owner - this might be something that might not seem important but I think it is. take the example of a lower middle class and an upper middle class family. the lower middle class right now owns one or two two-wheelers and have enough parking space in the neighborhood they live in. the houses have been built with two-wheeler parking in mind (how many ever years ago!!). well, say there are 100 families that live that way. now even if 40 families choose to make the decision to buy the 'dream car', we face serious problems - encroachment into others' private space, using up public roads to park, etc. this is an already prevelant situation in upper middle class neighborhoods in Delhi (where instances of neighbours fighting over parking space and even a shootout over the issue is common these days). people in the low income neighborhoods can now question the government and think its unfair on them but then reality is reality. many things in this materialistic world are guided by where you stand in the society - the school you choose for your kids, the neighborhood you live in, the restaurants you eat, the class system in airplanes, ticket prices in movie theatres, etc. well, this is another one. even if it comes at the cost of saying a higher earning person can pollute more than a lower earning person, yes thats how it should be because the higher earning person can 'offset' his luxury by paying higher taxes. BUT the government which takes this stand should also tax the higher earning person heavily to 'offset' for the environmental impact. and use the money to invest in clean and efficient urban transportation systems. there is no two ways about this!!!

lets get to the fundamental question of taxing at source - car manufacturers. well, its much simpler than addressing the customer side of the problem. however, it will only act as a restraint to the economy/competitiveness/etc. moreover, this problem can only be addressed by addressing people's mindsets, and this can be done by making them responsible monetarily. if its left to their choice, they would always pick the easy way out - hoping the neighbour would comply and he/she can stay away from issues!!!

also, congestion pricing like in london and nyc is an excellent way to address this problem. and there is obviously no questioning other solutions - better transportation system, eco-friendly fuels, etc. however, all thats gonna take quite a long time and much longer in a country like India. so the government has to address this issue with long-term sustainibiligy of the society in mind rather than succumbing to vested interests. i just hope common sense prevails over morality in how the government handles this case.

my dad has been with a leading indian automobile manufacturer for over 30 years now and personally for me, this is a moment of pride when an indian company has developed a quality and complete product indigenously. and the fact that it is for the masses from the Tata group is the cherry on the top. am a proud indian today and nobody is gonna take it away from me. not even thomas l friedman...