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The cost of road tragedies
April 29, 2006
It's debatable if life is really cheap in India. At any rate death is not. It might come easy as the old folksong goes but it isn't cheap if it comes before its time.
There are many methods of estimating costs from the death of a citizen of working age. Under any of these methods, India loses vast amounts because too many people of working age die untimely deaths.
One standard method of figuring out such costs is to estimate lost output - if a 25-year-old dies, we may assume that he or she would have worked another 33 years on average and amortise the estimated loss of productivity.
Another method is to extrapolate costs from insurance (life, medical and vehicle) claims. A third method is to estimate "willingness to pay": how much would the dead person's dependants have paid to keep him or her hale and hearty? That's a proxy for output loss.
By far the largest number of deaths in the 20-44 age group in India is caused by traffic accidents. Every 10 minutes (actually a little less), somebody dies on a road somewhere in India. Four out of five of these victims are of working age.
To put that in perspective, some 85,000 Indians died in road accidents in 2005-06. That was considerably more than the death-toll in Kargil and 15 years of Kashmiri insurgency (civilian plus military) combined. Four times as many people - some 350,000 - are severely injured every year on the road.
How much does it cost? Apart from "output loss", "willingness to pay" and insurance claims, there are other direct costs that are difficult to estimate. A road is blocked for an hour after an accident: how great is the loss of productivity? What about paramedic and police deployment costs?
The most conservative financial estimates suggest India loses over 1 per cent of its GDP every year to road accidents. The most credible suggest that India loses well over 2 per cent GDP per annum. Dinesh Mohan, who is the expert, says that he would consider 3 per cent a reasonable estimate.
It's not inconceivable that it is actually over 3 per cent. The US suffers around 55,000 traffic-related fatalities per annum and reckons that it costs about 5 per cent in terms of GDP. India has around 20 vehicles (of which six are cars) per 1,000 people; the US has nearly 800 vehicles (480 cars). That, in itself, says lots about India's safety record. The US is not the safest driving environment in the world (that's Sweden, land of the Volvo).
Per capita productivity loss is much lower in India compared to the US and far more pedestrians and lower-income people outside the insurance net die in Indian traffic accidents. That means the numbers are fuzzier - not that the costs are necessarily less.
One would assume that the case for greater traffic safety is clear and unambiguous. According to a 1998 WHO study, India may see a 3 per cent annual escalation in the rate of traffic accidents until the 2040s unless emergency measures are taken now.
There ought to be political consensus on this issue. Even the BSP would hardly demand increased quotas for OBC accident victims! The right-wingers can point at the cost-benefit analysis and suggest that large sums of money should be pumped into improving road safety.
After all, we're spending vast sums on the power sector in the hope of adding 1 per cent GDP growth per annum. Far smaller sums invested in road safety might result in far larger productivity gains. The left-wingers can claim that every tenet of social justice demands that the government improves its road safety standards.
But unlike reservations or T&D losses, traffic safety doesn't seem to be on top of the mind in any Indian political formation. India has always suffered from appalling misallocations of investment. This is just another glaring example.
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