The Challenged Private Sector

The West Bengal scene
Private bus operators in West Bengal are demanding a nearly 60 per cent increase in fares to cope with the hike in fuel prices. The operators may also resort to a strike if fares are not revised. - - “We are eagerly waiting for a positive decision on fare hike by Chief Minister Mamata Banerjee before October 29. No fruitful decision may lead to an indefinite strike thereafter,” Deepak Sarkar, Vice-President of Bengal Bus Syndicate, said. - - - Tapan Banerjee, joint secretary of the Joint Council of Bus Syndicate, said the chief minister promised the operators of a fare hike at a meeting on October 8. He added it would be “a natural death” of the private bus transport system in the State without an immediate hike in fares. - - - “Diesel price has been increased by 45 per cent here since 2009. So, the fares should go up accordingly. We are not taking the higher operating cost into account,” Sarkar said. - - - -Both the operators’ associations control about 95 per cent of the 42,000-odd private buses plying across the State.

Banerjee said of the 685-odd buses under JNNURM scheme (operated on a public private partnership basis), more than 350 buses were already off the roads. This has been attributed to the widening gap between fares and higher operating costs of these buses. - - - West Bengal is the only State that operates JNNURM buses through PPP route. - - - “Minimum fare for the buses running under JNNURM scheme should be increased from Rs 5 to Rs 8 (for non-AC category) with immediate effect,” he said.

For the full report in The Hindu, click here

The Kerala scene
The district unit of Bus Operators’ Organisation has decided to join the indefinite bus strike called by State coordination committee of private bus owners from the midnight of October 29 to protest against the State government’s refusal to proportionately increase bus fare to match the increase in diesel price.K. Radhakrishnan, general secretary of the organisation, announced here on Saturday that bus services had ceased to be viable after the last increase in diesel price and the State government’s failure to increase bus fares to meet the sharp rise in expenses for operating buses.- - - -“We have been operating services at a loss in the last one month, hoping the government will raise bus fares. But it has not happened,” Radhakrishnan said.

For the full report in The Hindu, click here

Neither can the government do a proper job of running the bus services, as evident from here and here, nor will they allow the private operators to do a proper job, largely because of their indicisiveness, linked to Socialist posturings. Meanwhile, the citizens, as also the economy as a whole, suffer.

Public bus transport services is constantly gaining in importance as a very key infrastructure sector, whose efficient and cost-effective operation, is a major contributor to the liveability factor, in both urban and rural areas. And, it is also becoming increasingly clear that the burgeoning demand, both in terms of variety as well as as quantity, can't be met by government monopolies alone, any longer. Whereas this fact should generally have been a no-brainer, both the government as well as the public, have however been living in a denial mode all these years, the resulting dismal state affecting every other aspect of the economy too in its wake. Very clearly, such a situation is no longer affordable now, and therefore, perhaps time the Civil Society in each of the affected states came together to demand the setting up of properly empowered regulatory bodies to take quick decisions, as also to provide a level playing field to the private players, as compared to the position existing now, so that the whole sector evolves to a new high, quite like in the case of civil aviation, telecom, etc.

And, of course, Karnataka can provide the lead. So, that's another petition coming, then.

@ raghunandan85 - Well, things can't be done in some arbitrary fashion. All of these call for policy changes, which is what is the demand here.

And, as for Naveen's comments, please also read the comments by others in the same blog as he has provided the link to. There is very little to add there as of now.

The following excerpts from Sunita Narain's article, cited in my post of 4th Dec (above - accessible readily here), indicate the jam we are all stuck in because of continued dependence on public sector in this vital infrastructure area, or the half-hearted attempts made at involving the private sector:

This was the model that Ponty’s company bid for. But all was not well. Private operators with little incentive to meet the tough service conditions prefer to cut corners. The Delhi government had already issued a penalty notice against Ponty for non-compliance with its agreement. Where does the city go from here? We better find answers because there is no alternative to public transport. Car exhaust is already taking a toll on our lungs.

So, what are the answers available? There are those who believe that government and government alone should provide the services, irrespective of whatever their past records, or their capacity to undertake the task, and would therefore suggest reverting to the earlier position of government providing the service.

Well, I am certainly not one of them, for the simple reason that whereas you can correct the wrongs in systems involving private players, through policy, regulatory and other changes, in the case of systems involving government players (particularly monopoly ones at that), it is well nigh impossible to do so. And, marginal changes won't be enough today; what is needed is quantum changes. As such, I am all for proper policy changes to attract the big players, with the entire game duly overseen by a properly constituted regulatory body.

