Train Fare Hike A Start But Not Enough

(Captain GR Gopinath founded Air Deccan and is considered a pioneer in the low-cost airline sector. He quit Arvind Kejriwal's Aam Aadmi Party on May 24, five months after joining it)

The hike in rail fares has unsurprisingly raised the hackles of  opposition parties. The BJP also fought the UPA each time it tried to raise oil prices or train fares. The job of the opposition apparently is to oppose. 

There is an apt story of an opposition leader who got shipwrecked in an uninhabited island. After a few years of living alone, he sights a ship. As the captain of the ship waded ashore, the opposition leader shrieked in delight, "Are you the government, are you the government? Then, I'm the opposition."

In the case of the Indian Railways, seeped in losses, infusing doles will add to widening the fiscal deficit and worsening inflation. It functions as a monopoly enjoying huge patronage and largesse from the government. It is also a 'holy cow' like many other publicly-owned enterprises like Hindustan Aeronautics Ltd which are not operating in a competitive environment. They operate under a different 'cost plus' business model and logic. Whatever the cost, add a profit margin and sell. The consumer has to cough up.

Crony socialism is as pernicious as crony capitalism. As purported ideology to help the poor, large resources are allocated through subsidies, huge government-owned corporations are created, and those in charge of them appoint their relatives and friends. Money can then be siphoned off through the  award of contracts or in a convoluted process of distributing the subsidies.

The system fiercely opposes competition and tries to vigorously perpetuate itself. The Indian Railways and Air India are classic examples where the interest of the nation and the welfare of a billion people are mortgaged to keep a few gainfully employed.

The Indian Railways is broken and falling apart, recording the highest number of accidents in the world. Trains stations are filthy and unable to handle millions of passengers.

China has built a massive and efficient rail network in the last  20 years and overtaken West, Japan and Korea with high-speed trains. The length of the total high-speed rail tracks of China now is more than the high-speed rail network of the rest of the world put together.

The task of the new government does not end in periodically raising fares while braving critics and protests. It must truly overhaul the entire organizational structure of the Railways and bring in the private sector to make it efficient, productive and competitive.

The Modi government's bitter medicine must treat not just the symptom but the disease.

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