Obsession with fuel prices

Ashok Sreenivas Ranjit Gadgil | Updated on January 20, 2013

At the NDC meeting in December, the Prime Minister stressed that “energy is under-priced in our country”. The next day, the Deputy Chairman of the Planning Commission said that fuel price hikes are necessary to contain the ballooning fiscal deficit. Following these, the Cabinet Committee on Political Affairs virtually deregulated diesel prices on January 17, when it decided that the oil marketing companies can increase diesel prices in “small” steps.

While fuel pricing should undoubtedly be debated, focusing only on pricing – particularly of transport fuels – to the exclusion of everything else does injustice to other policies that can also achieve similar goals. Such policies can also address other issues such as the country’s worsening energy security and trade deficit, and worsening congestion and air pollution in our cities and towns.


Though subsidised diesel prices have led to a rapid increase in diesel vehicle sales, it cannot account for the entire 13 per cent p.a. growth rate of passenger vehicle sales over the last five years, and plays no role in the 11 per cent p.a. growth rate of two-wheeler sales. Instead, citizens with more disposable incomes are opting to buy these vehicles due to the absence of mobility alternatives available to them, and the lack of alternatives can be attributed to the inability or unwillingness of governments to promote other, more efficient modes of transport.

On an average, a bus consumes only about 0.8 litres of fuel per 100 passenger km, as against about 2 litres for two-wheelers and about 8 litres for cars, while non-motorised transport (NMT) modes such as walking and cycling consume no fuel at all (rail-based systems are even more efficient than buses but are much more capital-intensive). Buses and NMT cause less congestion on roads; two-wheelers occupy about 8 times the road space per passenger and cars occupy about 11 times the road space per passenger compared with buses, while walking and cycling occupy negligible space.

Buses and NMT also promote inclusion in two ways. They are typically cheaper to use than two-wheelers and cars, thus making mobility accessible to the poorer people. They are also usable by most citizens, thus making mobility accessible to those who cannot drive, such as senior citizens, children and, with well-designed systems, the disabled. Buses also lead to correspondingly fewer environmentally harmful emissions per passenger-km, while NMT has no tail-pipe emissions at all.

Moreover, a paper published in reputed medical journal Lancet in 2009 shows a positive correlation between greater NMT usage and improved public health because of the regular exercise it involves. Clearly, promoting public transport and NMT aggressively in preference to cars and two-wheelers is a desirable policy option as it would not only reduce fuel consumption – thus improving energy security and reduce the trade deficit, since we import about 80 per cent of our petroleum – but also reduce congestion, improve air quality and make mobility more inclusive in our cities.


It should be emphasised that such an approach is not a maverick or romantic notion. Many ‘world class’ cities are pursuing exactly such policies. Tokyo, Amsterdam, New York, Paris, Copenhagen and other cities have excellent public transport, and many of them aggressively promote walking and cycling by providing large footpaths, safe cycling tracks, ample bicycle parking and innovative schemes such as public bicycle systems.

Cities are also actively trying to curb usage of motor vehicles through measures such as limiting the number of vehicle licences (Singapore, Shanghai), charging vehicles for using roads (London, Stockholm), tearing down infrastructure such as flyovers meant mainly for cars and two-wheelers (Seoul, San Francisco) and restricting private vehicle use in some parts of the city (New York, Paris).


In contrast, Indian cities and towns continue to be in the 20th century thrall of the automobile. They are happy to invest more in infrastructure for cars and two-wheelers than provide better bus services or walking and cycling facilities. This is best illustrated by Government of India’s JNNURM programme, which was expected to only support transport projects compliant with the reasonably progressive National Urban Transport Policy (NUTP).

However, in reality, over 60 per cent of funds approved under JNNURM were for infrastructure such as flyovers and parking lots meant for cars and two-wheelers, and not very useful to users of buses or NMT. Sadly, even the section on energy security in the 12th Plan document approved by the NDC is content to focus only on the supply-side and does not even mention managing demand and improving systemic efficiency.

Consequently, public transport services in most cities are badly run down and NMT neglected. Not surprisingly, a study commissioned by the Ministry of Urban Development predicts that the modal share of two-wheelers and cars in Indian cities is expected to increase from 24 per cent in 2008 to 46 per cent by 2031 in a business-as-usual scenario, while the shares of public and non-motorised transport will drop from 46 per and 30 per cent to 26 per cent and 28 per cent, respectively.

Combined with increasing populations and trip lengths, this is likely to result in tripling the fuel consumption levels in cities. This will not only lead to unsustainable levels of imports, but also make the air of cities more un-breathable.

On the other hand, an aggressive approach towards promoting buses and NMT could see these modes increase their shares in the years to come. Our preliminary analysis suggests that, compared with the business-as-usual scenario, this could result in up to 40 per cent lower fuel consumption in cities in 2031.

An aggressive policy shift towards public transport and NMT is clearly desirable. The examples cited earlier suggest that it is also possible, given the requisite political and administrative will. A good beginning would be to ensure that JNNURM II promotes public and non-motorised transport. If such a policy transformation is not undertaken seriously and the ‘reforms’ stop with fuel pricing, we may win the battle of fiscal deficit but lose the wars of trade deficit and energy security – and be left with dystopian cities.

The authors are with Parisar, an organisation working for sustainable solutions in urban transport.

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Published on January 20, 2013
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