The Indian car market is already on the high boom and the demand for the luxury car market are growing in a fast pace.
Tata Nano, the people’s car has invaded the car market but not in the luxury car segment in India. There are no bounds for a car lovers’ passion for the finest dream machine on wheels to find their way to the cellars of the rich and famous.
Luxury carmakers have done a thorough study on the Indian buyers and the Indian car market and are aware of their choice and desires of their dream car. And that help them to move steadily with their plans to manufacture and / or sell luxury cars for the Indian market. The study reveal that, the current market for the luxury cars in India is estimated 4,500-5,000 units per annum, which is expected grow to 10,000 units by 2010.
Audi A4 sedan will be rolling out in India from Audi India. This new generation model was launched recently launched in Europe and now it is being brought to India simultaneously. Initially the car will be imported but will carry the price of a locally assembled car.
Mitsubishi Motors will be also rolling out its luxury sedan, the Lancer Evolution X by early 2009. Currently Mitsubishi does not have any plan to manufacture this luxury sedan locally and so it will be completely imported. This would mean that the price of the Mitsubishi Lancer Evolution X will be very high. The price of Lancer Evolution X is priced close to Rs 13 lakh globally. But with the imposed duties on import, the cost may go up to Rs 21.70 - Rs 23.5 lakh.
Ferrari one of the big car brands is expected to hit the Indian roads by 2010 and this decision was taken after the Magic India Discovery tour. After the thorough study of the Indian market, Ferrari decided to enter the Indian car market very soon.
May be, the growing demand prompted style guru, Dilip Chabria to showcase his super luxury concept car ‘Amberoid’, that was displayed recently held Auto Expo in New Delhi. This Amby tcosts a neat Rs4 crore.
Amby is adorned with a sleek instrument panel backed by a satellite navigation system, rear vision camera, three LCD televisions, Internet and videoconferencing-enabled flat bed and multi-coloured mood lighting, now this is what we call it as a royal ride!
Showing posts with label press. Show all posts
Showing posts with label press. Show all posts
Lassen's from Tata's Nano
The breakthrough innovations of the $2,500 Nano car carry a lot of important lessons for Western executives
The announcement last month by Tata Motors of its newest car, the Nano, was revealing on many levels. The announcement generated extensive coverage and commentary, but just about everyone missed the Nano's real significance, which goes far beyond the car itself.
But, O.K., let's start with the car itself-particularly the price. At about $2,500 retail, the Nano is the most inexpensive car in the world. Its closest competitor, the Maruti 800, made in India by Maruti Udyog, sells for roughly twice as much. To put this in perspective, the price of the entire Nano car is roughly equivalent to the price of a DVD player option in a luxury Western car. The low price point has left other auto companies scrambling to catch up.
Thinking Outside the Patent Box
How could Tata Motors make a car so inexpensively? It started by looking at everything from scratch, applying what some analysts have described as "Ghandian engineering" principles-deep frugality with a willingness to challenge conventional wisdom. A lot of features that Western consumers take for granted-air conditioning, power brakes, radios, etc.-are missing from the entry-level model.
More fundamentally, the engineers worked to do more with less. The car is smaller in overall dimensions than the Maruti, but it offers about 20% more seating capacity as a result of design choices such as putting the wheels at the extreme edges of the car. The Nano is also much lighter than comparable models as a result of efforts to reduce the amount of steel in the car (including the use of an aluminum engine) and the use of lightweight steel where possible. The car currently meets all Indian emission, pollution, and safety standards, though it only attains a maximum speed of about 65 mph. The fuel efficiency is attractive-50 miles to the gallon.
Hearing all this, many Western executives doubt that this new car represents real innovation. Too often, when they think of innovation, they focus on product innovation using breakthrough technologies; often, specifically, on patents. Tata Motors has filed for 34 patents associated with the design of the Nano, which contrasts with the roughly 280 patents awarded to General Motors (GM) every year. Admittedly that figure tallies all of GM's research efforts, but if innovation is measured only in terms of patents, no wonder the Nano is not of much interest to Western executives. Measuring progress solely by patent creation misses a key dimension of innovation: Some of the most valuable innovations take existing, patented components and remix them in ways that more effectively serve the needs of large numbers of customers.
