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Private sector challenge
Written By murali772 - 27 October, 2008
Bangalore Infrastructure Privatization Analysis Economy monopoly competition
“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
COMMENTS

flanker - 27 October, 2008 - 17:03

navshot - 28 October, 2008 - 04:29

silkboard - 28 October, 2008 - 05:23

murali772 - 1 December, 2011 - 13:49
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 ???

Naveen - 5 December, 2011 - 09:32
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.
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