ROAD monopoly
Citing profit-making BMTC, the government wants to nationalize all routes in Karnataka. But private operators are pitching for denationalization, promising better services to commuters
Rishikesh Bahadur Desai | TNN
Advocates of free market say competition will give the best service to commuters at competitive prices. But others point out no private transport service provider could match up to BMTC’s record.
Government officials maintain nationalization has served the purpose of providing cost-effective transport to the people and helped state transport corporations (STUs) recover their costs. Private bus operators, however, say the government has done a disservice to the people by operating a public sector monopoly. And the debate goes on.
BACKGROUND
The Road Transport Corporation, 1950, protects BMTC from competition. This Act by the Centre has enabled all state road transport corporations to enjoy a near monopoly.
There were some private transport companies in Karnataka just after
Most of them were compensated. However, companies whose permits had expired did not get compensation. Today, KSRTC and its offshoots — BMTC that serves Bangalore, NWKRTC operating in the 10 north-western districts and NEKRTC, that runs buses in the five north-eastern districts — cover almost all villages and hamlets with motorable roads. KSRTC and BMTC are making profits while NWKRTC and NEKRTC have significantly reduced their losses over the last decade.
WHAT IS NATIONALIZATION OF ROUTES?
It means some routes are reserved for STUs and therefore, private buses are not allowed to ply on them. Routes in
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 no private player will run buses to villages as that would not be profitable. The government has to take full responsibility of rural service through its transport corporations. And to do this, the corporations need to make money from catering to remunerative routes. Or else, public sector corporations will end up in the red.
A recent example is that of Orissa state transport corporation. It had to stop operations for some time after suffering huge losses. Even today, it has only 100 buses.
PARALLEL SERVICE
This is the principle that allows STUs and private buses to operate on the same routes. The principle behind this is commuters get the best service, as public and private operators compete. This system is being applied in 10 districts in Karnataka.
WHY NATIONALIZATION?
Running buses to small villages and hamlets is not profitable, but the government has to take on the burden as private operators do not wish to share a non-profitable route.
It is estimated that a transport company needs a remunerative route for every loss-making route in order to operate on a noprofit, no-loss basis. This explains why government-run corporations perform on the principles of commercial prudence.
Transport minister R Ashok strongly favours nationalization. The present policy is to have 70% nationalized routes, but he wants to make it 100%. “Our model has worked well. Why should we change it?’’ he asked. “There is no question of denationalizing existing routes. On the contrary, we want to have a monopoly of public transport.’’
The corporation provides free bus passes to school students and subsidized passes to college students worth Rs 120 crore per year. It also issues passes to senior citizens and physically challenged people.
“We have a fleet of buses that include Airavat (Volvos), air-conditioned Mayuras, Rajahamsas and Grameena Sarige (mini buses). Today, we have the largest fleet of Volvos among state transport undertakings,’’ he said.
The KSRTC’s breakdown rate is one per one lakh of km and is one of the lowest among STUs in the country. “We also have the lowest accident rates among STUs,’’ he added. “Comparative studies show that BMTC is the only city transport corporation in the world that has consistently made profits. Why should we lose such credit?’’
WHY PRIVATIZATION?
Private operators, however, disagree. The government cannot go on with nationalization for long. It has to open up this space for private investment, says Rajavarma Ballal, president of the state federation of private bus operators. He 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. “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
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?
IN FIGURES
The four STUs have a total of over 20,000 buses
They carry nearly 80 lakh passengers per day
Each bus covers an average of 300 km per day
This means one out of six persons in state boards an STU bus at least once a day
INNOVATIONS
Online booking
Rainwater harvesting in bus stands
Use of biofuel Pongamia oil to reduce fuel costs
De-addiction programme for staff that has been praised by ILO
KSRTC has the best fuel efficiency among STUs
STUs have achieved a turnaround in just eight years
Plans for midway plazas as eateries across the state
Package tours with KSTDC
KSRTC has been doing well. Why change the system unnecessarily? Already, there is some attempt to allow private parties. But no effort should be made to denationalize them. P G R Sindhia | FORMER TRANSPORT MINISTER WHO INITIATED THE REFORM PROCESS AND SET THE STAGE OF SPLITTING THE BEHEMOTH INTO REGION-WISE CORPORATIONS IN THE 1990S
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