A Modular Design Revolution
But even this broader perspective fails to capture other significant dimensions of innovation. In fact, Tata Motors itself did not draw a lot of attention to what is perhaps the most innovative aspect of the Nano: its modular design. The Nano is constructed of components that can be built and shipped separately to be assembled in a variety of locations. In effect, the Nano is being sold in kits that are distributed, assembled, and serviced by local entrepreneurs.
As Ratan Tata, chairman of the Tata group of companies, observed in an interview with The Times of London: "A bunch of entrepreneurs could establish an assembly operation and Tata Motors would train their people, would oversee their quality assurance and they would become satellite assembly operations for us. So we would create entrepreneurs across the country that would produce the car. We would produce the mass items and ship it to them as kits. That is my idea of dispersing wealth. The service person would be like an insurance agent who would be trained, have a cell phone and scooter and would be assigned to a set of customers."
In fact, Tata envisions going even further, providing the tools for local mechanics to assemble the car in existing auto shops or even in new garages created to cater to remote rural customers. With the exception of Manjeet Kripalani, BusinessWeek's India bureau chief, few have focused on this breakthrough element of the Nano innovation (BusinessWeek.com, 1/10/08).
This is part of a broader pattern of innovation emerging in India in a variety of markets, ranging from diesel engines and agricultural products to financial services. While most of the companies pursuing this type of innovation are Indian, the U.S. engineering firm, Cummins (CMI) demonstrates that Western companies can also harness this approach and apply it effectively. In 2000 Cummins designed innovative "gensets" (generation sets) to enter the lower end of the power generator market in India. These modular sets were explicitly designed to lower distribution costs and make it easy for distributors and customers to tailor the product for highly variable customer environments. Using this approach, Cummins captured a leading position in the Indian market and now actively exports these new products to Africa, Latin America, and the Middle East.
"Open Distribution" Innovation
We have called this "open distribution" innovation because it mobilizes large numbers of third parties to reach remote rural consumers, tailor the products and services to more effectively serve their needs, and add value to the core product or service through ancillary services. Three innovations in products and processes come together to support "open distribution:"
o increased modularity (both in products and processes)
o aggressive leveraging of existing third-party, often noncommercial, institutions in rural areas to more effectively reach target customers
o creative use of information technology, carefully integrated with social institutions, to encourage use and deliver even greater value.
Modular designs combined with creative leverage of local third-party institutions help participants to get better faster. Companies such as Tata and Cummins are going far beyond "customer co-creation" in the narrow sense of soliciting isolated ideas from customers. Instead, they are building long-term personal relationships with customers, enriched by the specialized capabilities of broad networks of third parties that generate much deeper insight into customer needs and afford opportunities to tailor value.
Such innovations are quite different from those in the retail distribution systems pioneered by companies such as Dell (DELL) and the leading big-box retailers. These U.S. companies developed completely self-contained and highly standardized facilities and services for customers. But the open-architecture approach pioneered by Indian companies may offer much greater opportunity to deliver more tailored value to customers than the closed-architecture U.S. approach. The techniques initially developed to reach poor and rural customers may have even greater potential when used to reach highly demanding, affluent, urban customers in Western economies.
Welcoming Users Back into the Design Loop
The Tata Motors/Nano approach contrasts with the strategy of most other manufacturers. For more established automakers each new model represents an advance in tight integration, with more and more of the functionality deeply embedded in electronics that truly represent a "black box" to the customer. The days of customizing cars to personalize them and push their performance limits are rapidly receding into distant memory for the average customer. Yet, as Kathleen Franz, makes clear in her wonderful book, Tinkering: Consumers Reinvent the Early Automobile, it was the open design of early automobile models that blurred the lines between consumption and invention and led to a wave of innovations that were later embraced by the auto industry.
