Sreelatha Menon: Cars or scars?

Only fiscal measures can end the nightmare of private vehicles bringing all movement on the roads to a standstill.

For every man, a car. It is a thought worth celebrating but is there a guarantee of a smooth ride on the road for every car owner, not to speak of others?

Spending two or three hours on congested roads and inching one's way ahead is definitely not what driving should be about. The number of hours is bound to increase as cars increase in number. And with that will increase the costs of congestion.

Does this country looking forward to a billion Nano-citizens have a strategy to make its cars less of scars that do nothing but choke the roads and beat the very purpose of being on four wheels?

Recently the Centre for Science and Environment (CSE) proposed to Finance Minister P Chidambaram a recipe for liberating the roads and the citizens from the terror of being spaced out. Its first remedy was, of course, to scrap the excise duty on buses to make public transport cheap, (even free to some extent, for students and senior citizens), while scaling up the bar for those aspiring to own and use a private vehicle.

Both cars and buses now pay the same excise duty which CSE says is unfair. The present tax regime does not justify the social and environmental costs of motorisation "" the bus and car should not be paying the same taxes, says CSE director Sunita Narain.

While the excise duty is the same, there are even more distortions in taxes at the state level where buses pay more than cars despite catering to more than 70 per cent of the population. 
 

CARS VERSUS BUSES
Excise duty on cars	24 per cent
Excise duty on buses	24 per cent
Other taxes on cars	Rs 400 a year
Other taxes on buses	Rs 13,000 a year
GROWTH OF CARS, BUSES
Cars: (2006-07)	1.5 million
Buses: (2006-07)	28,000
ROAD SPACE USE
Cars	75 per cent
Buses	8 per cent

At present while a bus owner has to pay Rs 13,000 as taxes annually, the owner of a car pays peanuts and that too, just once. If that were to be broken into annual payments, it would come to Rs 400 a year, says CSE associate director Anumita Roy Choudhury.

CSE has also suggested to Chidambaram an increase in the excise duty on diesel cars, maintaining the differential between small and big cars and linking excise duties to the fuel efficiency of a vehicle.

The loss to the exchequer by the waiver of excise duty on buses can be compensated by the increase in the number of new buses "" just 28,000 were added last year "" and by the fuel saved, says CSE. In its study on Bangalore, the Asian Development Bank (ADB) estimated that the city could save 21 per cent of fuel consumption if it increased its share of public transport from the current 62 per cent to 80 per cent. The ADB projected that by 2035, the total fuel consumption of on-road vehicles in the country will be six times higher than in 2005 "" driven by light-duty vehicles, mainly cars.

Even if cars were to become supremely fuel-efficient, as the 42 km per litre car proposed by venture capitalist Vinod Khosla would be, it would not translate to a smooth ride on the roads, for cars cannot be adopted as the primary means of transport in any city, says Choudhury.

The jump in the number of cars in the country has been fast and phenomenal, a thing to be happy and yet concerned about. Is there room on the roads for these numbers?

India produced 46,000 cars and 97,000 two-wheelers in 1970-71; this rose to 49,000 cars and 4.47 lakh two-wheelers in 1980-81; to 2.2 lakh cars and 1.8 million two-wheelers in 1990-91; to 6.32 lakh cars and 3.7 million two-wheelers in 2000-01; and finally to 1.5 million cars and 8.2 million two-wheelers in 2006-07.

While the road space to accommodate these vehicles has also increased, Choudhury points out that there is a limit beyond which it cannot be increased. While in the last five years, there has been a 43 per cent increase in vehicles, there has been only a 9 per cent increase in road space. Further, it has been proved across the world that no increase in road space will ever be enough, adds Choudhury.

CSE says these developments are hurting the poor. Cars and two wheelers cater to just 20 per cent of the population's travel demand while taking up 90 per cent of the space.

This is hurting car owners as much, irrespective of their class. Movement at 10 kmph is not what they bargained for when they bought cars.

Dinesh Mohan, an expert on transport at the Indian Institute of Technology New Delhi, is resigned to the fact that congested roads and slow movement at 10 to 15 kmph is an urban reality in all developed cities. However, he proposes road user charges to discourage the use of private vehicles. He suggests that car owners be made to pay huge amounts for parking and for causing congestion.

CSE says that these are measures to be taken by the state governments. It is talking to state governments on these issues separately. One of the most distorted regimes in existence in all states is the passenger tax on buses which meet the bulk of transport needs.

A bus has to pay 17 per cent of the turnover as passenger tax to state governments. This is based on the number of passengers it carries per year. In effect, therefore, instead of rewarding the bus, the state punishes it for rendering the service.

Even as the money spent by households on transport rises dramatically, in Delhi alone, there are just 6,500 buses as compared to 1.5 million cars on the road. And the tax burden on buses as per a 2004 World bank study is 2.4 times more than that on cars. Take the case of Mumbai. There cars and scooters make a one-time payment of 4 and 7 per cent respectively, while buses pay 17.4 per cent annually.

Globally, even in the richest cities, more and more models are available for emulation to correct the distortion between the taxation of public transport and private vehicles. In Shanghai, for instance, the government auctions the licence plate of cars and also fixes the number of cars that can be sold in a month. The licence rate can go up as high as $4,500 a car.

Another city following a system to restrict the number of cars is Singapore which requires that one buys a permit before buying a car. This measure ensures that buying a car can be quite expensive.

Again, roads don't come free for car users in these cities. In London, congestion charges for entering central London have led to a 30 per cent drop in private car entry in the area.

Similarly, in Singapore, there is a road pricing system regulated through electronic swipe cards which ensures that payments are made each time a road is used.

While car parking comes almost free in Indian cities, more enlightened cities make vehicle users pay the cost of the real estate they occupy. Parking outside one's house can cost the equivalent of Rs 1,000 a month while public parking can cost Rs 50 an hour. In New York city, one pays Rs 400 an hour for parking, says Dinesh Mohan. It's true incomes in these cities are also several times higher, but India does not even follow the principle of taxing private vehicles at rates higher than those for public transport.

Any incentive for public transport can yield gains both in revenue as well as faster road transport, something which even a car user would look forward to any day.