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Private sector challenge

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“If you need to understand the difference between STUs and private operators, you need to compare the services provided by private operators in districts like Dakshina Kannada and Udupi, and those offered by STUs in fully nationalized districts like Gulbarga and Raichur", says Rajavarma Ballal, president of the state federation of private bus operators.

The government cannot go on with nationalization for long. It has to open up this space for private investment. Mr Ballal feels government-run corporations will never be able to invest as much money as needed in the sector, and run as efficiently as they do.

According to him, the government discriminates against private operators. The tax the government levies on KSRTC is different from what it extracts from us, he said. Ballal said KSRTC and other STUs pay a fraction of their earnings to the government. NWKRTC and NEKRTC have been exempted from tax till they break even. BMTC pays 3% of its earnings as tax and KSRTC pays 5%.
    
However, private operators are made to pay advance tax of Rs 550 per seat per quarter, irrespective of whether the bus operates and makes money or not. He said STUs suffer losses due to their inefficiency, but blame it on competition from private operators. “Worse still, the STU staff are bleeding them. They clandestinely own 75% of the 38,000 maxicabs in the state,’’ he said.

He rubbishes the argument that private operators will not ply buses to villages. “Each village with a road is covered by us in Dakshina Kannada and Udupi districts. No such private operator has ever made losses. If you offer prompt service, people are willing to pay for it,’’ he said. “If they privatize KSRTC and let us run it, we will show them 10-fold profits,” challenges Ballal. Is the state ready for such a challenge?

For the full story, click on:
http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JQkcvMjAwOC8xMC8yNyNBcjAwNjAw&Mode=HTML&Locale=english-skin-custom

Muralidhar Rao

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flanker's picture

Private bus service is very

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Private bus service is very good in Dakshina Kannada and Udipi districts. I have not traveled to the villages but on HW17 I never had to wait for more than 10 minutes for a express bus.
navshot's picture

Different rules?

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Do we have different rules for different districts? Why can't private guys start operations in Gulbarga? Or is it that Govt. has given permission in one district and not in the other? Tried searching for answers, but didn't succeed. -- navshot
-- navshot
silkboard's picture

full fledged option vs others

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Okay, I agree with this line, The logic behind nationalization is that public transport is a service and not a business. In a welfare state, the government has the responsibility of connecting each village to the nearest highway or main road. But, there are several ways in which government can honor this responsibility. Forcing private operators to run non-profitable routes is one way. Government can approve routes for private players, and ensure a fixed ratio of lucrative vs non-profitable (or welfare) routes. As for levels of privatization, there could be different ways of designing this. Here is quick overview: - Full fledged - state owns roads, routes and buses owned by private players - Half hog - state owns roads, as well as routes. Bus owned by private players - Minimal - state owns roads, routes and buses. private players maintain and operate. Full fledged - Like in telecom sector, multiple operators allowed, they pick and run routes. A regulatory authority watches all action, and ensures that welfare or non-profitable routes get served. Tight control on routes - If government doesn't want full fledged competition via privatization, it can sell bus operating contracts fir every route. So, only one transportation company will server each route, but in total, (numbers used as example) 10 different companies could be serving the total of 1000 routes. Service level could be monitored every six months, and contract for each route renewed and handed over to another player if feedback isn't good enough. In above scenario, there could be rules to prevent one single bus operator for becoming a monopoly. Outsourcing operations - last and not so good option would be to outsource operation of buses to private parties. state could own buses as well as routes, but outsources running of buses to private parties.
murali772's picture

Meeting with Mr Ballal

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I was in Mangalore last week, and took the opportunity to meet Mr Ballal. Amongst other things, he stated that he was headed to Delhi the next day to prevail upon the Transport ministry at the centre not to allow amendment of a certain section of the Motor Vehicles Act, which, if allowed, would empower nationalisation of routes by state governments without reference to the centre.

