Roads, traffic and GDP

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Addressing the problem of slow and chaotic traffic movement could enhance productivity and welfare in India

growth, profit, loss, currency, debt, reforms, investment, recovery, revival, revenue, share, value, stock, economy, returns, investment, gdp

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We are all familiar with the chaotic and slow movement of traffic on roads in many parts of India. And, this happens year after year. It is not that the public authorities are insensitive to this serious problem, but as the French saying goes, the more things change, the more they stay the same.

The chaotic and slow traffic movement causes significant wastage of time and energy, which in turn affects productivity and gross domestic product (GDP). This is not to say that a significant improvement in traffic movement can lead to a big change in the growth rate of GDP. But policy to improve traffic movement is a part of a much larger collection of “small” policy changes, and that collection as a whole can make a big difference to the growth rate of GDP, which has been low relative to the potential. This column is considering one of the very many “small” things that can make a difference.

In any case, improving traffic movement can have significant effects on welfare, even if the effect on GDP of improved traffic movement in isolation is not very much. This is due to factors such as tension, road rage, and “accidents” that are actually waiting to happen. Given its importance, traffic movement needs to be a significant part of development economics and public policy in India. 

Some readers may feel that bad traffic movement is an inherent and inescapable feature of an emerging market and developing economy (EMDE) like India, but this is not correct. There are many ways in which India does not fit in with the standard image of an EMDE. Digital payments are only one example. It is a matter of priorities, which need to change. At the margin, it will, inter alia, help to set up institute(s) of traffic management; we have enough institutes of business management, etc.

Investment can be in tangible assets or intangible assets. Tangible assets include roads. Intangible assets include a sound “system” in place so that traffic movement is smooth and safe. We are spending too much money on tangible assets and very little on intangible assets. Often there is a tendency to spend on wider roads and flyovers (and sometimes even on elevated roads and under-passes). But all this massive spending is often not accompanied by adequate attention to smooth traffic movement. So, the results of large investments in the transport sector are not always satisfactory and sustainable.

We often take pride in world-class highways coming up in India. However, the opportunity cost of a world-class highway is very high. What we need are good highways, but not necessarily world-class highways. The difference between the cost of building a good highway and a world-class highway can be very large. The money saved can be used to improve the roads and/or the traffic movement within cities and small towns. That way the gross time taken from “point to point” can be reduced more meaningfully.

Parking space for vehicles is limited in cities in India. So, often parts of the roads are used as parking spaces! This slows down traffic considerably. But why in the first place do we have limited spaces for parking of cars, buses, trucks, three-wheelers, etc? It turns out that master plans of cities often do not allocate enough spaces for the purpose. Town planners feel that they need to focus on providing land for housing, commerce, etc rather than on relatively less useful purposes like parking. They are not wrong, but we need to take a broader perspective.

Only about 0.2 per cent of national land mass in India is used in the top 10 cities (Das, Aroul and Freybote (ed.), 2019, p. 100)! This shows that there is ample scope for increasing land for cities. This, in turn, paves the way for providing far more spaces for parking (and for other purposes) in existing and new cities. Then the effective size of roads can be increased if fewer vehicles are parked on roads. Accordingly, traffic movement can be much better.

Let us next consider the licensing of drivers. At present the focus in licensing is on checking whether or not a person seeking a licence can drive a vehicle. But there is also a need to check adequately that the applicant can drive without adversely affecting others. A change in licensing policy can help to some extent in improving the movement of traffic on roads.

This column has considered only some aspects of the problem of traffic movement and the corresponding solutions. There is much more. Basically, at the margin, it is important to spend on “systems” in place that can enable smooth and safe movement of traffic rather than building new big roads.

The writer is visiting professor, Ashoka University.

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