You can pick your choice, and may be campaign for it too, if you feel strongly enough for the cause.

Well, like it has been stated before, more than the neta's and babu's, it is the people who are largely to blame for the way things are. And, as long as they can't bother to raise the demand for release from the strangle-hold of the monopoly government service providers, they will continue to be served the 'at-best a mediocre fare' they are presently getting.

Admittedly, my petition hasn't gathered enough support. But, apart from one lone voice (which has now turned almost virulent), whose owner can't seem to think of anything other than government providing bus services, the opposition of the others, where they exist, are based largely on an improper understanding of the why's of the short-comings in the Mangalore and Kochi services. My effort has been to bring about awareness on these aspects, and necessary changes therefrom, in this key infrastructure sector, for the benefit of all concerned. The process is slow; but that doesn't deter me. Perhaps, I need to re-work the petition.

There are certain natural monopoly areas - like power supply. Even there, the private sector has taken root in a big way (check this), and the sector is moving towards achieving an equitable standing, with the regulatory regime evolving simultaneously too. I can't see why that can't happen in bus services.

According M B Sathyan, president, Private Bus Owners Association, they are forced to keep mum as there is an acute shortage of bus drivers.

“There are several buses which are in garage owing to lack of drivers. If a owner speaks harshly to any driver who causes an accident, he will quit the job. He will be hired the next day by any other owner. So, the majority of owners fear their employees,” he said.

For the full report in the New Indian Express, Kochi edition, click here

powerful private bus operators' lobby & the stranglehold they have on city & district services - extract from Naveen's post of 13th Dec

While the Mangalore operators may be a powerful enough mafia, in Kochi, however, they are at the mercy of the government on the one side, and the drivers sub-mafia on the other, as the above report shows. So much so, a number of operators are surrendering their licences, as the report accessible here indicates.

And, even in Mangalore, however powerful a mafia the bus operators may be, they are still very subserviant to the bigger government mafia headed by the transport minister, as comes out from a reading of this report.

Despite Blueline killing hundreds & the Mangalore /Kochi experiences, the whys of the many shortcomings with existing private city bus operations are being covered up let alone being touched upon or analyzed nor suggestions made for overcoming them - another extract from Naveen's post of 13th Dec

But then, isn't this blog all about the why's of the short-comings of the private sector operations? I am surprised by these comments, apart from the accusations of adopting "tactics" (in the same post), essentially implying that I am part of a paid lobby. Prajagalu may form their own conclusions.

But the competition has been intense between the operators. Taking advantage of the amendment of the Public Transport Act of 1972 in 1989, every person who desired to plunge into the public transport business gets a permit. As a result, there are more single bus owners than the fleet owners, which is a dangerous development for a public transport system as the single bus operators are nothing short of bounty hunters and engage in a mad rush at top speeds for picking up every passenger - extract from Naveen's post of 16th Dec.

Very clearly, aren't these the areas where the problems lie, whether in Delhi, Mangalore or Kochi, and whether in bus transport services or in telecom, or for that matter, any of the services? So, shouldn't the answer to this lie in fixing proper selection criterion, viable fare regime to attract reputed players, and thereafter good regulation? And, if viable fares impinge on the affordability factor, in the case of the poorer sections of the society (but not the types who spend Rs 100 everyday on mobile-talks), perhaps they can be subsidised through coupons, which are anyway targeted to take effect in the food-grains and such areas, pretty soon.

Transforming the private sector as such should be very simple. The only problem is the government doesn't want to do it, since it is a cash cow for them, as existing. And, transforming monopoly government operators are a near impossibility - enough PRAJA teams themselves, apart from many others, have all tried and given up.

Excerpts from yesterday's New Indian Express (for the full story, click here) - Accidents involving Bangalore Metropolitan Transport Corporation (BMTC) buses have become a serious concern for the top officials of the corporation and the police department.

Excerpts from today's ToI (for the full story, click here) - West Bengal native and HP employee Ansuka Sinha died on the spot after a Tamil Nadubound KSRTC bus rammed his motorbike on Ramamurthynagar service road late on Friday night. - - -A man and his sister-in-law were killed when a BMTC bus hit the two-wheeler they were riding, near Bannerghatta on Saturday evening.

In fact, not a day passes without one such report or the other.

The Supreme Court today dismissed a petition by private bus operators of Himachal challenging the tax sops being given to state-owned buses, enabling the staff to charge low fares from passengers.

A Bench, headed by Justice Ranjan Gogoi, refused to entertain the appeal by the Niji Bus Operators Kalyan Sabha and others through advocate Shalu Sharma.

