Making sense of: The One Lakh Car

Of course the Tata’s fabled one-lakh car is a civil disaster waiting to happen. Looking at our choked streets, and in Mumbai at our choked six-lanes-each-way Express Highway, it is not apparent to the casual observer that what is required here is more cars. Infact, an alien from outer space would easily surmise that cars are robbing people of their mobility instead of the opposite and what is required is less cars, not more. So is the collective wisdom of the Tata Group so deficient in common sense that it cannot see the obvious? While rank incompetence can always serve as an explanation, it might also be instructive to speculate about other reasons for the existence of such an animal.

a) Money: Before you have a go at me for advancing overly simplistic arguments, let me clarify that I do not mean “Make car for X. Sell for X + Y%”. Of course, it is not possible to sell a car for Rs. 1 lakh and make money (even if you have gotten the land at “attractive rates” from a “state government eager for investment”). With taxes at 50%, you would have to make the car for less than Rs. 70,000 to sell it for a lakh and with an opportunity cost of say 20-25%, it wouldn’t make sense to produce the car for more than say Rs. 55,000 - the cost of a largish TV. And don’t forget, that doesn’t just include material costs but the cost of all that R&D as well. So what makes sense here? Did someone say Tata Finance? Thank you. Those of you who read blog posts like good little boys and girls and follow referenced links must have seen this amazing video - Banking and Scheming [If you haven’t please do so now. Anoop….not later. Now. Yes, all 5 parts.] which provides one with a little Theory Of Everything to do with economics.
Now that you’ve seen the video you will understand that the expansion of credit, or more accurately the continued and incessant expansion of credit is the cornerstone of “modern” economics. In this sense, modern economics does closely resemble a cancer except that entities that operate at the molecular level do not have an ethical framework and so are blameless.

So, as we have learned, the one thing that is most essential to the modern economies is consumption and not just your ordinary “let me spend some of my savings” kind of consumption that does no one any good but rather the “hey, let me take a loan and buy a car” kind of spending. The number of people that might take a loan to buy a three or five or fifteen lakh rupee car are few as compared to the number, the vast multitudes infact, who are eligible for a Rs. 1 lakh loan. The bus sucks, my colleague just died on his bike last week and the trains are a sweat massage but if I can soooomehow stash together a few thousand rupees, I too can sit in traffic jams in air-conditioned comfort. Hey, that’s not such a bad deal. It’s not like this bus is moving anyways. Forget about silly notions like “mobility for the masses”, this is Tata saving our fabled 9% growth economy by introducing the Indian heartland to something they can take a loan for.

And boy, are they champing at the bit! [Check out the comments…or is it bot spam?]
b) Control Cars are essentially a divisive tool. Not only do they emphasise the divide between the have’s and the have-not’s, they also divide the have’s. People like to be alone in their cars and who can blame them? In a city and a country where there is always someone inches from you, it must feel nice to have some “personal space”. 3.1 metres of it seems like a dream to the man hanging from the straps in a BEST (yecch!) bus. And this working population - the segment of society that is best equipped with education to organise politically - becomes hopelessly divided behind their steering wheels, their three hour commutes and Radio Mirchi. As Indian society splits at the seams, it is more important than ever to give people something to lose. Like a car.

Along with the car and it’s traffic jams, there will invariably follow the road widening. Bye bye footpaths. Bye bye walking anywhere. In Mumbai it is already impossible to walk more than a few hundred metres anywhere. There remains no option but to get that stinking car. And how does one acquire a car? One goes to work and acquires the money. Bye bye free time. Bye bye political organisation. And if you’re old and need to cross the road to go see the doctor? Too bad for you, you poor bastard. If you’d invested wisely, inflation wouldn’t have eaten away your savings and you wouldn’t have to live in penury. You thought RBI government bonds were a wise investment? I have just lost any sympathy I might have had. But, look at it another way - you’re just a puppet in their hands anyways. This was bound to happen.

You should have organised politically while there were still some open spaces to do it in and still some way to get there and still some time left over from your work day. Now, it is already too late.