[narayan]

The RBI move ( or lack of it ) yesterday sends a strong message to the Govt to not depend on fiscal measures ( like rate adjustments ) to promote/discourage growth/inflation and depend on policy measures ( stimulate investment in infrastructure, free up the supply chain, improve agricutural productivity etc )

The same applies to the Govt's stance to the auto industry as well. All they can think of this increase taxes. This shows the TOTAL LACK OF ANY THOUGHT PROCESS on the part of the Govt.

1) What is the Govt. doing about improving urban infrastructure ? Nothing
If we had better roads, average FE across the moving traffic improves and that effectively translates to reduced import fuel bill for the Govt

2) What is being done to improve public transportation ? Nothing
If we had better public transport, this again saves precious fuel

3) Why cant we invest in the Indian Railways ? No answer
The Govt is PUMPING IN CRORES OF TAX PAYERS MONEY into AIR INDIA. Why cant this be put into Indian Railways and introduce better infrastructure ( trains/tracks ), high speed corridors between key cities etc ? Imagine the massive business potential of doing such investments in Railways. Effect - Reduced fuel consumption on roads as well as by air

These are just some top of the mind thoughts. I am sure there are so many other things this Govt can do rather than take the simple way out ---- TAXES AND MORE TAXES..

[sa_kiran]

Policy paralysis always hits common man, rather than the perpetrators! Look at 2G scam, the telcos and other fraudsters have got away cheaply compared to the common people who are losing jobs because of shutting down of operations at Uninor and others.

[civic-sense]

A quick glance at a few threads that adorn this forum makes one wonder whether this has become a political forum. And in all the threads, the one at the receiving end is our favourite whipping boy - the government. As usual, the left and the right has come together to whip the centrists. It is always tough to be at the center of a debate.

The average Indian is still a socialist, who likes it better if the govt pays for his daily bread. Only when the govt asks him for taxes, does he transform into free-market proponent. I have seen many who lament about rising rents and ask for rent regulation from the govt, but would want the best returns when they rent out their houses or when they are selling their properties.

That's true with corporations too. On one side they want a free market with less licences, less checks & balances, less regulations, less taxes. But then they also want "incentives" in way of free land, interest-free loans, tax breaks etc. You can't go on a policy creating spree with the sole aim to help the corporations.

A government has two sets of people to take care of - the giver, and the taker. For some time, you may not pay the taker, and instead pay the giver in hope that the giver prospers so much that he can give more. Its a balancing act, and if it goes on for long, the taker goes mad. That is why, that the govt cannot spend all it's resources on the giver for too long. For the giver, it is also in his interest to keep the taker in good humour. Else, it will lead to the masses going into a revolution. And you can't reason with someone who is angry (and hungry).

The auto industry is not in a state where it needs incentives from the govt to prosper. And on the other hand, it needs to curb revenue leaks that is resulting from increasing diesel cars. Govt cannot cut taxes, as it cannot cut spending as it needs to keep the masses in good humour.


ps: I am not a communist, so please leave out the name-calling if you choose to reply to this post.

[46TheDoctor]

Hello Bhpians,
I see a few misinterpretations of my earlier long post, so let me clarify myself further.
But, before i do that i would like to make a few disclaimers:
1. I am not a socialist. In fact i am a capitalist who has his own business and who definitely want it to grow.
2. I am not at all against cars, In fact i am a complete petrolhead and motorsports fan which should be apparent from my Handle as well as my Garage. But, having said that i believe that cars should be taxed heavily because of the carbon footprint they leave behind during manufacture as well as their operating life and also because they are an luxury item if you have a good public transport in place.
3. I am not an advocate of our govt. either, like all of you, i believe that they are doing a pathetic job in handling our country.
4. So, i would like to keep this discussion related to govt. policies only and nothing personal.

