Policy Wise has argued previously that ”it is the dynamics of competition whose benefits are likely to be far more relevant in assessing the overall net benefits of NANO”. Barely a month after the launch of Nano, TATA group has announced its support for a car which would run on compressed air with zero emissions.

The car will be driven by compressed air stored in carbon-fibre tanks.

The tanks, built into the chassis, can be filled with air from a compressor in just three minutes – much quicker than a battery car.

Alternatively, it can be plugged into the mains for four hours and an on-board compressor will do the job.

For long journeys the compressed air driving the pistons can be boosted by a fuel burner which heats the air so it expands and increases the pressure on the pistons. The burner will use all kinds of liquid fuel.[link]

Whether the technology is feasible or not remains to be seen. But the very fact that the TATA group is prepared to back such an ambitious venture is an indication that the small car market is here to stay. No doubt, it is hard to predict its size especially because some of the interest in smaller cars–especially in America–is due to rising gas prices. It remains to be seen if the interest would be sustained if there is a correction in gas prices.

(Co authored with Pratik Mhatre.)

It is time the issue of urban transport is addressed in a holistic manner.

Five years ago, Ratan Tata made a tryst with destiny. He promised a car for Rs one lakh-a people’s car-and he has delivered. The new Tata Nano has been widely praised for its indigenous design, engineering skills and aesthetics. In the process, TATA’s have contributed to the maturing of a host of ancillary suppliers which can be expected to contribute positively to India’s manufacturing capabilities. The TATA’s have gone to extraordinary lengths to meet the price target; yet, NANO is reportedly capable of meeting the stringent EURO 4 pollution norms and has passed all required safety tests. Moreover, in an era where the issue of fuel efficiency has gained increasing salience, Nano’s claimed mileage of 50 miles/gallon is comparable to the best hybrid cars in the market including Toyota Prius.

Nano is not competing with any existing car model in the Indian car market. Its nearest competitor-Maruti 800- at Rs 2 lakh is almost double its price. By providing existing two wheeler drivers with a realistic and affordable option of owning a car, it can help expand the car market to the relatively lower middle class. Over two decades ago, Maruti 800 redefined the car market in India; Nano can take the automobile revolution to the next level. More importantly, Nano can spur product and process competition among the car industry not only in India but also abroad. Similar incentives would be present in the still-growing two-wheeler segment as well. It is the dynamics of competition whose benefits are likely to be far more relevant in assessing the overall net benefits of NANO.

As may be expected, not everyone is as impressed with Nano. Its many critics have primarily offered two arguments against Nano. One, with the climate change debate occupying global center stage, Nano’s higher affordability could potentially worsen the situation. Second, India’s urban infrastructure is already crumbling; attracting even more traffic to an already overburdened system may not be prudent. In the city of Delhi to give just one example, average peak hour driving speed is barely 10km/h. The situation in other large Indian cities can hardly be said to be any better.

Countering such arguments, Mrituinjoy Mohanty has pointed out in a Rediff.com column that while Nano might be cheap by global standards, it is still quite expensive for Indian incomes; the critics have overestimated the potential market for Nano. Nevertheless, it must also be recognized that with increasing prosperity, Nano and other cars of this price range would become increasingly affordable to larger segments of Indian population. Therefore, the welcome democratization of private transport must be tempered with the recognition that it has the potential of exacerbating global warming as well as worsening the already dire traffic situation. Public policy should seek to countervail these seemingly opposing positions and address the genuine concerns of the critics while recognizing the right of people to affordable private transport.

Singling out Nano for punitive taxes as advocated by Sunita Narain, the chief of the New Delhi based Center for Science and Engineering is not the solution. First, it merely punishes Ratan Tata for his vision and ability to deliver a cheap car. Second, the concept of ‘’polluter pays” has been well accepted the world over as an appropriate policy tool to ameliorate pollution. Generally, larger cars cause more pollution. Therefore, a suitable policy response would be to encourage the movement towards compact cars by imposing higher taxes on larger cars to ensure full recovery of the social costs they impose. At the same time, Ratan Tata should be held to his promise that Nano can meet all existing and even future emission requirements. A future version of the Nano equipped with a hybrid or an electric engine would dispel all concerns of pollution.

