[sustran] Re: MMRDA will file PIL to block Tata's Rs1 lakh car

[Anjali Mahendra]

This is an interesting discussion.  About the ban on the Tata car itself, I
agree that it is unfair and senseless for a particular vehicle to be banned.
One hopes that a PIL of this nature can lead to some sort of policy--pricing
or a vehicle restriction--for all cars. 
But car OWNERSHIP is directly correlated with USE so not considering them
together in a comprehensive policy doesn't work, I would argue, especially
in a place like Mumbai. For instance, people who don't own cars in Singapore
say that is just too expensive to do so--you end up paying 4 times the cost
of the car by the time you're done with taxes and registration.  The road
pricing policy, with expensive parking, and the ownership tax, all act as a
powerful disincentive TOGETHER.

On the issue of bans vs. pricing, the car owning population in Mumbai is
about 9-12% and a recent paper (Takeuchi et al., 2007) says that only 3% of
households use their own car to commute to work.  This is likely to be the
richest group of people--those who will buy a second car to get around any
bans, or an expensive car to get around bans on cheap cars, or to whom a
congestion charge will not matter either.  This is why I think a ban on
vehicle circulation would be important if congestion is the problem to
solve.  Also, a high % of cars on the roads in congested areas of Mumbai are
company cars (paid for by employers); in many cases parking spaces are paid
for by employers too.  

Demand for cars is far more skewed by income in Indian cities than in cities
of the West.  Does that mean a more important role for regulatory policies
than market-based policies?  It is probably a combination of both that's
needed.  Once we start taking two-wheelers into account, and taxis--both
large contributors to congestion in Mumbai, it gets complicated enough that
a ban might just be more feasible to implement.

Regards,
Anjali

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[sustran] Re: MMRDA will file PIL to block Tata's Rs1 lakh car 

Posted by: "Walter Hook" whook at itdp.org 

Wed Jul 11, 2007 9:35 am (PST) 

Carlos, 

You are way off. Car OWNERSHIP causes relatively few social problems, and a
lot of social benefits. The social costs are related to car USE and overuse,
and these costs are not uniform but vary greatly depending on location. In
some locations, more people are exposed to air pollution, and in some
locations the use of the car will create congestion whereas in other
locations it will not. It is therefore more socially optimal to regulate car
USE than to regulate its ownership. 

If the cheap car generates more pollution than other cars, it could
certainly be banned on those grounds. But a cheap car generates no more
congestion than an expensive car. 

Otherwise, banning cheap cars just creates a cash transfer from consumers to
the producers of more expensive cars, and yields no public revenue for
public investments. 

It may have some marginal congestion benefits, but these congestion benefits
will be poorly targeted and will be therefore far lower than the aggregate
social benefits of a congestion charge. In poor areas, where there is likely
to be the least congestion, people will be the most likely to be priced out
of the auto market, facing higher costs and bringing little congestion
relief, while in wealthy areas, where there is likely to be the worst
congestion, people will simply switch to more expensive cars and again there
will be no congestion relief. 

If the purpose of the policy is congestion relief, it is likely to be a far
less effective policy than a better targeted congestion charge.
If the purpose is to generate revenues for public investments, it does no
good either. 

With a congestion charge, a rich person or a moderate income person can
prioritize their trips into the city center and only make them when the trip
is really worth the social cost of 8 pounds (or whatever the charge is).
This is a much more flexible and fair policy than an alternative license
plate scheme which the rich can always get around by buying a second car, or
a ban on cheap cars, which the rich can always get around by buying an
expensive car. 

Best

Walter