India Economy: Tata Nano to Expand India ’s Economy

New Delhi, 11 Mar. When the Volkswagen was first launched in 1938, it was supposed to be the “people’s car”, affordable and practical for all Germans. Now India has its own version – with the exact same tag line: “The People’s Car”.

New Delhi, 11 Mar. When the Volkswagen was first launched in 1938, it was supposed to be the “people’s car”, affordable and practical for all Germans. Now India has its own version – with the exact same tag line: “The People’s Car”.

While vastly different cars, the economics of the Nano and the Beetle, when it was launched, are similar: To offer anybody and everybody the opportunity to have and drive their very own car. With a per capita GDP of only $2,900 in India, this is a tall order. But considering the car only costs about US $2,000, the dream of car ownership in India is becoming a reality. [br]

The car was launched on 23 March 2009 and sales will start in July 2009.

“Now I am having a two-wheeler but I am excited that the Nano is here – I am going to buy one soon,” said salesman Rohit Singh. “I am proud for my country to give us all this chance. India is becoming more modern and so should our cars. There is also an eco-friendly model because the pollution here is too bad,” he continued.

However, Nobel Peace Prize winner Rajendra Pachauri expects the Nano to only contribute more to the nation’s pollution problems.

There have also been criticisms that the car will make India more car-centric over fears of a nation becoming fixated with cars and forever dependent on oil for transportation. Further, there are about 90,000 people killed each year in automobile accidents in India.

Economically, Tata really cut corners to create such an inexpensive car. First of all, the only way to access the boot space is by folding down the rear seats. The boot does not open. Glue has been used where welding is normally done, in some areas. There is only one windshield wiper, not two. There is no power steering, and there are only three lug nuts on each wheel. [br]

The car is powered by a 623cc rear engine producing a mere 33 hp. But it’s not about performance – it’s about economy: The car achieves a stunning 4.55 L/100 km, or 21.97 km/L, which is 51.7 mpg (US), or 62 mpg (UK), in the city.

This opens doors for millions of Indians. According to the Economic Times, “Tata Nano’s launch could expand the Indian car market by 65%, according to rating agency CRISIL.”

The car is expected to fuel the growth of other industries, too, not just the car market. “This simply means that more people will be able to travel more freely faster and accomplish more in less time,” said EconomyWatch correspondent Hector Sim.

If economic expansion is what India needs, the Nano came at just the right time.

Charles Cole, EconomyWatch.com