Though Nano has the first-mover advantage in the compact car market, it would not enjoy a monopoly even in the short term. Automobile major Mahindra & Mahindra has already announced its intention of introducing a compact car to compete with Nano. Two-wheeler major Bajaj Auto is joining hands with Renault and Nissan to create a similar low-cost car. International car makers like Fiat, Ford, Honda, and Toyota have also recognized the demand potential for personal transportation in the growing Chinese and Indian markets. As indicated above, a competitive market guided by a tax policy which encourages lower emission vehicles would balance environmental interests with the genuine aspiration to acquire personal transport.

The second argument has seemingly greater validity but addressing it requires a broad-based approach. Indubitably, India needs to invest in a fast, efficient and comfortable public transport to reduce the demand for personal vehicles. Nevertheless, creating barriers in India’s motor vehicle manufacturing capabilities would be counterproductive. The idea of a small car by no means prevents the expansion of public transport. Indeed, it must be recognized that it is state’s failure to invest in public transport which has fuelled the demand for private transportation. The state would be well within its rights to control the number of private vehicles by suitable tax policies, congestion pricing, high parking charges e.t.c after an efficient public transport system has been provided. It is not justifiable to do so before this essential prerequisite has been met; people cannot be expected to give up the comfort, safety, and reliability of private transport for the uncomfortable and unreliable buses or expensive taxis. Urban transportation behavior is largely determined by local cultural influences but globalization has altered the ways in which people chose to travel. Public policy should recognize and along it self with the changes in people’s attitudes.

Also, it is utopian to wish that the need for personal transport can be drastically reduced. Instead, along with more accessible and affordable public transport, urban infrastructure facilities (including vertical and below ground parking); traffic management; better driving habits and road sense must be encouraged. It is quite possible that if clarity in property rights is achieved, entrepreneurs will fulfill parking needs efficiently and affordably. Already, there has been some positive movement in this regard with multi-storied parking being created on a Build-Operate-Transfer (BOT) basis in Delhi. Other Indian cities would do well to adopt this model.

Another important issue is that of road-safety. Due to a mixture of shoddy road engineering, bad driving habits and a poor regulatory framework, over 90,000 people die on Indian roads every year and several times more are injured. In addition to personal tragedies, this imposes heavy economic and social costs on society, stretching India’s relatively weak healthcare system especially the still nascent trauma facilities. In this light, the Mumbai Police deserves unqualified praise for its recent relatively successful drives against drunken driving and those not wearing seat belts. Two wheeler riders bear a disproportionate share of road causality figures; in Delhi only 5% of those killed in roads are car drivers. Nano, specifically targeted at this segment, can improve road safety by allowing a greater proportion of road users the cushion of travelling in cars.

By 2030, majority of Indian population will be urban. Urgency in better managing urban environment, including mega cities, is noticeably absent. Without obstructing private ownership of land and while respecting individual autonomy, the state can still influence public behavior by investing in transportation infrastructure and strictly enforcing traffic regulations that improve the standard of living in Indian cities. It is hoped that Nano will help focus the minds of policymakers, urban administrators and general public alike on the need for better urban management.

(An edited version appeared in the February issue of Pragati.)

(Co-authored with fellow Policy Wise contributor Pratik)

Back in the days when Doordarshan ruled the airwaves, if you tuned in during the weather forecast, you wouldn’t be completely off the mark if you thought that India’s urban regions comprised solely of Delhi, Calcutta, Bombay, and Madras – conveniently located in four corners of India. It was the natural corollary of India’s development since independence that has always been centered on its millions of villages. The idea of making villages self-sufficient drew its sustenance from the rather utopian Gandhian ideals. India’s early leaders also believed in heavy industrialization which led to development of cities like Jamshedpur–modeled primarily along industrial cities like Detroit in the developed world. The ‘Great Leap Forward’ (in stark contrast to its Chinese counterpart), came only after the post-1991 liberalization when India embarked on a path of economic reforms and globalization. The impact of rapid liberalization and expansion of opportunities were profound especially on the morphology of Indian cities.

