India's low-cost car may prove too high a price to pay
Curtesy by Space Daily

The launch Thursday of India's low-cost car at just 2,500 dollars points the way to a higher standard of living for the billions of people in the developing world but at the price of increased pollution, congestion and energy consumption.

"Global growth is profiting" from the rapid growth of the Asian giants, China and India, and their catching up with the developed countries "should be welcomed," said Veronique Riches-Flores, an economist with Societe-Generale.

The trouble is that their breakneck growth -- likely at above 11 and nine percent respectively last year -- means massive environmental costs come with the improved standard of living their people can now aspire to.

China has been the factory floor of the world since the 1990s, churning out an increasingly sophisticated range of consumer goods from Apple iPods to computers and cars, while India is fast catching up.

The great changes can be charted over the years: at first workers were content with bicycles, then moved up to mopeds and more powerful motorcycles as they got more money, and now they are turning their eyes to the next status symbol -- a car.

It is precisely this transformation that India's Tata Group seeks to capitalise on with its Nano, the world's cheapest production car.

The echo of the Apple Nano MP3 player product line is probably deliberate, with analysts saying the no-frills vehicle could revolutionise how millions in India and elsewhere travel.

The Tata Nano is a landmark in the history of transportation, claimed 70-year-old tycoon Ratan Tata, the head of the giant conglomerate, while rejecting fears the spartan car would add to congestion and pollution.

The Tata chief said he had wanted to make "a safe, affordable and all-weather transport -- a people's car, designed to meet all safety standards and emissions laws and accessible to all."

The reality could be different, critics say.

The International Energy Agency (IEA) estimates that the number of cars in China could grow seven times by 2030 to 270 million, representing a huge first-time buyer market of what will most likely be lower cost models.

It is easy to imagine what the consequences could be in terms of congestion and pollution after just a short visit to Beijing, Delhi or any other major city in the two countries.

"In my view this represents a bankruptcy of policy as far as transport options are concerned," said Rajendra Pachauri, head of the UN's climate panel which won the Nobel Prize last year.

"If our roads are going to be flooded with these cars by a few million each year, what is that going to do? Every car that goes on the road is going to use road space. We're only adding to congestion" and increasing pollution, he said.

Then there is the impact on oil -- which currently trades just below all time highs of 100 dollars per barrel -- and on the raw materials such as steel and rubber needed to build all these cars.

In the past several years, oil and metals have risen steadily to record levels on growing demand, driven in large part by China and now India and other developing countries.

As their standard of living rises in line with their economic progress, so in turn do their peoples' aspirations, resulting in increased demand for better quality food and other goods, putting their prices under pressure too.

For 2008, Chinese and Indian demand for raw materials shows no sign of slackening off, said Philippe Chalmin, economics professor at Paris Dauphine university.

The IEA estimates the two countries' demand for energy will grow at least 3.0 percent a year annually through to 2030, compared with the global average of 1.8 percent.

Such growth rates have inevitable environmental consequences, with China having just overtaken the United States to become the world's largest producer of the greenhouse gases held responsible for global warming.

By 2010, China will likely overtake the United States as the world's largest energy consumer, the IEA projects.

Riches-Flores of Societe Generale said that if China and India grew at a "more measured pace, it would be less worrying."