It's called the Nano. At $2,700 and 50 mpg, it's the world's cheapest car, and will soon be available in the world's most densely populated nation. It costs just a little more than the ubiquitous three-wheeled auto-rickshaw that clogs Indian roads, and a 100 million people can potentially afford it. What will this potent mix of possibilities produce?

From the moment Tata Motors announced its intention to build the 'One Lakh Car' the plan provoked excitement, speculation, criticism, despair, admiration and even some professional jealousy. So, when the audience burst into spontaneous applause at the unveiling in New Delhi, the man behind the car, Ratan Tata must have felt hugely gratified.

The first real 'people's car' in India (the earlier attempt didn't exactly produce something the 'masses' could afford), it comes at an enviable time for any innovative business idea in India. The country's economy is growing at an unprecedented rate, its currency rising, the interest rates just right and there are 100 million new rich. Ratan Tata is reputed to lose sleep perfecting his projects, but the projected earnings from the Nano must be giving him technicolour dreams.

Protest against Tata Nano (source)

But others, evidently, are having nightmares. There has been much chest-beating about the problems this widely-affordable car will create: heat up the world with emission, cause fuel shortages and price rises (and inflation), clog India's roads so much that all traffic will halt. There have been public-interest cases filed in Indian courts to stop Tata Motors' manufacturing the car, suggestions that it should be taxed so heavily that people can't buy it and angry protests outside the launch venue.

Few people seem to acknowledge that if there is a market, someone will build it -- regardless of impacts. Car ownership in India, at seven cars for every thousand people, is miniscule compared to the developed world. It is a market that will not be saturated for a long, long time. Estimates say more then 50 new models of cars will be launched in the country in the next year. And they will continue to be launched at this rate until 2020.

Other companies have begun to eye a share of this enormous pie. Tata may have spotted the market, but is evidently capable of grace:

Mr Tata says he is quite gratified that other firms are following suit. Bajaj Auto, which is known for its two- and three-wheelers, said on January 8th that it hoped to team up with Renault and Nissan to produce its own low-cost car. Fiat, Ford, Honda and Toyota also have cheap models in the works. It's not our God-given domain, says Mr Tata. -- Economist

Owning a car is very big deal in India. When my father bought his first car at 45, relatives from 150 kilometres away came to see it. When Rajiv Gandhi, then India's Prime Minister, was seen on TV driving a Maruti 800 (rather than employing a chauffeur), it did much more for the sale of that vehicle than any ad campaign. The humble 800 became a sign of upward mobility like no other.

For decades, poverty was celebrated as a virtue in Indian popular culture, especially Bollywood cinema. The villain emerged, smoking, from his car and turned to face the hero, who lived in a thatched hut with his aging mother and owned not even a two-wheeler, let alone a car. This image endured until the floodgates of liberalisation were opened. Films like Dil Chahta Hai (2001) unashamedly celebrated the new world of opportunity, with its leading trio of upper-class youngsters driving off on holiday in a Mercedes Benz convertible.

Consumerist aspirations will persist, all protests notwithstanding. An evening out for a family of four in most Indian cities either means having to use the packed-to-suffocation public transport, or endangering life by piling onto the motorbike.

"It's a dream come true," Ashok Singh, a constable with the Delhi Police, said at the show. "I look forward to buying that car. My wife will be really happy." -- IHT

Click to view cartoon Courtesy: Throbgoblins

The way to a sustainable future for India will not be by denying people what they want (and clearly need), but by providing equally attractive alternatives that are less damaging. Mass transit, as several commentators have suggested, is clearly the answer. Right now, only two Indian cities have a subway train system. Rather than strengthening the rail network which serves the poor and the lower classes, the Indian government is creating world-class expressways on which bullock-carts compete for space with SUVs.

It is also something of a surprise that none among the nay-sayers seem to have asked why hybrid cars have been so slow to arrive in India, why no congestion taxes have been levied or even planned, why city centres have not been pedestrianised. And most crucially, why the Reva, the only electric car on Indian roads, was finally priced at Rs. 250,000 when the initial promise was (surprise!) Rs. 100,000.

If the Nano does jam traffic, people will demand better road networks. If petrol prices go up, they will use public transport. As for rising emissions, I cannot see people caring as long this graph stays the way it is.

Hat tip: AutoblogGreen