Time to end state monopoly

DNA, September 18, 2015

The Road Transport & Safety Bill, 2015 is in the interest of millions of citizens

The Parliamentary paralysis this monsoon session led to the stalling of many important Bills. One casualtywas the Road Transport and Safety Bill, 2015 (RTS Bill), a welcome reform over the archaic Motor Vehicles Act of 1988 (MV Act). Some states are already taking a cue out of this legislation to develop a regulatory framework in bus transport services that would benefit not only the commuters but also operators. Gujarat is one such state, where such a dialogue has started.

Some stakeholders had opposed this Bill for high penalties, reduced control of States and their Corporations among other issues. However, the positive part is that the Bill paves way for a modern regulatory framework in the sector – an urgent and unmet need. This sector has long been wanting such reforms. The draft Bill clearly states out the rules of the game for the public and private players to engage in this sector. It is also in the interest of millions of citizens.

In India, State Road Transport Corporations (SRTCs) in the states are meant to provide subsidised bus transport, as per the essence of the MV Act. This act also allow the states to nationalise the routes if they deem fit. Gujarat is one such state that has, since 1994, officially declared Gujarat SRTC (GSRTC) as the monopoly operator on inter-city ‘stage carriage’ routes (giving the passenger an option to pay fares on the basis of kilometres travelled). However, a shrinking fleet size prevented GSRTC from being able to meet rising passenger demand. So, even though they are deemed ‘illegal’, private operators continue their operations on the above routes.

Given the current nature of the market and an outdated regulatory regime, there is a need for establishing a ‘modern’ regulatory environment in Gujarat’s bus transport sector. The RTS Bill 2015 not only promotes a level-playing field between public and private operators, but also encourages decision-making through stakeholder dialogues.

The RTS Bill 2015 has set a momentum for change across many Indian states including Gujarat. This has emerged from CUTS interactions during the course of an intervention (CREW project) with high-level government officials in the Transport Department in Gujarat. Private players have indicated that due to the current regulations (‘stage carriage’ monopoly of GSRTC) they incur ‘extra’ costs towards fines and rents, which could be avoided.

These private operators have asserted that passengers would gain if the 1994 ‘gazette order’ is rectified, as that would translate into better competition and resulting lesser bus fares. The consensus between the government and the private sector in Gujarat on ruled-based, predictable and non-discriminatory regulatory framework for transport sector in the state offers an opportunity for Gujarat to become a ‘model state’on bus transport services reforms in the country. Timely establishment of a regulator would therefore, aid in adequate planning (infrastructural, mobility, financial) for initiating this transition

Shreya is working as Senior Programme Officer with CUTS International, an international public policy think tank based in Jaipur.

This news item can also be viewed at::