Friday, November 18, 2011

As per the telecom regulator TRAI giving unified 2G licenses cheaply to many operators has failed dismally while causing massive revenue loss. TOI, November 16. This was apparently done to increase services by increasing competition but, in the event, 7 major players hold 93.82% of the market while 7 others have failed to establish any network and have only 6.18% of the market. Instead of lowering tariffs for consumers major players have hiked rates by 20% recently. TRAI now recommends making mergers easier to encourage consolidation but how that will increase competition is not clarified. Meanwhile passengers who buy plane tickets for domestic flights before December are being told that they will have to pay an extra Rs 200 at the airport. This charge will be added to tickets from that date. Presumably this is an increase in airport taxes. Already taxes on flights are so high that people fly only as last resort. This has caused Kingfisher to the edge of bankruptcy and Jet has declared a loss of Rs 7.13 billion. Instead of pouring precious taxpayer billions into the highly corrupt Air India the government should use that money to lower taxes on aviation fuel and other insidious taxes on flying. A flourishing airlines industry is essential for commerce and tourism and will stimulate the economy but Congress is stuck in its imbecile socialist ideology of aam aadmi which causes unchecked corruption and increases inflation. High taxes cause high inflation leading to decreasing consumption leading to declining industrial production leading to unemployment leading to fall in the rupee leading to inflation. Welcome to a crash.

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