Can India’s Newly Drafted Road Safety Laws Help Boost its Economy?

September 19, 2014 Posted by India Briefing Reading Time: 6 minutes

Op-Ed Commentary: Benedict Lynn

Since his landslide election victory in May, Prime Minister Narendra Modi has been attempting to eliminate the various obstacles that have thus far impeded India’s economic development. The new government’s emphasis has ostensibly been on the country’s underdeveloped infrastructure, and billions of dollars have accordingly been invested into its railways in an ambitious Chinese-style revival plan. India’s notoriously dangerous and congested roads, however, have until now eluded any significant parliamentary scrutiny.

On Saturday, the Modi administration released their draft bill on road safety laws. Widely thought to have been motivated by the death of senior BJP minister Gopinath Munde in a road accident in June, the bill proposes setting up an independent agency for road safety and vehicle regulation; a national authority that will have the power to recall vehicles which do not adhere to a required set of standards. Furthermore, a western-style penalty point system that includes severe fines and, in some cases, imprisonment, has also been proposed.

This is long overdue. There is currently no system of verification for vehicle maintenance, no central national agency of road safety, and very little legislation. Piyush Tewari, the founder of India’s road safety advocacy group Save LIFE Foundation, said: “The sole statute governing road safety in India, the Motor Vehicles Act-1988 (MVA), has proved ineffective in addressing any of [the] issues decisively. Even the last tabled Motor Vehicles (Amendment) Bill, 2012, which was passed by the Rajya Sabha in 2012, was archaic and contained recommendations which will not solve the current situation on Indian roads.”

The “current situation” is indeed grave.

Although progress has been made by the BJP, Asia’s third largest economy is still far from reaching its full potential for growth. At 32 percent, its rate of urbanization is far behind that of other BRIC countries, with Brazil and China at 85 and 53 percent respectively. The Planning Commission forecasts its urban population to increase to 600 million by 2031, which could have serious consequences for India.

Road safety and congestion provide particular cause for concern. Matthias Sweet, a researcher at the McMaster Institute for Transportation and Logistics, argues that traffic congestion is in itself not necessarily a problem, as it is often an indicator of fast economic growth. It is only when congestion passes a certain threshold that it can become a drag on the economy.

This is the point that India has reached. A 2012 report by the Ministry of Road Transport and Highways revealed that traffic jams and delays were costing the economy well over US$650 million annually in trucking costs. The trucking sector has been growing rapidly and is crucial to the Indian economy, contributing some 4.5 percent of GDP.

Also growing rapidly is the Asian giant’s middle class and their demand for cars. The quickly increasing number of passenger and commercial vehicles on India’s streets far outpaces the slow development of its infrastructure. While the amount of vehicles is increasing at a compounded annual growth rate (CAGR) of 10.76 percent, road length is trailing behind at a CAGR of 4.01 percent.

But it’s not just this infrastructure development lag and the resulting bottlenecks that are hampering India’s potential for economic growth. A damning 2013 report by the World Health Organisation (WHO) revealed that India is the global leader in road traffic fatalities, accounting for 10 percent of the world’s 1.24 million yearly traffic deaths. The social implications of some 150 thousand deaths a year are obvious, but less so are the economic costs. The Working Group on Road Accidents, Injury Prevention and Control set up by the Planning Commission assessed the cost of road accidents in India at US$9 billion – a staggering 3 percent of the nation’s GDP.

India’s abysmal road safety can be put down to a number of factors. According to Save LIFE Foundation, “Detailed investigations into road crashes are a rarity, officials in-charge of road safety are almost never held accountable, road design continues to be dangerous, and Indian laws around road safety remain deficient and poorly enforced.”

This is partly due to a corrupt and undertrained police force and a public with little regard for traffic laws, but ultimately comes down to India’s inability to cope with its own rapid economic growth and urbanization. There has been a sharp increase in the number of vehicles on India’s roads, something for which little to no precedent exists.

So it seems that the Modi administration has turned to the world’s more advanced countries for their draft bill, which is based on the practices of the US, Canada, Singapore, Japan, Germany and the UK.

But will cracking down on drivers and manufacturers solve the problem? The WHO study revealed that less than 50 percent of two-wheeler drivers and less than 10 percent of their passengers wear helmets, while only 27 percent of drivers wear seatbelts. The focus should be on education rather than enforcement, argues Professor N Ranganathan, an urban transport planner: “”If you have good engineering and education [it] is adequate to make people aware of the rules, regulations and their safety, you don’t need enforcement. You will find this working fine across the world.”

The case of the Indian city of Mysore, however, suggests that enforcement is the way to go. Over the past seven months police have booked 30,000 drunk drivers, 17,214 driving without their seatbelt, and have fined some 70,050 two-wheeler drivers for not wearing a helmet. The number of accidental traffic deaths within this period are now the lowest they have been for three years.

This bodes well for the BJP’s tentative bill. If it goes through when introduced in the winter session of parliament, it could save 200,000 lives and increase GDP by four percent in the first five years alone. Safer roads will also mean a decrease in traffic jams and delays, saving hundreds of millions of dollars every year in freight transportation costs.

“Providing safe, efficient, cost-effective and faster transport across the country is our mission,” tweeted Road Transport and Highways Minister Nitin Gadkari. This may be one of the key factors holding India back from reaching its full economic potential.

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