Wednesday, February 25, 2009

Submerge Subsidies

While writing my SNAP exam, I came across the essay as a reading comprehension passage. I found it quite interesting, and would like to share it with you. Author is unknown.
I've not copied the whole article here, only the important points to be considered. Read till the end....
(If you are feeling lazy to read the whole article, simply read the phrases in bold).

Rajendra K. Prachauri, head of the Intergovernmental Panel on Climate Change, is getting nightmares because of the Nano, Tata’s soon-to-be-launched Rs. one lakh car. Sunitha Narain of the Centre of Science and Environment (CSE) says that it isn’t the Nano by itself but cars overall that give her nightmares. The villains in my nightmares are neither Nano nor cars overall, but stupid government policies that subsidize and encourage pollution, adulteration and congestion......


.....More logical would be a protest against big cars that use more space and fuel, or highly polluting old cars. Instead, green hypocrites aim at a new car with the lowest cost, best mileage and least missions. The Nano will not burden us with too many cars. India has very less cars per person by world standards. London and New York have ultra-high car densities, yet have clearer air than Delhi. Our problem is too many bad policies, not too many cars.

We subsidize vehicles on a gargantuan scale invisible to lay folk. Roads and flyovers cost crores to build and maintain, yet road use is free (save a few toll roads). Traffic police and lights are costly, yet are provided free. These invisible subsidies starve cities of funds to expand roads and public transport.

Land in cities now costs lakhs per square metre. Yet parking is fee in the suburbs, and often costs just Rs. 10 per day in city centres. A single parking space of 23 square meters occupies land worth Rs. 40 lakhs. A car occupies more space than an office desk, yet the desk space pays full commercial rent while parking space costs just about Rs. 10 per day.

Daily parking charges range from $30 in Washington to $130 in New York. CSE launched a sensible campaign to raise parking gees in Delhi to Rs. 120 per day, but was foiled. So, parking space now exceeds green space, a scathing comment on priorities.

We sanctimoniously lecture rich countries to reduce their green house emissions, yet subsidize our own. Diesel is subsidized to be cheaper than petrol. So, Indian car makers produce the highest proportion of diesel cars in the world. Diesel fumes contain suspended particles that are highly toxic. This subsidy kills.

So does kerosene provided at throwaway prices, ostensibly to benefit the poor villagers. One third of all kerosene is use to adulterate petrol and diesel. That causes horrendous pollution even in the greenest of cars.

What’s the way forward? We must abolish subsidies and raise taxes on vehicles and fuels to reflect their full social cost. The biggest but least visible subsidy is for parking, and we should start there.

Many car owners in the West take public transport to work since parking space downtown is costly and scarce. We should levy parking fees on an hourly, not daily, basis. Rs. 10 per hour could be a starting point in the metros.....

Cities should levy stiff annual taxes on vehicles, not a one-time tax, and use the revenue to constantly expand public transport and roads. This will create economic synergy: Private transport will finance public transport. London and New York have high density public transport as well as high car density (better option will be electric trains like the MMTS in Hyderabad city or like in Mumbai)....

Next, some medicine that will be really bitter, politically. The excise duty on all automotive vehicles should be raised to reflect their social costs. Fuel subsidies should be abolished. Price differentials between petrol, diesel and kerosene should be removed, ending incentives for adulteration. Diesel cars should bear a heavy additional cess to finance improved healthcare for those affected by their emission of harmful particulate matter.

That is long, politically difficult agenda. Only part of it will ever be achieved. Yet that is the way to go, rather than agitate against Nano.

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