Revisiting economics of congestion

  • 27/02/2007

Revisiting economics of congestion In our December 31, 2006 issue we raised some questions in the editorial, 'Economics of congestion'. Readers responded. Here is a cross section of views

Theory-practice hiatus
Shreekant Gupta, director
National Institute of Urban Affairs
New Delhi

The article raises a pertinent point: the costs that automobiles impose on society. Economists, in principle, do recognise and accept this point but it has not been translated into actual policy. To my mind, this is partly because we do not have the numbers to factor costs into the price of each car, scooter or other automobiles.

But that is no excuse. The shortcoming is also because of the fragmented nature of bureaucracies: the Union ministry of environment and forests handles air pollution, the Union ministry of shipping, road transport and highways looks after urban transport, while the Union ministry of finance is in charge of taxation.

Perhaps the only country that has come closest to pricing the full social cost of automobile use is Singapore.Here the cost of owning (and using) a car is many times that of its manufactured price.

In the Indian context, one can only see conflict between various ministries and contradiction between government policies. The National Urban Transport Policy, for example, talks of promoting public transport and non-motorised modes, but the country's industrial policy gloats about cars. Even the