In this new paradigm of development where hi-tech companies dominated the economic landscape, the cities became the primary driver of India’s development. The most profound impact was on cities hitherto dismissed as B and C class cities: Bangalore, Pune, Hyderabad. In less than a decade, Bangalore, taking advantage of its higher educational facilities, skilled workforce and salubrious weather transformed itself from a ‘’pensioners paradise’’ to the ‘’Silicon valley of the east’. Leveling of the playing field, as Thomas Friedman has termed the flattening of the world accorded these cities a near-equal opportunity to boost their economic growth. No longer were megapolises like Delhi and Mumbai the magnets they once were. It is not as if the importance of these cities has necessarily diminished—they have continued to grow at a fervent pace—however, the belief that easy movement of labor and capital facilitated by advances in telecommunications and transportation is more important than geographic location has gained credence leading to the growth of several mofussil regional centers. As land prices in cities like Bangalore and Pune skyrocket, companies are increasingly looking towards smaller towns like Ludhiana and Coimbatore. It is quite clear that India would continue to experience en masse movement of populations within and to urban regions. Given the continuing dominance of the state even in the post-liberalization era, has the state taken the right steps toward building India’s future cities. The answer, unfortunately, is an emphatic no. India’s urban infrastructure has crumbled in the face of this rather rapid growth: roads are overcrowded, shortage of electricity and water is a perennial problem, and in most major cities, almost half the population lives in slums.

In fact, it could be argued that the overbearing influence of the state is responsible for many of the problems which plague urban India. State continues to remain the largest landowner—worse, there is little distinction its role as a property developer and as a regulator. In cities like Delhi, government bodies like the Delhi Development Authority have completely monopolized urban development. Their extremely tardy performance—people sometimes have to wait for as many as 25 years for their cherished flat or a piece of land—has led to the growth of slums and illegal colonies. Land needs to be freed of government control and private developers should take the center stage. Along with it, legislative reforms are essential. Laws like the Urban Land Ceiling Act (ULCA) and Urban rent Control Act( URCA) are dinosaurs from another era that need to be scrapped immediately. Unfortunately, special interest groups like the trader bodies have continued to resist reform. Considering that they have harmed the poor the most by sending land prices to astronomical levels, a government which ostensibly speaks for the aam aadmi should have no hesitation in removing them from statue books.

The second crucial issue is the lack of infrastructure. State electricity boards continue to supply power to most Indian cities. Their services are poor and erratic and transmission and distribution (T&D) losses—an euphemism for theft is close to 50%. The situation is not much better in case of water or for that matter sewer. Here again the government needs to step down from its commanding heights and let the private sector do the job. The example of BSES is illustrative; the company, India’s oldest private sector electricity distributor has ensured almost uninterrupted electricity supply in Mumbai—surely, a luxury by Indian standards.

Even worse is the state of urban transport. With rising income levels, and a more consumerist culture, Indian roads are groaning under the weight of cars and other modes of private transport. The government has responded to this challenge by constructing an ever greater number of flyovers in cities like Delhi, Mumbai and Bangalore. As many urban transport experts have pointed out, flyovers provide only temporary relief. What is required is a modern, efficient urban transport system Unfortunately only two cities in India currently boast of a metro system. An efficient mass rapid transport system with feeder buses would go a long way in solving the problem of overcrowding in Indian roads. The example of Navi Mumbai is illustrative; it only took off when the local trains service was extended till Belapur and eventually Panvel. The rapid commuting option, as with the suburbanization in American cities put the development of Navi Mumbai on the fast track. Most urban transport systems in the world are unprofitable due to the extremely high capital costs. However, they more than recover their costs in the form of indirect saving: reduction in pollution and commuting time. Hence, the state should take the lead in developing urban transport system adopting the hugely successful Delhi metro model. This will also allow the state to utilize other policy tools for reducing private transport: enhanced parking rates and congestion charges in the Central Business District (CBD) areas to give just two examples.

