India's car economy leaves the middle class fuming

Economic Times

23-05-2025

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The American way of life in the second half of the 20th century came to be synonymous with big cars, even bigger trucks, and the sprawling freeways on which they scurry about like purposeful ants. Cheerleaders point to productivity growth and the 24 cents private industry saved for every dollar invested in the highway network; critics talk about communities gutted by asphalt and the weakening of social ties in large cities. Nearly 75 years later, the car economy — with all its promises and pitfalls — has latched on to a new host half a world away.At 6 million-plus kilometers (4 million miles), India's road network is now the second largest in the world after the US, according to official data from New Delhi. Leave aside the vast differences in their quality, the most-populous nation has more than twice as many kilometers of roads per square kilometer of land as the US, a much bigger country by size. China, which has built a lot of highways but chosen highspeed trains as the focal point of transport, has a much lower density.For intercity travel, India's template ought to have been 21st-century China, not 20th-century America. The fastest train journey between Chennai and Bengaluru, two hubs of activity in southern India, takes over four hours. In that time, one could go from Beijing to Shanghai, a distance nearly four times greater. Whoosh, the Jakarta-Bandung line that Indonesia built with Beijing's help, is a good model. New Delhi, however, doesn't want a new dependence on China, even though its own first high-speed line, being built with Japan's shinkansen technology, is running years late.Roads continue to hog the limelight. Much of India's national highway system was built in the past 25 years. It has been the country's single-largest infrastructure development, ahead of railways and power, with nearly $30 billion invested last year. But since the network has been expanded with expensive debt, the cost to users is high.A still-small, car-owning middle class (fewer than one in 10 households) is feeling squeezed by the $7 billion it pays in tolls every year. The National Highway Authority, which racked up more than $40 billion in debt, is deleveraging. It's selling assets to private operators and investment trusts; it's also securitizing a part of its portfolio. But no matter who owns them, debt financing means roads still have to generate revenue. The burden on motorists will only swell as new highways get constructed.The US confronted the debt-financing problem well before President Dwight Eisenhower started the interstate highway program in 1956. Toll Roads and Free Roads, a 1939 report prepared for Congress, rejected the usage-fee option as revenue from traffic in many places wouldn't be enough to retire the bonds needed to back them. So the funding came from the government, which taxes motorists on gasoline and diesel.However, Indian motorists are paying 30% more for fuel than the average American. Then there is the vehicle itself. The auto industry complains that hefty taxes have put cars in the same category as drugs or alcohol. Half the cost of a new SUV is tax. It isn't hard to see why consumers are unhappy. The logistics industry is thrilled, though. The market share of roads in freight transport has grown to 65%. Some of it has come at the expense of the British-built railways, once the cornerstone of the sub-continent's urbanization.Blue-collar migrant workers don't have a choice. Trains moving at slow speeds of 35 to 50 kilometers per hour connect their homes in villages to their workplaces in cities. For the middle class, however, the romance of the Great Indian Railway Journeys has faded. Just like in the US, they're being pushed toward highways for relatively shorter distances and to air travel for the rest. This is when a dozen small airports haven't had a single passenger in months, according to Bloomberg News. Within cities, subways are coming up even in places where they aren't a practical option. Meanwhile, between cities, 'range anxiety' on highways means slow adoption of electric vehicles.No wonder then that roads accounts for 93% of carbon emissions from transport, compared with 84% in the US and 81% in China. 'Our malfunctioning toll plazas, with their long queues, cause waste of fuel, underutilization of the vehicle fleet, loss of productivity, and contribute to intense pollution,' says Anil K. Sood, a Hyderabad-based public policy analyst.In a deeply unequal society like India's, the cost of a car-centric economy is felt disproportionately by buyers of entry-level hatchbacks; they have practically gone on strike. Things are serious enough for the government to consider proposals like an annual highway pass to lower the load. But those will at best bring temporary relief. Better public transport is what will make the middle class breathe easy. Not cars.