What are the broader lessons that Western executives should learn from this innovation story?
Emerging markets are a fertile ground for innovation. The challenge of reaching dispersed, low-income consumers in emerging markets often spurs significant innovation. Western executives should be careful about compartmentalizing the impact of these innovations on the edge of the global economy. As we suggested in Innovation Blowback, these innovations will become the basis for "attacker" strategies that can be used to challenge incumbents in more developed economies. What's initially on the edge soon comes to the core.
o Find ways to help customers and others on the edge to tinker with your products. Modular and open product designs help engage large numbers of motivated users in tailoring and pushing the performance boundaries of your products, leading to significant insight into unmet customer needs and creative approaches to addressing those needs.
o Pay attention to institutional innovation. Western executives often become too narrowly focused on product or process innovation. Far higher returns may come from investing in institutional innovation-redefining the roles and relationships that bring together independent entities to deliver more value to the market. Tata is innovating in all three dimensions simultaneously.
o Rethink distribution models. In our relentless quest for operating efficiency, we have gone for more standardization and fewer business partners in our efforts to reach customers. As customers gain more power, they will demand more tailoring and value-added service to meet their needs. Companies that innovate on this dimension are likely to be richly rewarded.
John Hagel and John Seely Brown are co-chairman and independent co-chairman, respectively, of the Center for Edge Innovation, a part of Deloitte & Touche USA LLP. John Hagel writes a blog at Edge Perspectives .
The announcement last month by Tata Motors of its newest car, the Nano, was revealing on many levels. The announcement generated extensive coverage and commentary, but just about everyone missed the Nano's real significance, which goes far beyond the car itself.
But, O.K., let's start with the car itself-particularly the price. At about $2,500 retail, the Nano is the most inexpensive car in the world. Its closest competitor, the Maruti 800, made in India by Maruti Udyog, sells for roughly twice as much. To put this in perspective, the price of the entire Nano car is roughly equivalent to the price of a DVD player option in a luxury Western car. The low price point has left other auto companies scrambling to catch up.
Thinking Outside the Patent Box
How could Tata Motors make a car so inexpensively? It started by looking at everything from scratch, applying what some analysts have described as "Ghandian engineering" principles-deep frugality with a willingness to challenge conventional wisdom. A lot of features that Western consumers take for granted-air conditioning, power brakes, radios, etc.-are missing from the entry-level model.
More fundamentally, the engineers worked to do more with less. The car is smaller in overall dimensions than the Maruti, but it offers about 20% more seating capacity as a result of design choices such as putting the wheels at the extreme edges of the car. The Nano is also much lighter than comparable models as a result of efforts to reduce the amount of steel in the car (including the use of an aluminum engine) and the use of lightweight steel where possible. The car currently meets all Indian emission, pollution, and safety standards, though it only attains a maximum speed of about 65 mph. The fuel efficiency is attractive-50 miles to the gallon.
Hearing all this, many Western executives doubt that this new car represents real innovation. Too often, when they think of innovation, they focus on product innovation using breakthrough technologies; often, specifically, on patents. Tata Motors has filed for 34 patents associated with the design of the Nano, which contrasts with the roughly 280 patents awarded to General Motors (GM) every year. Admittedly that figure tallies all of GM's research efforts, but if innovation is measured only in terms of patents, no wonder the Nano is not of much interest to Western executives. Measuring progress solely by patent creation misses a key dimension of innovation: Some of the most valuable innovations take existing, patented components and remix them in ways that more effectively serve the needs of large numbers of customers.
A Modular Design Revolution
But even this broader perspective fails to capture other significant dimensions of innovation. In fact, Tata Motors itself did not draw a lot of attention to what is perhaps the most innovative aspect of the Nano: its modular design. The Nano is constructed of components that can be built and shipped separately to be assembled in a variety of locations. In effect, the Nano is being sold in kits that are distributed, assembled, and serviced by local entrepreneurs.