So, for a few moments lets not be petrolheads and think rationally.
What i interprete from OP's post is that govt should have friendly policies for automobile sector for various reasons stated by him. But, i dont think it would be such a good idea because i think transportation problem of india is very different from transportation problems of developed western countries and we cant copy their solutions just because it has worked there. OP has stated that govt. should promote aumobile sector and allow car penetration levels of 500-700/1000, same as developed nations. Which means in our country of 1.2 billion people, we will be having minimum of 600-850 million cars on our roads, which also means every household will have approximately 2-3 cars assuming four occupants per home.

So, answer a few important questions to yourself:
1. Where will we park our cars? Do we have 2-3 parkings per home in our residential areas? My observation tells me that current ratio is <1.
2. Assuming only 1/3rd cars come to roads everydays, we will be still having 200-300 million cars on our roads. Do we have such roads in cities and highways (probably 8-10 lane internal city roads and may be 20 lane highways)?
3. If 50% people bring their cars to offices, marketplaces, malls and multiplexes, do we have enough parking spaces there?
4. Are we going to demolish all these buildings and construct such a large roads to accomodate these many no. of cars?
5. Even if we decide that cars are the most important objects in our life and decide to rebuild everything, are we rich enough to do that?
6. Even if we are rich anough to do that, does it make any sense to do that? Is that money not better spent on education, healthcare, irrigation(1.2 billion people consume a lot of food), science and innovation, recreation?
7. Lastly can you imagine environmental impact it will have to manufacture and operate these many no. of cars and civil engineering reconstruction of everything that we have developed so far? Can we afford to do that when our environment is already in fragile state?

Common sense says that all the answers to the above questions are a big "No" only because of the factor called "Population Density" which is very high in our country. So, the only primary option remains is to improve Public Transport of our country to the leves that of developed nations. Individual transport is good in regions where population density is so low that there wont be sufficient users of public transport to keep it alive. Like Australia (PD 3/sq. km), USA(PD 21/sq.km.), etc. and public transport is good in countries like India (PD 369/sq.km, Mumbai has PD 20,800/sq.km. for your reference ). You can check wikipedia for PD figures for other countries and cities and see for yourself.
All this doesnt mean our govt. should ban cars in india. Since we live in a free, democratic country, every one should have right to by it, but, govt. policies should be such that people will prefer public transport.

So, what i meant form my previous post is that
1. We should be more concerned about our public transport improving at the snail's pace and not the increasing car prices.
2. If we think we can create difference in govt. policies towards automobile sector by voicing strongly on such forums, we can certainly do that for public transport also.
3. Employment can be generated through other fields which need drastic improvement like irrigation (we have huge amount of quality land in our country remaining uncultivated only because there is no water, on the other hand, a lot of people die of flooding also each year), infractucture, etc, etc.

I also see the car prices going down if the public thansport improves because
1. We are not a nation who loves cars (may be Italy, Germany are). Our favourite tv shows are defineitely not Top Gear, Fifth Gear, Motorsports (Though i live by them). We petrolheads count for less than 10% of total population, rest see cars as the liability. So, if good public transport is in place, people will always prefer it (leaving empty roads for us petrolheads) which should reduce demand and prices for cars.
2. Govt. (also private sector companies) tends to charge more on things which are high in demand and which dont have have any option/competition. For example, we cannt replace petrol, diesel with anything for our vehicles so, govt. taxes the hell out of it. Also, simillarly in private sector, favourite cars of people like Swift, Innova, Fortuners call for a premium over the competetion. So, if demand goes down taxes also tend to go down for such items.

Lastly, i would like to ask one simple question to all the advocates of automobile industry here, especially given the way things operate in india, Do you sincerely think that this same automobile sector lobby doesnt play a significant role in keeping our public transport in shabby state of affairs? How many will buy their cars if it improves?
I just hope you are not so knaive.

Originally Posted by carboy

Are you willing to sell your car(s) and not buy one till such time the infrastructure improves?

Definitely not. But, i don't mind paying higher taxes.

Originally Posted by ninjatalli

+ 1 to this.

Thnx for understanding my point.

