Tuesday, January 21, 2014

Monopolies and corruption increase costs for us.

Around 20 years back, when Rs 100 bought you so much vegetables that you would not be able to carry them, a phone call from one part of India to another was called a trunk call and cost Rs 100 per minute. At the time the government operated a monopoly in which MTNL supplied Delhi and Mumbai while BSNL supplied the rest of the country. Then, under pressure from the US, the telecom sector was privatised and prices have fallen to Rs 2.50 per minute for the same call today. The Electricity Act of 2003 privatised the distribution of electricity in Delhi but unlike in Mumbai, where Tata and Reliance compete for customers, the city was divided into 3 zones of which Reliance has 2 and Tata has one. Thus instead of a government monopoly Delhi has a private sector monopoly which is much worse because of the predatory nature of all private companies. Now add massive corruption in the distribution of coal mines to people with absolutely no experience in mining, such as gutka manufacturers, and it means that India has to import coal from abroad despite having 250 billion tonnes in reserve. A bemused Supreme Court has asked the government to explain how 11 private firms were allocated blocks without screening even when the ' Honest Man ' was heading the Coal Ministry. So we have coal mines given to unsuitable people, which have not been developed, leading to import of coal at much higher costs, increasing cost of production, plus private sector monopoly, plus the hidden rent seeking, all leading to exorbitant electricity charges. When a minister claims to have been threatened by an oil import mafia, which blocks development of oil and gas wells, we can understand why coal is imported rather than mined inside the country. The same goes for Delhi Airport where charges are so high that airlines are reluctant to use it. Charges were increased by 346% in 2012 so an aircraft landing at Delhi has to pay Rs 2,97,543 while at Dubai it is only Rs 85,769. No wonder Delhi has ceased to be a hub and Indian passengers are now using Dubai or Abu Dhabi as hubs when travelling abroad. A private consortium developed the airport and is supposed to recoup its expense from charges and developing the surrounding land. So if the government did not spend anything why is it levying such high taxes? The Indian citizen is a blood donor to thousands of parasites. Will we survive?

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