The scooter lay on its side in the dust when I got there, its front wheel still spinning. The mother was scrambling to her feet, shouting at her son as he careered down the roadside chasing after the chicken. The father struggled to set the machine upright, while his little girl sat on the ground, bawling her eyes out, but apparently unscathed.

You can’t travel for long on India’s crowded roads without stumbling – in my case, almost literally – on a crash of some sort.

This Lucknow family just lost a chicken. Around 90,000 Indians lose their lives on the roads every year – and only 5% of them are in cars.

Hence the appeal of the Tata Nano. At around £1,200, it promises relatively safe motoring for tens of millions of Indian families, not to mention their chickens.

It also brings the prospect of a surge in vehicle pollution, catapulting India into the premier league of carbon emitters.

So are environmentalists howling with outrage? If you scan a few Indian bulletin boards, you’d think that was the case. Since Tata announced the Nano, they’ve been bursting with comments lambasting ‘cosseted Westerners’ for daring to suggest this was anything other than excellent news for India’s poor. How can the rich world presume to deny Indians the right to travel safely? How dare they heap praise on Toyota’s Prius (average mpg 46) while denigrating the Nano (average mpg 54)? And so on, and so on...

In actual fact, few Western environmentalists have dared to put their heads over the parapet on this one. Most of the meaningful criticism has come from Indian activists such as Sunita Narain and Malini Mehra.

But all this does serve to flag up one classic dilemma of sustainable development: namely, what happens when an initiative aimed at meeting people’s aspirations and improving their quality of life runs slap bang into environmental limits? When the social and economic pillars of sustainability, in other words, come crashing down onto the environmental one?

Because there’s no doubting the fact that the Nano’s doing exactly that. Once you start to factor in the climate cost, there’s no such thing as a cheap car. Some of the very same people who’ll benefit from Tata’s new baby will also lose out, potentially devastatingly, as climate change wreaks havoc on India’s agriculture.

The Nano’s apparent affordability looks all the more illusory when you factor in the subsidies which keep petrol so cheap at the pump. According to the Asian Development Bank, Indian fuel subsidies account for a hefty US$17.5 billion a year – and rising, as the government, wary of political fallout, battles to avoid passing on to the electorate the recent surge in crude oil prices. (If you factored in a carbon cost as well, the Nano would begin to look distinctly dear.)

So does safer, smoother travel for middle-income Indian families have to come at the price of the planet?

Not necessarily. First, the Nano might actually speed the arrival of a global carbon market. If it helps pump millions more tonnes of carbon into India’s air (and make no mistake, where Tata leads, others will surely follow), it will make it increasingly hard for the Indian government to maintain that it’s a mere victim of climate change, rather than an increasingly powerful driver of it.

India as a whole – even including its Nano drivers – would for a time at least profit from worldwide carbon trading, as per capita emissions are way below those of the West. So if its government could just grasp this particular nettle, it might find the process less painful than it feared.

Second, with a bit of imagination, the arrival of the Nano could actually spur India to develop a more sustainable transport policy. There’s nothing like sitting gridlocked for hours in the Delhi sprawl to convince even the most sceptical minister that there has to be an alternative.

If a swarm of Nanos slows the pace of the capital’s traffic from sluggish to stationary, then our jam-packed minister may decide it really is time for some brave moves– like congestion charges or subsidy reductions, with the revenue hypothecated for improved bus and metro links, maybe.

And it doesn’t have to stop there. If anywhere is crying out for the sort of ‘car clubs’ springing up in European cities [see our recent article ‘Zip through London’], it’s India. So what about a state-sponsored Tata Car Club – run on specially adapted electrically powered, zero-emission Nanos?

Good PR for India, good PR for Tata, and a small step towards squaring the circle of sustainable development.