India’s ambitious plans on electric vehicles, in a bid to curb pollution as well as reduce its import bill on oil, are well known. Now, as per a Times of India report, the NITI Aayog has recommended imposing a fee of up to Rs 12,000 on new petrol and diesel cars. Though, given two-wheelers account for nearly two-thirds of the petrol consumed in the country and the bulk of diesel is consumed by commercial heavy vehicles, taxing cars alone may not be the best way to discourage fossil fuels. NITI recommends giving EVs an incentive of Rs 25,000-50,000 in the first year of implementation if its suggestions becomes policy. The incentive is proposed to be directly transferred to EV buyers’ accounts. However, addressing pollution through incentives for EVs is only a half-measure.
With coal accounting for the bulk of power produced in the country, incentivising EVs just transfers the pollution problem from one source to another. A truly efficient solution for the country, therefore, requires a fundamental shift in power generation, away from coal and towards cleaner sources. Greater focus on solar, wind and hydro will mean unlocking the true green potential of not just EVs but also hybrid cars that are already at a production-ready stage. Moving to green power would also entail the right price being paid for power. The current NPA situation at banks, with most such assets being from the power sector, exposes years of populist power pricing by state electricity boards. If coal-based power was to be priced correctly—indeed, building in green penalties—it would serve as a disincentive for using such power and soon, generation companies would also see value in producing cleaner power and discoms, in buying such power. Incentivising EVs is a good idea but making them effective curbs on pollution needs a backbone of clean power generation and supply.