Thursday, July 14, 2016

If there is no car people will take buses.

The price of oil has fallen from $115 per barrel in 2014 to around $46 per barrel today. Cheaper petrol prices has meant that demand for oil has grown by 12.6% in the first 6 months of this year in India, compared to 2015. If oil companies were hoping that India will make up the slack in demand from the rest of the world they are going to be disappointed. Our demand for oil is never going to catch up to that of China. We need 544,000 barrels of oil per day while China needs 2.8 million barrels. Why so much difference? Because our growth in oil consumption is driven by rising use of motorcycles. Last year 16.5 million motorbikes were sold in India, up from 11.8 million in 2010-11, compared to 24.6 million in China but, and here is the massive difference, 25 million cars were sold in China last year, compared to a tiny 3 million in India. In fact, car sales have fallen from 300,000 per month in 2010 to 215,000 per month today. Why? Because average Indian salary is $1,440 per annum, compared to $9,000 per annum in China. Aslo because since independence our politicians have defined India as a poor country and have been against car ownership. More than 20% of workers walk to work and less than 15% use public transport. Around 2.7% use cars or jeeps and 3% use either autorickshaw or taxis. Of the 4 metro cities, only 2.93% use a car to go to work in Kolkata, it is 4.78% in Mumbai and 6.14% in Chennai. Delhi comes first where 10.79% drive a car to work. Why so few people own cars in India? Because cars are expensive, about 5 times the average annual salary, cars use more petrol, roads are narrow and politicians are always looking for ways to penalise car owners. Thus, Delhi Chief Minister forced restrictions on car usage even though it showed no improvement in pollution levels. He is threatening to bring it back again in winter, maybe to increase earnings of autorickshaws. Some suggest introducing congestion charges on cars, as is the case in London. Others are suggesting increasing parking charges to astronomical levels. So how will people travel? There is the metro, but most people need some transport to get to a metro station. Besides trains are already overcrowded during peak hours. The government proposes to buy 25 electric buses but Delhi needs 10,000 more buses to provide a proper service. In last 5 years the Delhi Transport Corporation lost Rs 50 billion so we can imagine how much more it will lose with more buses. Some countries have over 600 cars per 1000 people, while India was said to have just 32 cars per 1000 people in 2015. If politicians do not want cars why is the government looking to spend so much on building highways? While a German company is designing a flying car by 2018 we are going back to bullock carts. If we are not allowed to own car stop manufacturing them. 

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