As Ratan Tata, chairman of the Tata group of companies, observed in an interview with The Times of London: "A bunch of entrepreneurs could establish an assembly operation and Tata Motors would train their people, would oversee their quality assurance and they would become satellite assembly operations for us. So we would create entrepreneurs across the country that would produce the car. We would produce the mass items and ship it to them as kits. That is my idea of dispersing wealth. The service person would be like an insurance agent who would be trained, have a cell phone and scooter and would be assigned to a set of customers."
In fact, Tata envisions going even further, providing the tools for local mechanics to assemble the car in existing auto shops or even in new garages created to cater to remote rural customers. With the exception of Manjeet Kripalani, BusinessWeek's India bureau chief, few have focused on this breakthrough element of the Nano innovation (BusinessWeek.com, 1/10/08).
This is part of a broader pattern of innovation emerging in India in a variety of markets, ranging from diesel engines and agricultural products to financial services. While most of the companies pursuing this type of innovation are Indian, the U.S. engineering firm, Cummins (CMI) demonstrates that Western companies can also harness this approach and apply it effectively. In 2000 Cummins designed innovative "gensets" (generation sets) to enter the lower end of the power generator market in India. These modular sets were explicitly designed to lower distribution costs and make it easy for distributors and customers to tailor the product for highly variable customer environments. Using this approach, Cummins captured a leading position in the Indian market and now actively exports these new products to Africa, Latin America, and the Middle East.
"Open Distribution" Innovation
We have called this "open distribution" innovation because it mobilizes large numbers of third parties to reach remote rural consumers, tailor the products and services to more effectively serve their needs, and add value to the core product or service through ancillary services. Three innovations in products and processes come together to support "open distribution:"
o increased modularity (both in products and processes)
o aggressive leveraging of existing third-party, often noncommercial, institutions in rural areas to more effectively reach target customers
o creative use of information technology, carefully integrated with social institutions, to encourage use and deliver even greater value.
Modular designs combined with creative leverage of local third-party institutions help participants to get better faster. Companies such as Tata and Cummins are going far beyond "customer co-creation" in the narrow sense of soliciting isolated ideas from customers. Instead, they are building long-term personal relationships with customers, enriched by the specialized capabilities of broad networks of third parties that generate much deeper insight into customer needs and afford opportunities to tailor value.
Such innovations are quite different from those in the retail distribution systems pioneered by companies such as Dell (DELL) and the leading big-box retailers. These U.S. companies developed completely self-contained and highly standardized facilities and services for customers. But the open-architecture approach pioneered by Indian companies may offer much greater opportunity to deliver more tailored value to customers than the closed-architecture U.S. approach. The techniques initially developed to reach poor and rural customers may have even greater potential when used to reach highly demanding, affluent, urban customers in Western economies.
Welcoming Users Back into the Design Loop
The Tata Motors/Nano approach contrasts with the strategy of most other manufacturers. For more established automakers each new model represents an advance in tight integration, with more and more of the functionality deeply embedded in electronics that truly represent a "black box" to the customer. The days of customizing cars to personalize them and push their performance limits are rapidly receding into distant memory for the average customer. Yet, as Kathleen Franz, makes clear in her wonderful book, Tinkering: Consumers Reinvent the Early Automobile, it was the open design of early automobile models that blurred the lines between consumption and invention and led to a wave of innovations that were later embraced by the auto industry.
What are the broader lessons that Western executives should learn from this innovation story?
Emerging markets are a fertile ground for innovation. The challenge of reaching dispersed, low-income consumers in emerging markets often spurs significant innovation. Western executives should be careful about compartmentalizing the impact of these innovations on the edge of the global economy. As we suggested in Innovation Blowback, these innovations will become the basis for "attacker" strategies that can be used to challenge incumbents in more developed economies. What's initially on the edge soon comes to the core.
o Find ways to help customers and others on the edge to tinker with your products. Modular and open product designs help engage large numbers of motivated users in tailoring and pushing the performance boundaries of your products, leading to significant insight into unmet customer needs and creative approaches to addressing those needs.
o Pay attention to institutional innovation. Western executives often become too narrowly focused on product or process innovation. Far higher returns may come from investing in institutional innovation-redefining the roles and relationships that bring together independent entities to deliver more value to the market. Tata is innovating in all three dimensions simultaneously.
o Rethink distribution models. In our relentless quest for operating efficiency, we have gone for more standardization and fewer business partners in our efforts to reach customers. As customers gain more power, they will demand more tailoring and value-added service to meet their needs. Companies that innovate on this dimension are likely to be richly rewarded.
