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Tuesday, January 08, 2008

The $2,500 (1 lakh) Tata Car

Congratulations to Tata Motors for helping the less fortunate

While Western car manufacturers have been busy developing new petrol-guzzling sport utility vehicles, Ratan Tata has been pushing his engineers to think small. Tata Motors of India is introducing a car that costs $2,500.

Purulia District, India 00022

Before jumping to conclusions about the benefits one thing needs to be made very clear. $2,500 USD translates into approximately 100,000 rupees or 1 lakh. Most people living in rural or urban India can barely imagine having 1 lakh rupees at one time. Therefore 99% of the prospective buyers for the new Tata car will need to go to their local ICICI Bank branch and convince the loan manager that they can indeed pay off such a loan. In many cases two rural buyers will no doubt pool their resources in order to buy one car. Nevertheless, the $2,500 Tata car offers a huge opportunity for buyers smart enough to use such transportation for their immediate financial gain.

My 6 visits to India taught me that millions of rural Indian people are intelligent enough to hold down good jobs but these jobs simply were not located close enough to their homes. Thanks to good primary schools, technology, and the existence of relatively inexpensive colleges, many people living way out in panchayats or small villages do earn college degrees. However, they often find it impossible to get better jobs near their homes. Many people do pack up their belongings and move to larger cities.

In addition to the promise of better pay; urban life in India also brings exposure to much higher costs, polluted air, and water. There is more crime and certainly far more competition for very limited housing. Every year some people do fail to make it in the cities and return home depressed, disillusioned and often very sick.

Millions of other educated Indians are smart enough to see the folly of packing up and moving to a larger city. I often saw young people riding two on a scooter great distances just to get to jobs in a slightly larger town. Thanks to the Tata car, these people will now have a chance to show up to work in cleaner clothes, more rested, and more likely to earn promotions.

No doubt, small business people will use such their Tata car to carry products to a larger market and perhaps get better prices for these crafts and fresher produce. I see the new Tata car offering many of the same benefits of micro-loans, which are currently transforming the lives of many desperately poor around the world.

Western observers will immediately jump to the negative impact of the air pollution caused by one million new fossil-fuel burning cars. People in the lower classes have no concerns for greenhouse gas emissions, nor should they. It is up to the rich and highly educated to address these issues, the lifestyles of the wealthy will always generate the lion’s share of waste and pollution. My suspicion is that a 1 lakh car will barely generate a quarter of the greenhouse gases that a Detroit SUV (assembled in Mexico) produces. I also know that the people buying these cars will not start using them just to drive a few blocks across the panchayat to buy a pack of cigarettes, lottery tickets, and a six-pack of beer. Indians and someday soon Africans, Malaysians, and people of many developing nations will primarily use such a car just like they now use cell phones; to find jobs, make money, and ultimately feed their families.

People in the lower classes have no concerns for greenhouse gas emissions, nor should they. It is up to the rich and highly educated to address these issues, the lifestyles of the wealthy will always generate the lion’s share of waste and pollution. We can only hope that by the time owners of the new Tata cars become wealthy enough to buy a bigger car that automakers will finally agree to make non-polluting models available at affordable prices as well.

Links:

Tata Motors
Tata Unveils 1 Lakh Car
CNN Article
Washington Post
Reuters News
Business Week
LA Times
BBC News on Air Car

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