Sunita Narain: Economics without mind and matter

DOWN TO EARTH

The Society of Indian Automobile Manufacturers (SIAM) records that in 2006, India has produced over 10 million vehicles. This yardstick makes it clear that the economy's fundamentals are buoyant.

I have no quarrel with this. But I do find this economic assessment rather incomplete and simplistic. There are five, at the very minimum, costs that have to be added to the price of the manufacture of each vehicle.

First, there is the cost of building a road. Second, there is the cost of maintaining roads, the cost of policing on the road, the cost of powering the millions of traffic lights. Third, the crippling cost of local air pollution and bad health which requires monitoring, control and regulation. Added to this, is evidence that vehicles are key contributors to pollution, which is feeding climate change and will require even bigger costs to be paid. Fourth, there is the cost of congestion, which every motorist on a busy road imposes on fellow travellers "" from delays which cost time to increased fuel consumption which costs money. And fifth, there is the cost of space for parking of the vehicle "" at home and at work.

We need to ask why economists, who normally rant about markets, the need for full cost pricing and removal of subsidies, never account for these costs in their calculations of growth. After all, the cold logic of the market, repeatedly cited when it comes to the meagre support given to farmers, should apply here as well. Could it be that our economists are so vertically integrated "" with mind and matter "" to the market that these distortions fail to catch their attention?

Take roads, for instance. Cities invest in roads, but fight the losing Battle of the Bulge "" congestion. These roads occupy space "" real estate "" and are costly to build and maintain. It would be logical economics of the market that if something expensive is given away free, people will overuse it. Why then should this dictum not be applied to roads?

The issue of who should pay is simple: the user. But what is often not understood is the nature "" colour and class "" of the "real" user of the public largesse in our economies. While in the western world, the car has replaced the bus or bicycle, in our world, it has only marginalised its space. Therefore, even in a rich city like Delhi, cars and two-wheelers carry less than 20 per cent of the city's commuting passengers. The rest are transported by buses, bicycles or other means. But the operational fact is that these cars and two-wheelers occupy over 90 per cent of the city's road space. Therefore, it is evident that the user of the public space and the beneficiary of public largesse "" the road, flyover or elevated highway "" is the person in the car or two-wheeler.

Cars do not only cost on the road. They also cost when they are parked. The fact is that personal vehicles are parked for roughly 90 per cent of the time and the land they occupy is costly. Cars occupy more space for parking than what we need to work in our office: 23 sq metres to park a car, against 15 sq meters to park a desk. My colleagues have estimated that the one million-odd cars in Delhi would take up roughly 11 per cent of the city's urban area. Green spaces in the city take up roughly the same.

Ultimately, the issue is not even what it costs. The issue is why we are not computing the costs or estimating its losses.