KSRTC is our Air India. Do we need them?

Let’s assume that we have to travel from Kochi to Bangalore. We have multiple choices. We can drive down at an expense of around ₹5,000 in a personal car. We can take the train which would cost around ₹1,500 in 2nd AC. We can take a seat in A/C bus that would cost around ₹2,000. We can also take a flight that would cost around ₹3,000. Kerala Road Transport Corporation [KSRTC] also operates an A/C bus that costs around ₹1,000. We are spoilt with choices at varying comfort and costs. The service providers are also happy catering to the demand. Among the options available, KSRTC is the cheapest but definitely not the popular. Why?

Why don’t we have the best buses available for local transport at varying comfort and costs? Why do we see more entrepreneurs leaving the local bus service business than entering them? Why do we have policemen and road transport officers running private buses under ‘benami’? Why A/C local buses are not common in a humid place like Kerala? Don’t we like A/C buses?

At current regulated ticket prices, there is not much money left for the bus service providers. That’s why we see bus owners driving their own bus. They are making themselves self-employed. It cannot be seen as entrepreneurial as the business do not offer them the scale and opportunity to grow and own multiple buses. In fact, 2nd and 3rd generation entrepreneurs in the business of bus service are moving away selling their bus to their employees.

In this environment, how can we even contemplate that a KSRTC can operate profitably?

First of all, the government has no business operating KSRTC or for that matter any sort of business. Having made a choice to operate KSRTC, the government is depriving the public the choices and comfort a market would offer by itself over time. Let me explain.

The losses made by KSRTC on a daily basis is funded by the government. There is no other competitor with that privilege of big purses to fund losses. On top of that, the government regulates the ticket prices. KSRTC will die anyway. The price regulation will ensure that the industry does not survive. By regulating prices, we are depriving ourselves the choices that a market provides by itself. Even with an Air India, with huge losses funded by the central government, the airline industry in India is doing good because the prices are not regulated. The airline industry is otherwise heavily regulated. Still, private players make profit and consumers are happy flying with them.

When the prices of our papadam or rice or puttu or appam or umbrella or chappal or mundu or even internet are not regulated by the government, why do we want the bus ticket prices to be regulated? For all those products, we are spoilt with choices at different prices. Every player in the market is better off. That’s how a market operates without any government intervention on pricing.

What do you think?