Appearing for the sabha, senior advocate Vibha Dutta Makhija pleaded that the tax exemption had given an unfair advantage to the state road transport corporation and rendered private operators uncompetitive.

The government had exempted state buses from payment of Rs 38,500 each as annual token tax, besides the special road tax of 10 paise per passenger per kilometre under the Jawaharlal Nehru Urban Renewal Mission (JNNURM).

The JNNURM was meant only for urban areas, but the state government had given the tax sops to the corporation for all its buses plying across the state, including far-flung rural areas, and on inter-state routes, Makhija pleaded.

- - - The Bench, however, said the government was well within its powers to grant exemptions in taxes. It also refused to keep the issue alive by tagging it with a similar case pending in the SC.

The petitioners said they had gone to the state high court, pleading that the tax exemptions to state buses in 2009 had resulted in huge losses for them, virtually ruining them. They had pleaded that this was against the interest of the commuting public as well as the private bus operators plied about 5,500 buses which was double the number of state buses.

Forthe full text of the report (emphasis added by me) in The Tribune, click here.

Very plainly, even as its own service providers cannot meet the demand, the government, instead of encouraging those who can, is doing every thing possible to kill them. The irony of it all is that it is using JNNURM funds, which after all come from the tax payer (you and me), to deny the much needed services to the same tax payers. This is totally against the spirit of "Make in India". Perhaps, if the matter had been presented to the Supreme Court that way, they may have viewed it differently.

@Sridharraman  - At 10 ps per km, at an average125 km per day of operation, and an average ridership of 35, the subsidy per bus per annum would amount to a whopping Rs 1.6 lakhs, in addition to the Rs 38,500/- by way of tax exemption, making for a total Rs 2 lakhs per bus, per annum. All from JnNURM - tax payers' money.

Now, in your ideal world of Socialism, I expect all of the needs of the commuters/ travellers will be met by government service providers, and since the operations are not meant to make profits, they will be subsidised by the government, not just for carrying on the day-to-day operations, but even for expansions, and technology upgradations (we will not talk about modernisation, since that I guess would be anathema to the Socialist line of thinking - so, Volvo, etc would be out).

But then, how can all of these be limited to just bus operations? So, you'll have educaton, healthcare, water supply, power supply, train services, housing, food supplies, etc etc too similarly povided at subsidised rates by the government. All very well; but, where's the money going to come from? Taxing the rich, of course, you'll say. But, why would any rich man want to work his back off, to be taxed at the kind of levels that will be needed to meet all of this subsidy burden? I guess that's where patriotism comes in.

Well, isn't that what the USSR was all about? Apparently, there are enough takers in the country who may want to pursue that model. But, most certainly, count me out.
 

The more important question to ask, which of course you can't bother to, is can the government operator/s meet the demand by themselves. The answer being an obvious 'no', can the government then be creating such a steeply sloping field to the disadvantage of the private players?

The differential on account of the tax exemption and the "10 ps per km per seat per day" subsidy, that the private players are faced with, are just the official part. The unofficial part is the bribes they will have to pay to the numerous agencies involved, since they'll invariably be licensed only as "contract carriages" (check here, for more on that) - a coinage conceived by some 'brilliant' babu for this very purpose (which should hopefully go, if the new Transport Bill is passed - check here, for more on that). All in all, it's a huge burden, particularly when talking about operations in rural Himachal.

There's a saying "father waited for 1 hr to save Rs 10/-; while son spent Rs 10/- to save one hr". Quite understandably, the rural folk of Himachal remain very much in the father's mind-set, and consequently, the ticket price is important for them, compared to comfort, speed and other factors. But, in a city like Bengaluru, there's enough of the population aligned to the son's thinking, and consequently, factors other than the fare weigh-in more for them. How else do you think VRL, Durgamba, SRS, Neeta, Kallada, etc are managing their operations, quite often at fare levels higher than KSRTC's 'Airavat'? Now, if the operations are licensed properly, the more professional lot too will come on, and you can have services of all types and fare levels, inter-city, intra-city, as also connecting the rural areas, solving all the people's mobility problems in every aspect of the term.

I doubt anyone should have any difficulty understanding all of these. As such, the only people who are desperate to retain the status quo, in my understanding, can be the transport sector mafia confederation lot (headed of course by the politicos), who can then continue to further their vested interests.

And, if you want to label my respones to you as 'ad hominem', I wonder if it has to do with the prevailing culture of intolerence. Suit you, either way.