For decades, the chaotic melée on India's roads has been held up as a point of pride by locals who argued that, though unnerving, the free-for-all worked in a way that foreign practices such as staying in your lane or using your mirrors would not.

Now the government of Narendra Modi, who won a landslide victory in May, hopes to tame the rickshaws, elephants, trucks, luxury SUVs, bicycles, camels, five-seater motorbikes, cows and buses that battle it out each day on the country's highways.

"Providing safe, efficient, cost-effective and faster transport across the country is our mission," said Nitin Gadkari, the roads minister, as he launched the policy.

The objective is an ambitious one. Around 150,000 people a year die on India's roads, with hundreds of thousands more injured in around half a million recorded accidents.

There is no ongoing system of verification of vehicle maintenance, no central national agency of road safety, and a culture of flouting the law. A huge surge in car ownership has not been matched by investment in roads, safety education, monitoring or policing.

The new bill aims to save 200,000 lives over five years and boost economic development, which has flagged in recent years.

The World Health Organisation has said the number of deaths and injuries on the roads in India costs the country around three percentage points of GDP growth annually. Transport ministry officials put the figure higher.

Modi's government has disappointed some observers, particularly in the business community, for failing to pass "big bang" reforms immediately. BJP officials say they are taking a "softly softly" approach with measures aimed at "putting the house in order, not burning it down".

One spur to the reform was the death of a minister in a car crash in Delhi days after the election win.

The draft law was posted online by the road transport ministry at the weekend with a request for user comments.

It includes radical measures such as a points system that could lead to repeat offenders losing their licenses, and a £3,000 fine in the event of a driver killing a child. Penalties for speeding, drunk-driving and failing to stop at red lights will be increased dramatically.

Drivers in Delhi welcomed the plan. Ashutosh Bhardwaj, a sales executive from the satellite city of Gurgaon, said it might curb the taxi drivers who ferry call centre staff from home to office at breakneck speed. "They are the real menace. They are racing their cars, not driving them in proper, sober fashion," he said.

Preeti Jha, 28, a hawker and migrant from the poor state of Bihar, said it was the poor who suffered most as they were most likely to be on vulnerable bicycles, motorbikes or overcrowded, badly maintained private buses.

Though authorities across the emerging world face similar challenges in controlling traffic, some provisions in the draft law reveal a range of problems in India not always faced elsewhere.

School bus drivers found to be over the limit will face three years in jail, off-duty police officials will lose any immunity and emergency vehicles such as ambulances and fire engines will be given a right of way over vehicles carrying dignitaries.

The real problem, some specialists say, is corruption. Driving licences can be bought easily and the police are notoriously hungry for bribes from errant motorists. Police are undermanned and poorly trained. It is well-known in Delhi, a city of 17 million people, that there are no traffic police deployed between midnight and dawn.

Prof N Ranganathan, an urban transport specialist, said enforcement was not necessary, "if you have good engineering and education". "You will find this working fine across the world. Before doing the first two Es – engineering and education – we are just talking about enforcement," Ranganathan told the Times of India newspaper.

According to the WHO, about 1.24 million people die each year on the world's roads and between 20 and 50 million sustain non-fatal injuries.