After having revoked the notification issued by the S M Krishna government, allowing for stage carriage service operations in cities other than Bangalore (which paved the way for the birth of Bendre Nagara Saarige in Hubli-Dharwar), the present Karnataka government has apparently been pursuing this. The aim plainly is to hold out a constant threat to the private operators, and thereby extract money from them. Mr Ballal couldn't put it as explicitly as that for obvious reasons, and, as such, these are my conclusions from the talk.

I suggested to him that he should instead be demanding scrapping of the power to nationalise itself, with the concept having lost its relevance in today's world.

He appreciated the support, and offered to team up with PRAJA in helping liberate the bus services from the stranglehold of the government.

Very clearly, as I can see it, it's perhaps time for a PIL, along the lines detailed here.

Muralidhar Rao
Naveen's picture

Here we go again

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concept having lost its relevance in today's world

As the name suggests, Public transport is not a profiteering nor a lucrative business. It is for providing subsidised transport to those that need it - like office goers, students, factory staff, etc. No private operator can invest the huge sums needed for land & infrastructure such as depots for parking buses, maintenance facilities for buses, etc, & still be able to make substantial profits if the tickets rates are to be kept affordable for these sections of society, particularly in larger cities. In smaller cities like Mangalore, most private operators use road sides for parking buses overnight & for servicing & washing them to make ends meet !

The concept has thus not lost relevance & will remain so since there will always be those that need subsidised transport, & cannot pay enough to allow the bus operator/s to make sizable profits - this is so, even today & even in the developed world.

At the same time, public monopolies are known for inefficiencies & well-known problems such as graft, which need to be tackled periodically by citizen groups such as praja.

Cities such as Seoul, Bangkok & Santiago have graduated out from the tens of thousands of private buses that were causing havoc on the streets & now have better, more disciplined govt owned /regulated services, whilst streets of cities like Manila & Mexico city continue to suffer.

City road transport, due to it's inherent nature is a resource that, if allowed for commercialization, would greatly inconvenience all other road users.

What we need to pursue must be a course along the lines of a welfare state as suggested by the news article, & not encourage more chaos on an already congested city road network. One blueline service was enough to prove this for India. We do not need to test again what has already been proven all around the world several times over.

Wonder why this is so hard to understand & accept !

silkboard's picture

Murali, the PIL

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I would think that the PIL that asks for "my right to equitable mobility" has better chances of gaining broader acceptance as it would be about an objective that every citizen connects with - I want to move faster. While I see that many see that the way to get to this objective may be private sector participation, a PIL targeting that subject directly would be a prescription, and not a "I need a service, I am not getting" thing.

Lets say we work on that "right to equitable mobility" PIL, your motives would certainly, and naturally come into the scope if the PIL gets acceptance.

kbsyed61's picture

Equitable Mobility!

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SB,

You are absolutely right about what prayer should we be making in the PIL. Certainly the PIL should be praying for equitable mobility than clamoring for privatization of just the bus service. Call for my right to a decent commuter service would be the right call. Because decent means of transportation is a means for citizens to earn a living and sustain self and the family, thereby a indirect right to LIFE which is guaranteed under the constitution.

Private Players and all other solutions would revolve around that entitlement. It is a multi-aimed shot.

Murali Sir, let us move on this suggestion - My right to equitable Mobility.

-Syed

Naveen's picture

What PIL ?

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many see that the way to get to this objective may be private sector participation

How many ? Other than the one shrill voice here, there have only been a few murmurs every now & then, mostly complaining about BMTC's well-known inefficiencies - none are seriously demanding privatization.

 

your motives would certainly, and naturally come into the scope if the PIL gets acceptance

The 'motive' appears to be to pursue privatization as the mother of all solutiions for any & every problem without any analysis or rationale - especially so in this case for privatization of city bus transport.

I stand by what I said earlier - unless dedicated right of ways (ie. physically separated BRT lanes) are created or zones created for individual operators (with no on-street competition between players), privatization is not worth any consideration. Else we will go back in time & have to face the ordeals - what many large cities have already been through & abandonned.

 

This aside, the PIL for equitable mobility, as proposed may gain some acceptance in public, but may not stand in court since Gok is building a Metro system to address traffic & mobility problems & their lawyers are bound to use this point in arguments.

