Rs 14,000 crore subsidy proposed for hybrid, electric cars

The Times of India , Tuesday, July 08, 2014
Correspondent : Pyaralal Raghavan
Good for a greener future

Government is readying a scheme to encourage green vehicles. Heavy industry ministry has sought finance ministry’s clearance to give subsidy ranging from 35% for pure electric vehicles to 15% for mild hybrids. But this is an unusual subsidy scheme in that it will save much more than it will cost. Over a six-year period, it’s estimated that an outlay of Rs 14,000 crore will yield savings of Rs 60,000 crore in fossil fuel usage. Environmental profits are as certain. Examples from rest of the world show that tackling the climate change challenge demands visionary government policies. Subsidising green vehicles is definitely visionary and welcome.

Transport is responsible for a significant proportion of emissions all over the world, because of petroleum-based products used in internal combustion engines. In countries like India transport is a rapidly expanding sector and hence pollution an increasing health hazard. Checking this menace demands gradually moving towards greener transport. Again, the lesson from around the world is that government incentives can get people off fossil fuel — boosting sales of green vehicles, reducing greenhouse gas emissions, diesel fumes and other toxic by-products of internal combustion. Many countries actually top off tax breaks with perks like no tolls, free parking and free charging at municipal stations.

The proposed scheme doesn’t just envision more breathable cities. It should also give the domestic car industry a healthy boost. Various Indian auto majors are ready and eager to up their eco-friendly game, as soon as the Centre’s subsidy scheme for electric vehicles is actually introduced. Note that the previous government had also moved in this direction, with Manmohan Singh himself commending it highly. With a new government at the helm, home-grown majors are hoping this scheme will finally take off. For the rest of us, greener transport will mean cleaner air.

The government’s move to provide a subsidy for electric and hybrid cars to partially defray the costs of running the vehicle is a hare brained idea. Providing a subsidy of around Rs 1 lakh for a car costing Rs 33 lakh, as indicated in news reports, will be of no great value to the purchaser but will leave the government with a large subsidy outgo of around Rs 14,000 crore in the medium term, when government is struggling hard to cut wasteful expenditures and target welfare spending to the most needy.

Apart from wastage of government funds that are more desperately needed elsewhere such subsidies are also meaningless as they do little to protect the environment which is the very raison d’etre of such government schemes. This is because the bulk of power produced in the country, which will be used for charging electric cars, is produced by thermal plants using coal, which is very polluting, and not by nuclear power or from other renewable sources where such emissions are minimal. So by favouring electric power over gasoline the government is only shifting environment damage from urban areas, which will be using the less polluting subsidized cars, to rural locations, where most thermal plants are situated. This does little to serve the environmental cause and only shifts the problem from one point to another.

Then there are other costs that electric and hybrid cars inflict on the environment mainly through their use of large and powerful batteries which are used for running them. Batteries are pollutants which carry dangerous chemicals that are costly to dispose of. So subsidies that increase use of batteries are a poor choice. Overall such short-sighted programmes for promoting electric and hybrid cars will damage the environment as well as finances.

 
SOURCE : http://blogs.timesofindia.indiatimes.com/toi-edit/rs-14000-crore-subsidy-proposed-for-hybrid-electric-cars/
 


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