Perhaps, the biggest challenge Indian cities face is solving the problem of slums where millions of Indians continue to live amidst poverty, squalor and disease. The state’s response has been to let the slums grow, largely under political pressure and then attempt demolitions. It is quite clear that millions of people simply cannot be thrown out of their homes. Currently in Mumbai, the Slum redevelopment Agency (SRA) is attempting the re-development of Dharavi slums by involving private parties. While the jury is still out on how successful will this model be, it is quite clear that only this kind of private-public partnership with active involvement of the slum dwellers can help solve the problem of slums. Needless to add, this policy will only succeed in conjunction with legislative and administrative reforms advocated above along with a zero tolerance policy towards future squatters.

Finally the philosophical question: What should be our urban planning model? Some policy makers have often looked up to the Singapore model and advocated the benefits of central planning in directing the growth of the city. As the example of India’s previously planned cities like Chandigrah and Gandhinagar has shown, that may not always be the best answer. City planning is one of the few sectors where the public and private sector can work individually toward common goals. The government should take a backseat in macro-planning, invest in essential infrastructure, tackle environmental issues, and simply creates opportunities for businesses to prosper. India doesn’t necessarily needs the overbearing Communist government policies that have worked in China or the Singapore model—rather, by simply deferring to indomitable Indian entrepreneurial spirit that has worked wonders for the business sector; she can see the consequential effect on the form of Indian cities as well. Cities need not compete in attracting the best of all businesses (or industries) and talent but instead work at developing their competitive advantages to target the demographics and businesses best suited to its region and character.

 (Admin note: This is a guest post by Pragmatic)
The term itself is a misnomer in many ways. Which transport system in India is not public? The ubiquitous auto rickshaw is used as a “hop-in and hop-out” coach in many parts of India, operating with a fixed tariff rate on predetermined routes. In Udaipur (Rajasthan), a parterre and rear vomitory has been added to these motor powered three-seaters for greater comfort and economic viability. In places like Agra and Meerut, even this enhanced comfort and adornment has been shunned to yield the proverbial ‘can of sardines’. The scarcity of alternatives for commuters allows these uncomely modes of transit to be economically viable despite many handicaps, viz., police haftas, poor fuel quality and unending traffic jams.

And, then there are those long 10/12 seater minibuses christened as ‘tempos’, belching out smoke and noise, generally ferrying over a score of passengers, ensconced inside and clinging outside, and plying on the opposite lanes on various national highways. It is no use blaming the passengers for patronising these lusus naturae, for the plebeians have no options but to brook the monster. No respectable public transport ever touches their lives, as all public sector transport agencies vie for higher profits and focus less on public service. The passengers at major towns and cities seek non-stop journeys on buses with super fast and express tags, which facilitate embarking and disembarking solely at major stations. Various service providers, both public and private, bend backwards to meet these requirements. In Maharashtra, the state road transport Volvo buses compete with privately operated Volvo buses for nonstop commuting between major cities, while minor towns and villages continue to languish unconnected by any safe and reliable means of transport.

The recent fatalities involving Blueline buses in Delhi and the reactions of the public, courts, politicians and popular media are a fascinating study in the modern Indian psyche. The public is agonised but has no real alternatives to the insufficient service quantity and terrible service quality of public transport. Those who can afford, graduate to the motorcycles or cars at the first opportunity and add to the road congestion. The courts have rendered and continue to render yeoman service but unless the correct processes and delivery systems are in place, fatigue and inertia in implementing these court orders will set in the executing agencies. The politicians have not grabbed the opportunity to assume leadership role and seek major structural reforms, when the larger public opinion is on their side. Their maudlin display of public concern is, instead, focused solely on scoring petty political points. The popular media has, as is the wont, sensationalised and hyped the incidents rather than generate awareness on the subject and seek long-lasting solutions.