Originally Posted by anu21v

Very Well said. As far as Industry's concern, they should better learn how to keep making profits on stable set of volume as in "Market Size" (as Mr Boneham points out) rather than ever increasing set of volume as in "Growth".

+1 to this

[samarjitdhar]

Originally Posted by 46TheDoctor

.....

You have elucidated your point very well. In a country like India where weather can take extreme proportions sometimes, all of us expect a decent public transport infrastructure to run our daily lives. Decent in the sense that I should not be made to jostle with my own citizens to board a bus or be handled like a sack of potatoes in a suburban Mumbai train. But that was not to be. The bane of India has always been a severe lack of quality leaders since independence. We might have gotten one or two who had it in them but since they didn't conform to the corrupt ilk they were muscled out. For years, the governments have relied on staying in power by promoting over population and subsidies as a means of garnering votes. Even a couple of decades ago you will find politicians vociferously protesting against family planning. Now add to that the tremendous amount of illegal immigration being tolerated also for votes. Things went fine till the time India could borrow and run its subsidy engine without generating any revenue. The trouble started when the debt markets shut the doors on India and India had to pledge its gold as well as throw open its license raaj closed markets to global competition. So calling our current PM visionary is demeaning the term visionary itself. Simply put their hands were forced.

Thus unprepared they tottered in ill planned reforms and thus the sudden spurt of growth without the infrastructure to show for it. The NDA did take it up in a large scale and what we see today in terms of growth is because of building of that amount of infrastructure in terms of roads and highways. Agreed it was not enough but the pace should have been accelerated a lot more. Instead to cling to power, even more subsidy schemes, loan waiver programs and what not were announced by the government that came in next and now we have run out of money to spend on infrastructure including public transport. Absence of these fundamental things in an economy will ensure that the average citizen can never be prosperous and will continue living on doles. Maybe that is now by design rather than poor planning because that average citizen can still sell their vote to get two square meals a day.

[anurag.somani]

In India the govt has a weird apathy towards the upper-middle class who have pretty normal ambitions like buying a car, house etc.

If the govt is trying to create a socialist utopia by heavily taxing the "HAVES" and subsidizing the "HAVE-NOTS"; like europe; then it has gone terribly wrong since the "HAVE NOTS" have really not become better-off.

Anyway; coming back to the auto-industry; the govt seriously needs to simplify the taxes and be consistent towards fuel-pricing.

Problems:
1. High taxes: Milk the cash-cow till it stops milking. that seems the mantra.
2. different types of taxes: Excise; Octroi; taxes on component manufacturers; state-tax etc
3. different tax brackets: varying across engine capacity; length of vehicle; state which the car is registered; degree of localization of the car.
4. Myopic fuel policy: Petrol has been decontrolled; still there is too much of interference from govt about the pricing. Diesel needs to be completely decontrolled. If required; rationalize the taxes but subsidizing diesel and adding diesel taxes for cars is a short-sighted policy. Puts both the manufacturers and end-customers in a flux.
5. No incentive for green-technology: If fuel prices are going through the roof; the govt has to provide tax-breaks and incentives for green-tech so that manufactures can develop hybrids and indian car-makers can spend in R&D. The fruits might not be for now to see; but for R&D you have to forgo the initial gains and look at long term results.

[carboy]

Originally Posted by 46TheDoctor

2. I am not at all against cars, In fact i am a complete petrolhead and motorsports fan which should be apparent from my Handle as well as my Garage. But, having said that i believe that cars should be taxed heavily because of the carbon footprint they leave behind during manufacture as well as their operating life and also because they are an luxury item if you have a good public transport in place.

That basically means that only the very rich should be able to have personal transportation. And with everyone else forced to public transport, the roads would be nice & clear for those who can afford the unaffordable cars.

Basically it's as I wrote in an earlier post -
"This is the same as those people who felt that the Nano should be banned till such time infrastructure is improved because it will increase congestion on the roads (this was before the Nano released - when people thought it will sell more than the Alto)."

People with Altos don't want Nanos because they are scared it will increase congestion. People with Mercs don't want the Corollas on the street and so on.