John Hagel and John Seely Brown are co-chairman and independent co-chairman, respectively, of the Center for Edge Innovation, a part of Deloitte & Touche USA LLP. John Hagel writes a blog at Edge Perspectives .
Tata Nano: Pride and Joy
The Tata Nano might be the world's cheapest car but there was nothing cut-price about its launch.
After weeks of anticipation and a morning of wall-to-wall build-up on local television networks, which covered the event live, India's "people's car" rolled on stage to the epic strains of Richard Strauss's Also Sprach Zarathustra, with Ratan Tata, the chairman of Tata Motors, at the wheel.
You could almost hear the cheer going up across India - and you couldn't hear yourself think in the auditorium - as waiting journalists, members of the public and the minister of commerce, Kamal Nath, broke into spontaneous and euphoric applause.
Tata (below), suave and 70, appeared to have a lump in his throat as he announced the realisation of a dream that has taken more than four years and 500 engineers to bring to reality.
This was more than just the launch of a car, he said: it was the jumping-off point for an ideal that its designers hope will revolutionise the lives of millions of Indians, most of whom live in rural areas many miles from the nearest bus stop.
A hologram of an Indian family four-up on a motorbike - a familiar sight in the country - reminded the audience that while the Nano might not have airbags and European safety certificates, it's a good deal safer than a two-wheeler.
Mr Tata spoke with feeling: "I observed families riding on two-wheelers - the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family.
"Today, we indeed have a people's car, which is affordable and yet built to meet safety requirements, to be fuel-efficient and low on emissions." Tata's security men pleaded in vain for people not to scratch the car as enthusiasm swept away the choreographed launch ceremony and more than 1,000 delegates and journalists fought for a glimpse of the new machine.
And for Indians in the audience, the launch of Tata's wonder-car was an emphatic, jubilant statement to the world of what India is capable of delivering.
After weeks of anticipation and a morning of wall-to-wall build-up on local television networks, which covered the event live, India's "people's car" rolled on stage to the epic strains of Richard Strauss's Also Sprach Zarathustra, with Ratan Tata, the chairman of Tata Motors, at the wheel.
You could almost hear the cheer going up across India - and you couldn't hear yourself think in the auditorium - as waiting journalists, members of the public and the minister of commerce, Kamal Nath, broke into spontaneous and euphoric applause.
Tata (below), suave and 70, appeared to have a lump in his throat as he announced the realisation of a dream that has taken more than four years and 500 engineers to bring to reality.
This was more than just the launch of a car, he said: it was the jumping-off point for an ideal that its designers hope will revolutionise the lives of millions of Indians, most of whom live in rural areas many miles from the nearest bus stop.
A hologram of an Indian family four-up on a motorbike - a familiar sight in the country - reminded the audience that while the Nano might not have airbags and European safety certificates, it's a good deal safer than a two-wheeler.
Mr Tata spoke with feeling: "I observed families riding on two-wheelers - the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family.
"Today, we indeed have a people's car, which is affordable and yet built to meet safety requirements, to be fuel-efficient and low on emissions." Tata's security men pleaded in vain for people not to scratch the car as enthusiasm swept away the choreographed launch ceremony and more than 1,000 delegates and journalists fought for a glimpse of the new machine.
And for Indians in the audience, the launch of Tata's wonder-car was an emphatic, jubilant statement to the world of what India is capable of delivering.