A better option may be to come up with some title for a PIL for bus feeder services for access to Metro by all, but even this may not be accepted by the court, at present since BMTC will argue that feeder services have been unsuccessful since only one reach is operational (which is true) & will be improved after completion of all Metro reaches.

So, I don't believe that there is any quick-fix solution - we might have to wait till Metro ph-1 has been completed & see how BMTC operates feeders then & revise the PIL at that stage, if improvements are insufficient.

murali772's picture

irrationality is not uncommon

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As the name suggests, Public transport is not a profiteering nor a lucrative business. It is for providing subsidised transport to those that need it - like office goers, students, factory staff, etc.

This argument could extend to healthcare and education also, apart from power supply and water supply. So, would you say the government should not have allowed the private sector into these areas too?

No private operator can invest the huge sums needed for land & infrastructure such as depots for parking buses, maintenance facilities for buses, etc, & still be able to make substantial profits if the tickets rates are to be kept affordable for these sections of society, particularly in larger cities. In smaller cities like Mangalore, most private operators use road sides for parking buses overnight & for servicing & washing them to make ends meet !

The answer to that is in the following specific point, listed in the draft policy paper, accessible here

"8. All bus stands to be taken over and run (or better still - leased out to professional contractors) by local bodies, like BMP, City Corporations, Municipalities, etc, making the facilities available to all service providers against user charges."

The concept has thus not lost relevance & will remain so since there will always be those that need subsidised transport, & cannot pay enough to allow the bus operator/s to make sizable profits - this is so, even today & even in the developed world.

On the question of affordability to the common man, these extracts from the report put out by the Ministry of Petroleum - "With improved efficiency, the fare structure can continue to remain low while still providing for overall viability of the operations" should provide the answer. And, such efficiency cannot come about as long as the services remain the monopoly domain of government service providers.   

At the same time, public monopolies are known for inefficiencies & well-known problems such as graft, which need to be tackled periodically by citizen groups such as praja.

till kingdom come??? But, PRAJA has more or less given up.

Cities such as Seoul, Bangkok & Santiago have graduated out from the tens of thousands of private buses that were causing havoc on the streets & now have better, more disciplined govt owned /regulated services, whilst streets of cities like Manila & Mexico city continue to suffer.

Why look all over the world, when you have fair examples in our own backyard (check this post by Mr Dhanuraj, Director, Centre for Public Policy Research, Kochi)? And, all that's required is to accept their role, and facilitate their operations.

City road transport, due to it's inherent nature is a resource that, if allowed for commercialization, would greatly inconvenience all other road users. What we need to pursue must be a course along the lines of a welfare state as suggested by the news article, & not encourage more chaos on an already congested city road network. One blueline service was enough to prove this for India. We do not need to test again what has already been proven all around the world several times over.

This is a matter of traffic management and policing, which has to be good either way. And, the welfare state argument could extend to other sectors also.

Wonder why this is so hard to understand & accept !

Understand, may be; but not accept, and there perhaps lies the essential difference

Other than the one shrill voice here, there have only been a few murmurs every now & then, mostly complaining about BMTC's well-known inefficiencies - none are seriously demanding privatization.

If you go through the various debates, it will become fairly evident that there are enough people supporting the idea of competition (nobody is talking of privatisation, please), while there are many who are non-commital largely because they are not comfortable about being seen as 'politically incorrect', and there's one irrational voice that champions the status quo. Similar irrationality shows out in another area too - the debate on Kannada number plates. Both the subjects have been debated enough and more, and, as far as I am concerned, I would like to limit my engagement only to rational beings.

So, I don't believe that there is any quick-fix solution - we might have to wait till Metro ph-1 has been completed & see how BMTC operates feeders then & revise the PIL at that stage, if improvements are insufficient.

stage n+1 ???

Muralidhar Rao
Naveen's picture

Compare like for like

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This argument could extend to healthcare and education also, apart from power supply and water supply. So, would you say the government should not have allowed the private sector into these areas too?

