From Thalinomics to Travelnomics: what can Budget 2021 offer India’s growing e-mobility sector
Mobility is the key to a quicker economic recovery, and the much-awaited Budget 2021 must realise this necessity. From the simple movement of people, goods and services, to access to education, and economic opportunities — the importance of mobility as a focal point in the budget cannot be understated.
And, while projections by the IMF and the economic survey depict a rosy 11.5 percent growth in the coming year, without this focus on mobility, that potential is easily unrealisable.
Budget 2021 is poised to be historic, given the health-cum-economic situation of India and around the world. The unprecedented pandemic, and the economic fallout of the global response in attempting to limit the spread, has forced governments to push towards resilience rather than unabated growth.
While these structural changes in the economy have helped India weather the storm, how we recover will largely depend on how we move.
The last decade was marked by mobility becoming demand-responsive, user-centric, and catering to all strata of society, thanks to the ubiquity of smartphones and rampant digitalisation. Today, combined with the traditional auto sector, India’s mobility industry is one of the largest in the world.
It employs over 35 million people, accounting for half of India’s manufacturing GDP, and over seven percent of our economic output. The long-tail of mobility services — ranging from two-wheelers, three-wheelers, four-wheelers taxi-cabs, and vehicle rentals, to hyperlocal deliveries — caters to hundreds of millions of users and workers across India.
Leveraging the economic growth potential of India’s new mobility — comprising of shared, connected, electric, and AI-powered mobility solutions — the government has announced a slew of initiatives over the last few months.
Proactive policy support, including ‘vocal for local’ and production-linked incentive (PLI) schemes have created the much-needed momentum to ensure India’s global dominance in manufacturing and localised mobility innovations.
The pace of growth in the mobility sector is further fuelled by the government allowing 100 percent FDI under the automatic route, increased budgetary allocation to urban infrastructure, and policies like FAME. Such policy interventions catalyse the growth of sustainable modes of transportation for today and tomorrow.
Undoubtedly, the Budget 2021 should look to capitalise on the mobility economy opportunity for economic recovery and growth. In fact, mobility’s share in the future of the Indian economy, in the stated goal of a $5 trillion global economy, is poised to increase exponentially.
India’s new mobility is expected to touch $90 billion by 2030. Thus, it is necessary to adopt a holistic budgeting and fiscal policy approach that helps build mobility on the pillars of sustainability, accessibility, affordability, and inclusion.
To do so, there are three broad areas that the Budget 2021 should look to include.
First, prioritise accelerated adoption and manufacture of EVs. As India transitions to a global e-mobility hub, the government must continue incentives for creating a world-class localised manufacturing base. India must leverage the shifts in global supply chains now, and rapidly enhance our capacity to cater to the world.
Next is to make EVs ultra-affordable. This can be done through GST subventions on EV battery and charging-swapping services. Furthermore, to develop adequate EV infrastructure as public utilities, government bonds, and priority sector lending (PSL) could be considered.
A PSL status for EVs would also help individual buyers readily access formal credit to buy EVs. Such measures would fulfil the aspirations of the previous budget’s National Infrastructure Pipeline plan.
Second, unlock micro-entrepreneurial opportunities and enhance financial inclusion. The digitalisation of mobility creates millions of livelihood opportunities for all. Today, innovations also unlock unexplored areas for India’s burgeoning labour market, such as facilitating access to formal credit.
Budget 2021 can strengthen platform workers’ access to finance and assets, and empower them to actively participate in the economy. This can be achieved by enabling cash-flow-based lending as initiated by fintech businesses, expanding access to Mudra loans, etc. Combined with the successful Jan Dhan-Aadhaar-Mobile (JAM) trinity, India can bring new-age platform workers under the formal banking fore, thus achieving financial inclusion.
Lastly, promote accessible and safe transportation. To access various social, economic, health, and educational opportunities, affordable, reliable, and flexible mobility for all is imperative. The cost of making infrastructure accessible for persons with disabilities, the elderly, and more, is just one percent of the overall project cost if accessibility is considered right from the design and planning stage. Thus, Budget 2021 should include a separate accessibility head for all infrastructure and mobility projects.
Indeed, mobility is critical to the health of the economy. Budget 2021 is crucial to enable the resurgence of the economy, and mobility infrastructure must remain at the heart of it.
While Budget 2020 was defined by ‘Thalinomics,’ given the cruciality of mobility innovations and its role in post-COVID economic recovery, Budget 2021 would do justice by focussing on ‘Travelnomics.’
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)