There are myriad aspects related to the problem of public transport in India that have been dissected by many expert committees, NGOs and researchers. The unregulated growth in the cities and government regulations permitting higher floor space ratios in suburban areas have promoted sprawl and led to a shifting of population away from the city centre. As the offices, workplaces, schools, hospitals, shopping and other utilities continue to be based in the city, they generate long trips between residences and almost all other trip destinations. This, in turn, puts greater pressure on the public transport.

There is another aspect of this quodlibet that defies logic. The public transport system in Delhi and many other places is run by private operators, but through individual bus owners rather than an established private agency. It reeks as a relic of the socialist era when the state did not trust the private corporate houses. It would be ideal if the bus system in cities like Delhi and Pune is corporatised and opened to two or three private players; these could be reputed corporate houses like Tatas, Reliance, Bharti or GVR. These firms could own, manage, operate and finance their own public transportation systems. They will bring in much needed efficiency and accountability into the system while economies of scale and market forces will keep the tariff rates competitive. The license fees from these operators can be used by the government to subsidise non-profitable routes. The advantages of the proposed system are numerous to recount and there aren’t many drawbacks of this system except certain teething problems. However, it has to be accompanied by strict regulations, performance standards, and overall coordination by an independent regulatory authority to ensure an efficacious network of services. The modernisation of transport offices, registration and driving licensing authorities has to be a concurrent step.

A half hearted approach by having public agencies contract with private firms to operate services on a system wide basis, for selective routes, or for selected functions like maintenance is a recipe for disaster. Such a half baked approach will only further empower and profit the patron-client ecosystem of politicians, bureaucrats and their cronies appointed to various transport boards.

Spare a thought now for the Indian automobile industry. Mumbai civic corporation says that it doesn’t want the Tatas Rs 1 lakh car on its roads. Do we need to go back to licensing to decide how many vehicles to produce every year or should we have better roads and infrastructure coupled with regulatory processes (like entry fees for private vehicles at peak hours and in city centres)? The answers are obvious but one can only hope and pray that the decision makers will soon overcome their misoneism.

A proposed congestion charge in U.K has led to much resistance among commuters.

A transport ministry proposal last year for a road congestion charge that could see drivers pay up to $2 a mile has sparked an online revolt, with motorists crashing part of the British prime minister’s Web site Monday night in a barrage of protests.

“We’ve seen a succession of governments look at drivers as a source of public revenue,” said Mark McArthur-Christie, a director of the Association of British Drivers, a motorists’ lobbying group. “But I think the government pushed things one too far.[link]

While some sort of congestion charge is already a reality in many of the big cities, charging 2$ a mile is certainly taking things a little too far, especially when gasoline in Britain is already heavily taxed. What the government should concern it self is to find out why people are still resistant to using public transport. The system might require changes which would make it easier for people to give up private transport. Just charging excessive congestion charges without proper public policy interventions makes little sense.

Congestion charges are means to achieving an end, they shouldn’t become an end in themselves.

Update- Here’s a slightly different take on congestion charges.

But the fact is that congestion pricing is conservative economics at its best. For decades, conservatives have championed market-oriented solutions to highway problems as a means to allocate scarce resources. Congestion pricing gives consumers the opportunity to decide when it is in their economic interest to ride crowded roads, and whether the price charged for a given trip is worth their travel time savings.In the former Soviet-bloc states, the standard way to allocate scarce goods was to set the purchase price low enough for everyone to afford, but to make consumers wait in long lines to buy them. The real price depended on what value consumers placed on their time.[link]

But what if the consumers have no alternative to road transport? The key to my mind is coupling congestion pricing with investments in public transport.

It may seem a bit obvious, but Science News has a story on research on correlation between urban sprawl and obesity.

