11 July 2008


One of the most thoroughly screwed up areas in public life is the Transport. Not only in India, but in several other countries, this very important area is muddled up, thanks to the noble intentions of the Governments.

Lets see the insanity of the situation. A two-wheeler today costs upwards 40k and a four-wheeler upwards of 2.5L. This is a huge factor of a person's annual salary, considering India's Per capita. For a majority of people, a vehicle is rarely used upto 2 hours a day. Buying an item whose cost is so high and whose utility is so less frequent should not make economic sense. People would ideally rent vehicles or share vehicles rather than buying on their own. This would be the only economically sound and viable option, if not for our regulations.

Firstly government has a monopoly on public transport. It makes the transport cheap, dirty, unreliable and crowded. Further since it is governemnt owned, the fares have to be low, and meet only the minimum standard. Forgiving the lack of corporate management skill in the government, the financial position of all these public transport corporations through-out the country is in a dismal state, thanks to the high levels of corruption. If an absolutely important and repeatedly used service, which is run a monopoly, is not economically viable, then the only blame will be on bad-management.

What are the effects of such management. If Cheap, Dirty, Unreliable, Crowded are the adjectives that can be given to this sector, then people obviously shy away from it. Any person who can even remotely afford a own-vehicle will definitely go for it.

There is an interesting side-effect to it. If private enterprise runs public transport, Oil or Energy are a cost to it. Companies will be forced invest on reducing cost and hence vehicles will become energy-efficient, and economical alternate energy sources will be easier to come into market. If private enterprise is only into selling vehicle, Oil or Energy is at best a non-competing partner in the market. Companies see no reward in investing alternate fuels, as Oil is not a cost to them. Since the cost of Oil is pushed to the common man, who is no position to invest on research for alternatives, he picks his available alternatives. Cheap and Unreliable Public transport. Costly but Reliable Private transport. If Reliability leads to success, then you know who gets richer.

As long as the person is poor, he would choose Public transport, but the moment he becomes better off, he's off to buy a vehicle of his own. Another area in which our government regulations cause a heart-burn, is our taxi-service. Autos (three-wheelers), as they are popularly called, are a life-line to public transport, especially for shorter distances. Government excessively regulates them. Fixes the price, Fixes the color, does not allow branding, fixes the dress code, limits the number of passengers.

What is the effect of each:
1. Fixing the price: Auto drivers earn a measly amount per day. Most auto drivers rent their vehicle per day for a fixed amount like 300/- per day etc. They toil the whole day and hardly make an amount more than the rent they pay. No matter how hard an auto driver works, his income is limited due to this. Government artificially keeps the auto-drivers poor, in the garb of keeping the common man happy. Somehow, for government, auto drivers are not common-men. In many areas, auto drivers do not follow pricing and resort to fleecing and/or extortion. Every one of us, at one time or the other, would have had a good fight with an auto-driver over pricing. Such unprofessionalism in a service which we use so blatantly.

2. Fixed colors and no-branding: How many times did you get to travel in the same auto, in which you had once got a very good service. For me, it is almost none. For auto drivers, there is absolutely no incentive to be professional. If they are polite to you, or do not cheat, is there any benefit for them. Almost none. He does not see a repeat business. You would notice in areas where there is repeat business, auto drives act very polite and professional. Such is the effect of our regulation. We reduce people from professionals with self-respect to fleecers and extortionists.

3. Limiting the number of passengers: In India, every kind of vehicle is overloaded. It is in our culture to utilize our resources to the breaking point. Buses, lorries, cars, cabs everything is overloaded. Fining auto-drivers for overloading is just exhibition of power on the powerless.

To fix such simple issues, government ingeniously finds horrible solutions. By making traffic police monitor auto-drivers, we are insulting the police profession. Police who have to manage traffic, handle accident cases and investigate road related crimes have become arbiters of auto-fares, bullying around auto-stands and pocketing petty bribes.

The solutions are simple and straight-in-the face. Yet, we choose to ignore them without an ounce of reason. First, privatize the public transport. Let corporates run the buses. They'll do it more efficiently and cost-effectively. Second, allow branding. Customer loyalty greatly reduces prices. Enable free-market competitiveness, ie. allow multiple operators ply on the same routes. Third, abolish pricing controls, and branding controls on autos. Let them compete with the bus service. They are a good alternative for short travels. These can greatly benefit from alternate fuel technology like Solar / Electric / Pressurized-Air. Abolish any subsidy on transport fuels. Let the end customers feel the real cost of fuel. By subsiding one technology, we are closing doors on alternates.

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