India cuts gas subsidy in favor of greener investments?

Dehli Metro, Phase One

Is India trying to turn a corner toward more sustainable economic development with its recent reduction in fossil fuel subsidies?

India's decision to completely cut gasoline subsidies last month has created national protests, as new unsubsidized gas prices rose to about $4.60 a gallon. The country has also reduced subsidies to natural gas, diesel and kerosene, all to balance a budget and reportedly redistribute money for economic development, including the planning of cities with more sustainable energy and transportation.

Gasoline will no longer be sold below cost by producers and retailers in India, as it had been until the late June announcement was made to end the subsidies, which have been cut $5.2 billion. That leaves the remaining government and state owned fuel companies subsidy spending at about $11.5 billion this fiscal year.

India has embarked on a program to develop new and greener cities, and to redesign existing cities for greater sustainability as its urban population swells in the wake of a national population that is forecast by the United Nations to surpass China's population by 2030.

The nation is moving from its agrarian roots to a service-based economy that has been boosted by the rise of the companies in information technology, health care and other professional services.

Clean technology areas being investigated for large-scale implementation with urban development include infrastructure investments in PV solar, geothermal energy, and advanced wastewater treatment. A new metro rail system in Delhi that opened a major line earlier this year is now one of the world's largest.

Indeed, India--like China--may be on a course to reinvent itself for the 21st century.

Warren Karlenzig is president of Common Current, an internationally active consultancy based in San Anselmo, California. He is a Fellow at the Post-Carbon Institute and author of How Green is Your City?: The SustainLane US City Rankings.