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A price based transport policy vs odd-even policy of AAP

and , December 28, 2015, 0 Comments

odd-even-policy-aap-marketexpress-inAir pollution levels in Delhi have reached alarming proportions. Something drastic has to be done to curb pollution emanating from automobiles. But is the odd-even policy of the AAP government in Delhi the best method to deal with the issue? Aren’t there better methods of addressing the problem?.

We would have preferred to see a price based solution to the problem rather than a rationing type of solution. What are some of the price based options of dealing with the problem? Let us have a look. The government can enhance parking fees, especially in major markets of Delhi and other congested destinations. This will discourage people from driving down to these crowded locations.

Secondly, the government can increase taxes on diesel and petrol and this will discourage people from using automobiles. Thirdly, the authorities can levy a heavy tax on the sale of motor cars which would be a measure aimed at discouraging people from buying cars. Fourthly, owners of motor cars should be subject to heavy taxation and the second car should be taxed at a higher rate than the first and so on.

Under a price based disincentive system the public has the freedom to adjust to the economic compulsions that are being imposed on them according to their sweet will. A person who wants to save on paying fuel taxes will travel less, but he is not prohibited from travelling. Under the odd-even policy a commuter is prohibited from travelling on alternate days. A price based transport policy has the advantage that it provides more flexibility while a rationing system is characterized by rigidity.

We shall now look at some of the problems created by the odd-even policy. Take the case of a lower middle-class car owner who has just purchased a small motor car making a huge economic sacrifice in the process. He now finds that he cannot use his car on alternate days, even if it is to take his pregnant wife to hospital.

Take the case of an employee who has purchased a car with the intention of travelling in it to and from office daily. He can now do so only on alternate days. On other days he will again be at the mercy of the crowded bus service in Delhi. If he is a rich man he will buy a second car with a suitable number plate so that he can use both cars on alternate days. If he cannot afford to buy a second car he will end up cursing his unlucky stars. If he can’t buy a new second car he may also reconcile to buying an additional second-hand car or a two-wheeler.

A small industrialist may have purchased just one vehicle to meet his factory’s requirement. Very soon he will be persuaded to buy a second one and the cost of production of his factory will go up.

Many ladies travel to and from office in motor cars. They will now find to their horror that the single car they own can no longer fulfill their requirements. It is, the less well off in this category who will suffer. People who are rich will unhesitatingly invest in a second car or second hand car.

Many eminent persons and public figures in Delhi have openly declared support for this policy. They are fully aware that whatever comes they will never have to travel by public transport. They are either owners of more than one car or their office (sometimes government) will provide them transport facility.

The government wants to experiment with the policy for a fortnight and then examine the results. A two-week experiment will not lead to reliable conclusions. The public’s adjustment pattern of such a policy will become evident only over a period of time. If a commuter is to invest in a second car or two-wheeler he may not do so in the first 15 days. It takes time for people’s plans to crystallize.

The people can adjust to the odd-even policy in a variety of ways. They may buy a second car or second hand car (which is more polluting) or a two wheeler. They may decide to travel by taxi on alternate days. All such outcomes will turn out to be self-defeating to the success of the policy.

The demand for cars in Delhi will go up temporarily. The second-hand car market will also receive a boost. Taxi service providers will fetch more orders. But if taxi owners can ply their taxis only on alternate days it will be a major economic setback to them and many may virtually lose their livelihood.

A policy such as this would have made sense in a city with a good public transport system. But in a city such as Delhi it is just another experiment by an insensitive government that will pile up more and more hardships on the commuting public.