[University of British Columbia Professor Lawrence] Frank is part of an emerging area of cross-disciplinary science that’s examining the relationship between the shapes of our cities and the shapes of our bodies.He and other researchers have evidence that associates health problems with urban sprawl, a loose term for human made landscapes characterized by a low density of buildings, dependence on automobiles, and a separation of residential and commercial areas. Frank proposes that sprawl discourages physical activity, but some researchers suggest that people who don’t care to exercise choose suburban life. Besides working to settle that disagreement, researchers are looking at facets of urban design that may shortchange health.

[link]

In spite of the fact that humans occupy less than 1% of the total land available on Earth, land scarcity is an omnipresent urban reality. Partly due to urban aggregation behavior and availability of conducive habitable spaces, the fight for space especially in urban areas has been intense. Be it the ever-growing slums in Mumbai or the problem of homeless in New York, the fight is also never fair or equal. Although common sense tells us that economics should be enough to dictate property rights, the point of contention arises at the boundaries of public and private space. As in this case:

A Madison Avenue antiques dealer is suing a group of unidentified homeless people for $1 million, saying that the group has taken up residence outside his posh Upper East Side business, using the sidewalk in front of the shop as a urinal, spittoon and occasional dressing room [source].

Now the problem of homelessness in the United States is something that Americans wish that would simply disappear if they ignore it long enough. Hardly has anyone tried to understand the underlying cause of homelessness. Some term it as a urban truth that we have to live with while others look at it as nuisance that we could zone out of our visibility cone. While not being an expert on homelessness, I understand that in spite of millions of research dollars thrown at it, authorities haven’t been able to agree on a politically and economically feasible solution.

Why not give all homeless a free home? Of course, the United States so busy in resettling whole countries in the Middle East can afford it. But then that might logically lead to free-ridership and creating dependencies in the long run and definitely goes against the American ethos of work hard and you’ll succeed. At the same time, the core cause of homelessness is mental illness. I have seen numerous incidents of previously well-to-do individuals like lawyers, doctors, or businessmen being forced into homelessness due to chronic mental illness and lack of family support. Strangely a count of the homeless in the United States put the figure at an astounding low 744,000. But addressing causes of homelessness or seeking a solution may be beyond the scope of this post and let me return to the topic of discussion brought up by the article cited above.

“My concern is the health of the man,” Mr. Kemp said by phone from his store’s East 10th Street location today. “Sometimes he’s out there in blizzard conditions, and you and I pay taxes in New York City and some of that is to maintain decent shelters. And he should take advantage of that.”While Mr. Kemp referred to one of the homeless men as a “nice guy,” he said it is time for them to part ways. “It’s nothing against him,” Mr. Kemp said. “I want him to be safe and not to be an obstruction to us.”

If you notice the tone in this paragraph, it goes beyond the usual get-out-of-my-way apathetic attitude that you would normally associate with the landowner. Mr. Kemp may have developed a personal relationship with the homeless man after seeing him around for more than 2 years and although understands the plight of the afflicted man, he is now taking a more practical stand by wishing more for the man. But at the same time, shifting the responsibility onto the city seems like a likely and easy solution.

Has the city or Mr. Kemp tried to understand why does the homeless man not want to go to a homeless shelter? Definitely a warm place however seedy might seem like a better option than living out in a New York winter. Probably the answer might be similar to that of a slum dweller who rather live in the squalor of a drain in Bandra than relocate to Mira Road. The homeless man might be thinking in economic terms as well – why move to a distant homeless shelter and spend time and money commuting when you can in fact live right on Madison Ave.and hope for better alms. After all, he is occupying public space. Mr.Kemp’s ownership ends at the threshold of his store.

But at the same time, a case can be made to the city on the grounds of harm to his property value/business due to presence of the homeless. The city may very well be interested in addressing the issue if it leads to loss of revenue through sales tax. Unfortunately apart for the humanitarian argument, the homeless may have little support.

The larger question here is, where should we move the homeless man to? Should he become someone else’s problem or should we just zone them out of sight? However ignoring a social problem has never solved any.

[NY Times article hat tip: Bongo Pondit; cross posted at Urban Planning Blog]
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