Healthcare, education, power supply, water supply, telecom, banking, insurance, etc use private premises or exclusive infrastructure such as office space, pipelines & cables & do not use public roads to conduct their business. They do not endanger pedestrians or other vehicles on the streets in any way like private buses have proven to do everywhere in the world.


On the question of affordability to the common man, these extracts from the report put out by the Ministry of Petroleum - "With improved efficiency, the fare structure can continue to remain low while still providing for overall viability of the operations" should provide the answer. And, such efficiency cannot come about as long as the services remain the monopoly domain of
government service providers.


The comment by the Ministry of Petroleum above does not refer to competition as a possible solution - they only speak of improving efficiency.

Improving efficiency cannot be at the cost of pedestrian lives & endangerment of other road users. Merely being viabile will be insufficient for the operators - they will want to capture as much business as possible by grabbing the maximum passengers by speeding to the next stop to beat the competition - this is squarely against the principles for road safety. If BRT or zones with only one operator per zone or BRT route is provided, it will work safely & well & is also proven abroad, subject to proper
monitoring for maintaining scheduled timings & service levels.


till kingdom come??? But, PRAJA has more or less given up.

Yes, as long as exclusive lanes or zones aren't created for public road transport. I don't think Praja & other groups have given up. The fact is the city has grown too large & needs Metro or other transport using dedicated infrastructure for quicker transits on trunk routes since buses cannot handle the volumes with efficiency due to traffic constraints. Furthering the competition on the streets will only worsen traffic conditons & endanger road safety.

Why look all over the world, when you have fair examples in our own backyard (check this post by Mr Dhanuraj, Director, Centre for Public Policy Research, Kochi)? And, all that's required is to accept their role, and facilitate their operations.

Comments by Mr Dhanuraj do not alter what happened in our own backyard in Delhi & the fact that all large cities have had terrible experiences with private city bus transport cannot be ignored.


This is a matter of traffic management and policing, which has to be good either way. And, the welfare state argument could extend to other sectors also.

Traffic management and policing has limits - traffic Policemen cannot be posted on every bus all the time to ensure that they do not speed to beat the competition. Other sectors are policed by the consumers for cost & service delivery. In the case of city transport, consumers actually encourage speeding since they will want to reach destinations faster - this is why it is different from other sectors & becomes unsafe.


If you go through the various debates, it will become fairly evident that there are enough people supporting the idea of competition (nobody is talking of privatisation, please), while there are many who are non-commital largely because they are not comfortable about being seen as 'politically incorrect', and there's one irrational voice that champions the status quo.
Similar irrationality shows out in another area too - the debate on Kannada number plates. Both the subjects have been debated enough and more, and, as far as I am concerned, I would like to limit my engagement only to rational beings.


There are a mere 18 signatures on the petition for competition to start with. If the debates suggest that there is enough support, why are there so few signatures ? Most of the debates were for improving BMTC services. The inference that can be drawn from debates is that BMTC needs to buck up, which has always been a foregone conclusion.

The assumption that all of the tens of thousands that visit praja do not want to be seen as 'politically incorrect' appears flawed.

Maintaining status quo was with reference to the PIL & for very good reasons as had been explained. If one believes that a PIL (with only 18 signatures on it) will be admitted by the courts, he is free to go ahead & file it on his own expenses, but I would not support praja to waste resources on it since it is very likely to be rejected by the courts.

Also, one may draw their own conclusions about rationality or irrationality & engage or not engage based on this or any other debate.


stage n+1 ???

I do not know what this means or implies.

abidpqa's picture

healthcare and education

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healthcare and education

Universal healthcare covering all conditions is a human right. Lack of government investment in education is creating inequality in the society. somehow we have not been able to demand them.

