Rural push can kickstart slack automobile sector : The Tribune India

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Rural push can kickstart slack automobile sector

More cars and commercial vehicles for rural India, however, are welcome. India has very low density of cars with 22 per 1,000 citizens compared to 980 in the US and 850 in the UK. Rural women would find work or business if there is a better system of transportation in the villages. It means a focus on the rural economy and making road connectivity better.

Rural push can kickstart slack automobile sector

Choked: Our city roads are not built to take in so much traffic. Widening them remains a challenge with there being more scope for passenger and freight traffic.



Jayshree Sengupta

Jayshree Sengupta
Senior fellow, Observer Research Foundation

SEEING photographs of terrible traffic jams in Metro cities and reading about the slowdown in the automobile sector alongside, one gets mixed feelings. Do we really need more cars on the roads of Delhi, Mumbai, Chennai or Bengaluru? Cars, commercial vehicles and trucks are one of the main causes of air pollution and the big cities are choking. All countries around the world are trying to lessen the number of cars on the roads and resorting to all kinds of controls to keep the city centres free from traffic jams. According to New York Times, cities worldwide are reimagining their relationship with cars. Maybe, we need less cars on the roads in the big cities.

Rural India, on the other hand, has a transportation deficit and communication between the villages and nearby towns are limited because of lack of adequate transportation. More cars and buses would definitely benefit the rural population as it will increase their earning capacity, but how many of our farmers can afford cars unlike in the advanced countries? With their meagre incomes, they can only afford two-wheelers. There is a need to rev up the demand for cars in rural India where the absorption capacity for vehicles would be high if they got higher disposable incomes. But according to the unpublished consumer expenditure survey report, ‘Key indicators: Household consumer expenditure in India’, undertaken by the National Statistical Office (NSO), consumer demand fell by 8.8 per cent in the villages, that is rural areas, and two per cent in the urban areas, between July 2017 and June 2018.

With slack rural and urban demand, the automobile sector will have to shed many jobs. Workers will have to be retrained and reskilled to do some other jobs if the demand does not pick up. The government’s policy changes have also affected the demand. The new emission standards of Bharat Stage VI for diesel cars will have to be adopted by April 2020. As a result, the demand for diesel cars is likely to drop from 40 per cent of the total domestic sales to 28 per cent.

The NBFC crisis in the shadow banking sector has also slowed the demand for automobiles as it has affected adversely the credit flow to dealers and consumers. Higher input prices of steel have slowed the manufacturing growth of cars. The policy to push to a transition to electric vehicles has also affected demand.

In any case, the automobile and automotive part sectors will be driven by artificial intelligence (AI) in future, requiring more robots than humans to make cars and components. Already, it has a density of 79 per 10,000 workers (Economic and Political Weekly, August 17).

In the last few years, the automobile industry came up very fast, comprising seven per cent of the GDP in 2018. India is a manufacturing hub for cars that are exported to other countries and slowdown in demand for passenger and commercial vehicles is taken as a sure sign ofsevere economic slowdown.

Due to a meteoric rise in the number of cars, Delhi is one of the most polluted cities in the world and has done quite a lot already to clean the air. There is a vast Metro system, a peripheral highway to keep trucks out of the city and restrictions on older and more polluting vehicles. There is also a requirement for all buses and taxis to switch from diesel to less polluting natural gas. The Chief Minister of Delhi tried to have odd-even car number plates on alternate days to control the volume of traffic after Diwali. The impact on pollution was not great.

Parking of cars in the cities is a nightmare and cause terrible congestion on the roads. In Delhi, according to the DDA, an additional 382 hectares of area is needed annually for car parking. If two-wheelers are added, an additional 277 hectares will be required every year. There are 1.2 crore vehicle registered in the capital city, 33.2 lakh registered cars and 76.3 lakh two-wheelers.

People are travelling more in private cars than by public transport. According to the Centre for Science and Environment, 49 per cent of the miles travelled every day in the capital are by bus or Metro while 51 per cent are by private vehicles. India has to go for mass rapid transit system. Otherwise, there is no way the cities can function without unseemly traffic jams that waste the time of the passengers and cause hazardous pollution.

In many advanced countries, cars with internal combustion engines are going to be banned in the future in cities and India also will go along — at least for two-wheelers, for now. Our city roads are not built to take in so much traffic. Most of the cities have narrow roads with buildings on both sides. How to broaden such roads is a major challenge. Highways have expanded a lot and most of the freight traffic is carried by trucks. There is scope for more passenger and freight traffic on the highways, except that they have to be better lit, regularly patrolled by the police and have clear road signs to make them safe. From 4.1 million km of road in 2008, it was 5.5 million km of roads in 2018, a 34 per cent increase in ten years, which according to many, is not enough.

More cars and commercial vehicles for rural India, however, are welcome. India has very low density of cars with 22 per 1,000 citizens compared to 980 in the US and 850 in the UK. Rural women would find work or business if there is a better system of transportation in the villages. It means a focus on the rural economy and making road connectivity better.

City centres, on the other hand, should be free of all traffic and meant for pedestrians only. London has imposed a congestion charge since 2003, to drive a car or truck into the city centre on weekdays, between 7 am and 6 pm. Today, driving a car into central London can cost up to £24 on weekdays. Pollution levels have gone down significantly as a result.

For the automobile industry to keep growing, the demand for passenger and commercial vehicles — two-wheelers and tractors — has to come mainly from the rural areas where 70 per cent of India lives. For that to happen, rural incomes have to rise through agricultural reforms so that farmers can earn more. Export production of cars should also increase.


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