Small wheels, big lessons
The flutter created by the Nano, Tata Motors' new low-cost car, will not subside anytime soon. This car, costing about a lakh rupees ($2,500), is half the cost of the next cheapest car, made in China ($5,000). It reportedly meets the required benchmarks on safety, fuel efficiency and emission norms. Sceptics question these claims, asking us to wait for drive tests to validate them. However, the widespread enthusiasm accorded to the car represents a new middle class euphoria. People have experienced a sudden sense of empowerment in the possibility of their steadily rising incomes bringing the fruits of development within their grasp. While pedestrians opt for the cycle, and the cyclist yearns for a two-wheeler, the vast majority of the urban working class aspire to a car for safety, status and respectability. Nano helps them make this psychological transition.
We have often been told by the likes of CK Prahalad that there is enormous opportunity at the bottom of the pyramid. Nano is yet one more example. The rapidly increasing teledensity in semi-urban and rural areas is another. I believe that embracing innovative low-cost services has wider benefits for the Economy. Illustratively, low-cost housing, affordable educational hubs and reliable healthcare facilities. Ingenuity and engineering skills can drive fundamental changes in the Economy in multiple ways. It is well known that agriculture now yields only 18% of India's GDP but provides livelihood to over 58% of the population. Massive urbanisation has scarcely begun. It is inevitable that we would need to provide employment to millions through non-agricultural means. We have to improve agricultural productivity, moving it up the value-addition chain, while supporting labour-intensive manufacturing. If done, this could mark the start of our effort to fill "the missing middle", with comparative factor endowments sharpening our competitive edge.
Building self-contained satellite cities entails a daunting pace of urbanisation. Without low-cost housing, affordable education and reliable healthcare, this would not be possible. There are many affirmative action initiatives outlined in the Eleventh Five Year Plan, which, if implemented, can kindle the ingenuity of the corporate sector.
The Nano also provides policymakers an opportunity to correct some manifest distortions. First and foremost, India needs an integrated energy policy. Continued subsidisation of fossil fuel consumption results in multiple distortions of the Economy. The massive under-recoveries from the sale of petroleum products by oil Companies is clearly iniquitous. The subsidies benefit the affluent and compress resources available for social and physical infrastructure. No doubt, the petroleum sector has constituted an acceptably large percentage of indirect taxes. Rationalising the tax structure for petroleum and related products is an independent exercise which cannot be linked with the broader principle of economic costing for multiple forms of energy.
Depoliticising the pricing of petrol, diesel and kerosene would help mitigate environmental degradation, minimise adulteration and free resources for outlay on public goods. It is equally important that even while per capita energy consumption rises, given the current pace of economic development, priority must be accorded to energy efficiency and investment in renewals. Without a rational pricing policy, renewals will remain commercially unviable. We have for long known that subsidising electricity and fuels, not to mention other forms of cross-subsidies, have not proven electorally advantageous to the party in office. Just think of Gujarat and Himachal. India has entered a cycle of multiple elections this year and the next, and so leaving energy policies in a mess at this juncture would be irresponsible governance.
Second, the framework of the Urban Reforms Mission need restructuring. The proposed allocations in the Eleventh Plan for the urban sector are grossly inadequate if it is to cope with the inevitable rapid pace of urbanisation, extend mass transport systems in non-metro cities, and support the development of satellite towns.
Third, India needs an integrated transport policy. This goes beyond improved planning and implementation of rural roads, upgrading district roads and state highways and speedier completion of various components of the national highways project. A coherent approach is needed to improve operations and maintenance, secure better management of vehicular traffic, and apply user charges for road amenities. Highway patrolling, provisioning and economic costing of parking space need attention, too. Besides, our public transport systems remain hopelessly inadequate and inefficient. Perhaps the Delhi Metro example need wider and innovative replication in many other cities as well as emerging satellite configurations. Buses need fiscal incentives apart from improved quality and large investments in driving schools and operations modernisation and maintenance. A sensible transport policy would also need to be multi-nodal, including sensible tariffs for different modes of transport for goods and services. Deregulation and competition have made air travel affordable to millions. Depoliticising railway fares, with an increased dose of competition, will be to everyone's benefit.