Originally Posted by 46TheDoctor

Definitely not. But, i don't mind paying higher taxes.

So basically, we should take something which is affordable to the middle class and tax it more and make it a luxury item so that people with more money than them can enjoy less congestion on the roads.

[46TheDoctor]

Originally Posted by carboy

That basically means that only the very rich should be able to have personal transportation. And with everyone else forced to public transport, the roads would be nice & clear for those who can afford the unaffordable cars.

Basically it's as I wrote in an earlier post -
"This is the same as those people who felt that the Nano should be banned till such time infrastructure is improved because it will increase congestion on the roads (this was before the Nano released - when people thought it will sell more than the Alto)."

People with Altos don't want Nanos because they are scared it will increase congestion. People with Mercs don't want the Corollas on the street and so on.


So basically, we should take something which is affordable to the middle class and tax it more and make it a luxury item so that people with more money than them can enjoy less congestion on the roads.

Carboy, i request you to interprete my post in it's entirety and not just in a sentence or two. Also, i see that you are ok with having 600 million cars on our roads. I dont know how to fit that many no. cars in our context. If u understand what that no. means and it's effects pls enlighten me how to make that possible. I am eager to learn a few new things. Thnx.

[carboy]

Originally Posted by 46TheDoctor

Carboy, i request you to interprete my post in it's entirety and not just in a sentence or two.

That's what I thought I was doing it.

Originally Posted by 46TheDoctor

Also, i see that you are ok with having 600 million cars on our roads.

I don't know. But I know that I am not OK with your method of reducing it.

Originally Posted by 46TheDoctor

I dont know how to fit that many no. cars in our context. If u understand what that no. means and it's effects pls enlighten me how to make that possible. I am eager to learn a few new things. Thnx.

How about don't allow any cars at all. Let everyone take public transport, no exceptions. If everyone was forced to take public transport including the people with influence, then public transport is bound to get better, right?

Note, I am not proposing this plan seriously, but I think it's as good as your plans, only that more than just the middle class is inconvenienced.

[ambivalent_98]

This thread brings up a really good topic. Opinions will flow back and forth and as someone said the Automotive industry just represents one part of the multi-faceted India Inc as it is known. Well lack of clear direction inspite of having an economist as PM (policy maker) and Prime Minister is the root cause. I am no economist so I have no inkling about fiscal deficit or all those heavy duty words used in the papers. What I do see is that inspite of demand and supply being there no one is willing to help both sides. The supply is being affected by taxes which in turn affects the demand due to price hikes. So in general if the producer and consumer are both willing to rise against this maybe the government can wake out of its slumber.
If I want to buy and there is someone to sell and we agree at the price point I think this should be encouraged and not weighed down by unfair rules / laws / taxes.

[46TheDoctor]

Originally Posted by carboy

That's what I thought I was doing it.



I don't know. But I know that I am not OK with your method of reducing it.



How about don't allow any cars at all. Let everyone take public transport, no exceptions. If everyone was forced to take public transport including the people with influence, then public transport is bound to get better, right?

Note, I am not proposing this plan seriously, but I think it's as good as your plans, only that more than just the middle class is inconvenienced.

My Friend Carboy,
I have never said in my post that only rich should buy cars and poor should take public transport. I dont care who buys them whether rich or poor. I have only said that given our high Population Density our govt. needs to keep car population in control.

The solution you have offered could have been implemented in societies where Hukumshahs rule. Definitely not in a democratic country like ours.

The only weapon that democratic govt. has is it's monetory policies. Whenever govt. wants to promote perticular sector, it provides lower taxation and subsidies for them and whenever they want to arrest it's momentum they increase taxation, rate of interests etc. The solution i have offered is in line with these proven principles over centuries in all the democratic govts.

"I dont know" is definitely not a policy any govt. can implement. They have to implement some policy, this or that, irrespective of whether it is convenient or inconvenient for us keeping in mind the bigger picture.