There have been many posts here favoring the private sector in transport, but do the operators have any websites explaining their great contribution to the society? Wherever they are present, I feel they are trying to impose themselves on us, city transport and interstate transport. For example, there are not enough interstate trains because of the interference of private bus operators (sorry to repeat). They may be welcome if they could rationalize their behavior wherever they are present now.

murali772's picture

meekly suffer inefficiencies - not for me, any way

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They do not endanger pedestrians or other vehicles on the streets in any way like private buses have proven to do everywhere in the world. - - - Traffic management and policing has limits - traffic Policemen cannot be posted on every bus all the time to ensure that they do not speed to beat the competition. Other sectors are policed by the consumers for cost & service delivery. In the case of city transport, consumers actually encourage speeding since they will want to reach destinations faster - this is why it is different from other sectors & becomes unsafe. - - - in Delhi & the fact that all large cities have had terrible experiences with private city bus transport cannot be ignored.

Even today's newspapers have reported some 3 fatal accidents involving BMTC buses. While rash driving because of competition among players is reportedly the bane of private operators in Kochi, Mangalore, etc, in the case of BMTC/ KSRTC, very often it is because of racing between their own buses, just for the thrill of it (check this, for instance). And, there are ways of getting over that problem, like in the case of the Bhubhaneswar model (here), or even our own model-M1 (here). But, if one goes about with a belief that bus services are ordained by the Gods to be provided only by the government, then I guess one can go on inventing enough arguments to counter the opening up of the sector. 

The comment by the Ministry of Petroleum above does not refer to competition as a possible solution - they only speak of improving efficiency.

Your own statement - "public monopolies are known for inefficiencies & well-known problems such as graft". Like Mr Swapan Dasgupta stated in a T V debate, in the 'FDI in retail' context, "we are required to suffer inefficiencies in order to support the government's idea of a welfare state"

If with only one operator per zone, it will work safely & well

That's more or less the Bhubhaneswar model, as also the London model, and even our own model-M1. So, let's atleast pursue that. Essentially, the monopoly has to go.

The fact is the city has grown too large & needs Metro

Metro is costly, and takes huge time to implement. So, why shouldn't we be talking of these different PPP models for cities like Mysore, straightaway, like SB has suggested? And, even when you have the Metro, you need 'efficient' feeder services.

If the debates suggest that there is enough support, why are there so few signatures ?

I had explained in my 2nd post itself that that was due to a mistake made by me in the formatting of the petition. I'll start a fresh petition and let's see how it goes. Whatever, even as of now, there are enough voices supporting competition.
 

@ abidpqa  -  

For example, there are not enough interstate trains because of the interference of private bus operators.

Holding bus operators alone to blame for the iadequacies and unaccountable ways of the Railways, is plain naivity.

They may be welcome if they could rationalize their behavior wherever they are present now.

Read the first para above, as also the opening post of this blog, and this blog. And then, try reasoning out things.

Muralidhar Rao
Naveen's picture

Private for private's sake ?

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in the case of BMTC/ KSRTC, very often it is because of racing between their own buses, just for the thrill of it

'just for thrill' accidents do happen now & then with all types of vehicles & not just with BMTC or KSRTC, but one can imagine what the scene would be when income/s involve wrestling on the streets to capture passengers -- it would unleash a far more serious threat with disastrous consequences - this is exactly what had happened in Delhi with the likes of the red & blueline.

Very strange that one chooses to ignore commuter & pedestrian safety in his pursuit of supposed efficiency that has been discarded everywhere, whilst not missing any opportunity to criticize BMTC or KSRTC.

Bhubhaneswar model

Orissa's bus services were awful & bleeding heavily. The PPP came about as an effort to stem these losses & improve financial efficiencies rather than operational. Further, Orissa's consumption patterns compare nowhere near Bangalore or Karnataka. Hence, operational efficiencies, as we desire are not a priority as is a service that does not lose money.

According to the report, it's still a monopoly with a single operator serving all zones /areas. How is this a role model & acceptable ? Just so because a private operator is the monopoly here ? How does one guarantee that the private operator does not bribe all the SPV officials & run buses only when there are profits rather than for commuter & public convenience ? What are the benefits to consumers here (other than bringing in some private investment for their govt) which the operator will, no doubt, try to earn back several times over through various, possibly dubious means from consumers ?

