A Case of Exploding Nanos

The world’s cheapest car makes an impressive bonfire.

These things happen. If i-pods and laptops can burst into flames, why not the Tata Nano, which, at $2500, runs about even with a 17-inch MacBook Pro?

Mumbai insurance agent Satish Sawant was taking his new Nano home from the showroom on March 21 – celebratory garlands still swinging from the hood – when the hottest car in India became an inferno.

A Tata spokesman called the blaze “a stray incident.”

Whether that’s the case or not, many environmentalists say the Nano will be a catastrophe for India’s environment and quality of life. Simply put, the country’s cities, roads and highways can’t take the volume. Going deeper, they say the kind of consumption that the Nano represents is an outdated model of growth and one inappropriate to India.

Gandhi noted that if 1 billion-plus Indians tried to consume their way to growth, they would strip the planet like “locusts.”

Here’s the argument against the Nano (and cars in general) by the excellent Sunita Narain of the Center for Science & Environment. See how the Nano turns out to be a government handout to the middle class:

Unlike the car-saturated West, we still have a large number of people who are potential buyers. But the fact is in India, because of the even greater price-sensitivity, personal vehicles are viable only if they are subsidized to the brim.

Take the Nano. My colleague Chandra Bhushan has calculated the incentives rolled out by Narendra Modi’s Gujarat government amount to a fat write-off—as much as Rs 50,000-60,000 per this Rs 1 lakh [100,000 rupee] car. In other words, its cost is so low only because the state has doled out a largesse. Every past and present automobile has got this benefit (more or less). We can afford a car because our government pays for it. We can also afford it because we are not asked to pay the price of its running—the tax on cars is lower than what buses pay in our socialist country. We do not pay for its parking, a cost, which, if added, would make us think twice before we bought or drove our new dream vehicle, whatever the variant.

So the cheapest car in the world is only cheap because the taxpayers are picking up 25 percent of the check (and in a country where hundreds of millions live in poverty worse than sub-Saharan Africa).

The subsidy, in at least one case, includes the cost of the fire department.