If you have any solution which can be implemented in a democratic country like ours, pls let us know, as always i am eager to learn new things.

Thnx.

[raul]

You can't solve the problem if you can't identify it. Its not too many cars, India has the lowest density of cars per 1000 people, but poor planning, corruption, public transport and long term infrastructure to sustain growth.

How does limiting cars solve any of these issues but just make life easier for the already privileged which is a self serving view that does not engage the larger issues. You want to cure the symptom but not the cause?

The solution is obviously better governance. The only reason there is congestion in cities like Mumbai for instance is unplanned growth and corruption because it suits some people to drive property prices high and make obscene sums of money.

Those who are better off have a responsibility to the larger nation and knee jerk reactions like make cars expensive are self serving. What about growth, how are we going to give better life to people, improve living standards, what about other people's aspirations? Or should just 2% of our population have cars because we can't govern ourselves?

[carboy]

Originally Posted by raul

(snip)
How does limiting cars solve any of these issues but just make life easier for the already privileged which is a self serving view that does not engage the larger issues.
(snip)

Or should just 2% of our population have cars because we can't govern ourselves?

Well, you expressed it far better I ever could.

[ninjatalli]

Numbers are so awesome - you can paint a completely different picture with different numbers.

Originally Posted by raul

You can't solve the problem if you can't identify it. Its not too many cars, India has the lowest density of cars per 1000 people, but poor planning, corruption, public transport and long term infrastructure to sustain growth.

Try looking at the problem with the figure of density of cars per sq km and with respect to similarly populated developing countries. Not US, not Europe. And then check if the problem statement remains the same.

Originally Posted by raul

How does limiting cars solve any of these issues but just make life easier for the already privileged which is a self serving view that does not engage the larger issues. You want to cure the symptom but not the cause?

The solution is obviously better governance. The only reason there is congestion in cities like Mumbai for instance is unplanned growth and corruption because it suits some people to drive property prices high and make obscene sums of money.

Those who are better off have a responsibility to the larger nation and knee jerk reactions like make cars expensive are self serving. What about growth, how are we going to give better life to people, improve living standards, what about other people's aspirations?

Better governance is certainly one important aspect of the solution. But how to implement it; what all external aspects to keep in consideration (e.g. environment); what are the market conditions (fuel availability, fiscal deficit, etc) - everything needs to be considered.

Better infrastructure/unplanned growth/corruption are obvious problem areas - and on a realistic manner I doubt if any of us are going to see the end to it.

Do note - the doc hasn't recommended his approach as the best "solution"; just that he's voicing aspects which seriously need to be taken into consideration by the vast majority (=us).

Originally Posted by raul

Or should just 2% of our population have cars because we can't govern ourselves?

Wonder how you got the 2% figure from the doc's post! I'll give my take of it - even with a perfectly functioning government in an utopian market, can we ever sustain 98% of our population having cars?

[RadiantKarma]

Haven't gone through the full thread. My apologies if I am repeating.

Originally Posted by GTO

If the Government thinks hefty taxation on diesel cars will lead to market recovery for petrols, it is grossly mistaken.

The hefty tax is nowhere intended for recovery of the car market but to discourage sale of diesels in passenger car segment to ultimately minimize / prevent the rich from enjoying the benefits of diesel 'subsidy'.

To such an important industry, is the Government supposed to provide stimulus or deterrence?

I can understand your frustration, but we live in a vibrant democracy, where the KPI of the government is decided to a great extent by the poor and illiterate. Government obviously has different ideas of what is important!

Just my two cents.

P.S. I am against any additional taxes on diesel car, and fully in favour of aligning the taxes on diesel and petrol.

May be OT: The differential taxation/subsidy regime based on a perception of affordability of the beneficiary group is distortionary in nature and often tends to keep the so-called luxury items permanently out of the reach of lesser folks who could have otherwise benefited from it. Thank Heavens that the mobile revolution happened too fast for the government to comprehend, else this erstwhile luxury item called mobile would have been taxed out of the reach of crores of people.