In pursuit of any service, the objective must always be to bring the best for consumers -- such as welfare, safety, well being & convenience of commuters, & not about who operates the services.

"we are required to suffer inefficiencies in order to support the government's idea of a welfare state"

Swapan Dasgupta may be correct in stating this with reference to FDI, & I agree with his views, but I don't think BMTC/KSRTC are amongst those public monopolies that need replacement nor competition to improve their performances, as of now, with the argument that they are monopolies. They are already being spoken of as the only well run profit making public transport corpns, even across the world. They successfully gambled & pursued with expensive volvos & are being spoken about favorably in cities like Mumbai & Delhi, which still do not have such extensive A/C services.

At this stage, all we need to do is to closely monitor their operations & performance lest they start becoming lethargic like other public monopolies & try to improve their operations.

Metro is costly, and takes huge time to implement. So, why shouldn't we be talking of these different PPP models for cities like Mysore, straightaway, like SB has suggested? And, even when you have the Metro, you need 'efficient' feeder services.

Metro for Bangalore is already happening & ph-2 has also been passed through cabinet. Feeders were doomed to failure since a mere 7km Metro stretch is not sufficient in terms of volumes - the average per day user figure is only about 20-25,000. As I mentioned earlier, feeder operations will need to be scrutinized when ph-1 has been completed.

If BRT is being pursued, PPP models can be discussed with different operators on different routes. This would also bring in investments. I think for Mysore, it is upto Mysoreans to decide what they want.

fresh petition -- there are enough voices supporting competition.

This is yet to be proven -- not just by a few loud voices on praja, but amongst many other similar citizen groups as also those sections that do not use internet. Only then will the petition become meaningful & gain acceptance in courts.

murali772's picture

how else can this go on?

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When boarding a 500C (VOLVO) at Agara, at around 10.30 AM last Saturday, I noticed this maxi-cab (picture taken at Sarjapur cross) parked just ahead, and the "conductor" hanging out from the door and shouting out "Marathahalli, Whitefield, IT park, etc". And, at least some 5 people got on, even as there were enough of the regular BMTC readily available for them too. Obviously, the maxi-cab was undercutting them on the tariff, and the differential was wide enough for the people to brave the sqeeze in and sqeeze out of these vehicles.   

What struck me was the brazenness with which the maxi-cab was going about the job, which perhaps lends credence to the statement “Worse still, the STU staff are bleeding them. They clandestinely own 75% of the 38,000 maxicabs in the state’’ made by Mr Ballal.

Muralidhar Rao
Naveen's picture

Incorrect

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Whilst there may be some truth in what Mr Ballal may have said, this particular van does not look like one of those that belong to STU staff. These vans belong to various IT companies for ferrying their staff, but operate this way all over the city by undercutting BMTC fares. The drivers take commuters from the public on the 'empty' trips to or from ITPL, etc for cheaper or same fares.

BEML gate, Marathalli, Sarjapur rd-ORR signal, etc are the places they halt to look for passengers. I once travelled in a minibus that looked similar to BMTC minibuses, but after boarding, I realized what it was when he asked for 5rs & didn't issue any tkt - the BMTC fare is 8rs.

murali772's picture

the monopoly has to go

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The High Court on Wednesday asked the state government to consider afresh the applications of around 1,500 private bus operators seeking permit to run their buses on monopoly in nationalised routes.

- - - Referring to it, the judge said the notification issued in terms of the Motor Vehicles Act in February 2015 empowers the principal secretary only to hear the applications but he cannot pass orders, as only the state government can take final call on the matter.

Till the matter is decided, the judge asked the transport authorities to consider the applications of those who do not have permit for the time being within 10 days.


For the full text of the report in The New Indian Express, click here.

Didn't know the existence of such a petition. I myself have petitioned the govt to end the monopoly - check here . Now, would like to join forces with this group - anyone can put me in touch, please?

May be time to consider a PIL, as also an approach to Comprtition Commission of India

Muralidhar Rao

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