Electric thoughts

The statement by Mr Carlos Ghosn, CEO, Renault-Nissan, that a subsidy from the Government is needed to make electric cars affordable, is certain to ignite a debate on the subject in India. The assessment is neither radical nor novel as domestic manufacturers with interest in electric vehicles have sought concessions of some kind or the other especially around the Budget time. That such pleas have not found much favour in the past among policymakers in the Government is only to be expected. The Indian economy is not so automobile driven nor its society so rich that the Government will find the necessary political consensus for cash payouts in the manner of the US and many European Governments pushing through ‘cash-for clunker' kind of schemes to stimulate their respective automobile industries.

Promoting transportation of both private and public varieties that involves the use of ‘clean' technologies need not be viewed through the prism of political correctness. There is also a strategic imperative behind making the economy switch over to vehicles that use alternative fuels. For all the excitement generated over recent oil and gas discoveries in the country, the harsh reality is that India is woefully short of crude petroleum reserves and is destined to remain so in the foreseeable future. Projects that involve import substitution are granted some shadow benefits in any social cost-benefit analysis. Funding the acquisition of electric vehicles that use energy generated from a combination of domestic and cheaper imported (high grade thermal coal) fuel sources is a recognition of that principle. Of course, the case for rewarding the superior operational economies of mass rapid rail transportation systems is no less compelling and should be recognised. The average Mumbai commuter experiencing abnormal crush loads in suburban rail travel is deserving of some fiscal support that would enable the Railways to improve the infrastructure and offer a more comfortable journey.

Since the country still struggles with a sizeable electricity deficit, no fiscal indulgence towards electric cars would make sense if the Government does not restructure the policy framework that enables greater investment in conventional and non-conventional sources of electricity generation. After all, the electric vehicles that will mushroom on the roads with fiscal support need electricity in abundance in the first place.

Source Indiacar.com Source : Business Line (Online Edition) (3/23/2010)