The replication of the Nano model in multiple sectors can make growth genuinely inclusive. India needs to plan for rapidly rising rural and middle class aspirations. The time has come for their embedded yearnings to be realised.
- NK Singh,The author is a former bureaucrat. These are his personal views.
We have often been told by the likes of CK Prahalad that there is enormous opportunity at the bottom of the pyramid. Nano is yet one more example. The rapidly increasing teledensity in semi-urban and rural areas is another. I believe that embracing innovative low-cost services has wider benefits for the Economy. Illustratively, low-cost housing, affordable educational hubs and reliable healthcare facilities. Ingenuity and engineering skills can drive fundamental changes in the Economy in multiple ways. It is well known that agriculture now yields only 18% of India's GDP but provides livelihood to over 58% of the population. Massive urbanisation has scarcely begun. It is inevitable that we would need to provide employment to millions through non-agricultural means. We have to improve agricultural productivity, moving it up the value-addition chain, while supporting labour-intensive manufacturing. If done, this could mark the start of our effort to fill "the missing middle", with comparative factor endowments sharpening our competitive edge.
Building self-contained satellite cities entails a daunting pace of urbanisation. Without low-cost housing, affordable education and reliable healthcare, this would not be possible. There are many affirmative action initiatives outlined in the Eleventh Five Year Plan, which, if implemented, can kindle the ingenuity of the corporate sector.
The Nano also provides policymakers an opportunity to correct some manifest distortions. First and foremost, India needs an integrated energy policy. Continued subsidisation of fossil fuel consumption results in multiple distortions of the Economy. The massive under-recoveries from the sale of petroleum products by oil Companies is clearly iniquitous. The subsidies benefit the affluent and compress resources available for social and physical infrastructure. No doubt, the petroleum sector has constituted an acceptably large percentage of indirect taxes. Rationalising the tax structure for petroleum and related products is an independent exercise which cannot be linked with the broader principle of economic costing for multiple forms of energy.
Depoliticising the pricing of petrol, diesel and kerosene would help mitigate environmental degradation, minimise adulteration and free resources for outlay on public goods. It is equally important that even while per capita energy consumption rises, given the current pace of economic development, priority must be accorded to energy efficiency and investment in renewals. Without a rational pricing policy, renewals will remain commercially unviable. We have for long known that subsidising electricity and fuels, not to mention other forms of cross-subsidies, have not proven electorally advantageous to the party in office. Just think of Gujarat and Himachal. India has entered a cycle of multiple elections this year and the next, and so leaving energy policies in a mess at this juncture would be irresponsible governance.
Second, the framework of the Urban Reforms Mission need restructuring. The proposed allocations in the Eleventh Plan for the urban sector are grossly inadequate if it is to cope with the inevitable rapid pace of urbanisation, extend mass transport systems in non-metro cities, and support the development of satellite towns.
Third, India needs an integrated transport policy. This goes beyond improved planning and implementation of rural roads, upgrading district roads and state highways and speedier completion of various components of the national highways project. A coherent approach is needed to improve operations and maintenance, secure better management of vehicular traffic, and apply user charges for road amenities. Highway patrolling, provisioning and economic costing of parking space need attention, too. Besides, our public transport systems remain hopelessly inadequate and inefficient. Perhaps the Delhi Metro example need wider and innovative replication in many other cities as well as emerging satellite configurations. Buses need fiscal incentives apart from improved quality and large investments in driving schools and operations modernisation and maintenance. A sensible transport policy would also need to be multi-nodal, including sensible tariffs for different modes of transport for goods and services. Deregulation and competition have made air travel affordable to millions. Depoliticising railway fares, with an increased dose of competition, will be to everyone's benefit.
The replication of the Nano model in multiple sectors can make growth genuinely inclusive. India needs to plan for rapidly rising rural and middle class aspirations. The time has come for their embedded yearnings to be realised.
- NK Singh,The author is a former bureaucrat. These are his personal views.
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