Why We Need Competition In Bus Services

Transportation is so inefficient, partly because of government involvement. This is especially true of bus services because 90 per cent of public transport in India happens in buses.  Even though India has Asia's largest bus terminal, the services are not efficient. Buses are usually too congested and mostly run by government-owned transport corporations, though there has been more private participation since the economic reforms.

The government is involved in many things, including planning services, deciding bus routes, collecting revenues, granting licenses, and ensuring that buses meet safety standards. As the government is the primary law enforcer across the world, it won't be easy to step out of the service of ensuring that buses meet safety standards. But devoting more staff and resources to planning and scheduling bus services and in deciding bus routes, the government is unable to carry out what many experts consider its primary responsibility.

Moreover, when the government decides bus routes and schedules services, this takes away responsibility from bus operators. This also discourages planning. A retail store, for example, is situated in a certain neighbourhood because the proprietor thinks that it makes business sense to do so. As a store is forced to be profitable or go out of business, there is great pressure on the proprietor to choose a location where there are enough potential customers. When the government schedules bus services and decides the routes, there is very little incentives for operators to plan. This is partly why bus services are so inefficient and do not meet the needs of people well.

To cite an example, in mid-2013, Haryana Roadways had only 110 buses on 15 routes. So, buses do not cover important routes in Gurgaon, and people are forced to find other ways to travel. There is a shortage of bus drivers, and no appointment was made in the bus depot since 1993. There are, of course, many unlicensed buses in Gurgaon, but these buses usually carry twice as many people as they ought to. There are also private buses provided by corporations. This is because there is great demand for bus services, but not enough buses to meet the demand.

Gurgaon is not an exception. Less than one-fourth of Indian cities with a population of more than half a million people have a city bus service. This is not because India is poor because many other developing countries with similar income levels have public transport that is twice as large, in scale. So, the reason is something else. This is because of low investment in mass transport, a taxation system that is skewed against investment in public transport and too, much regulation.

When there is not enough competition, the government is likely to provide bus stations even when they are not profitable. People are also more likely to overuse bus services because the fares are too low. Buses in Indian cities are usually overflowing because the fares are too low, by market standards. This makes the business not profitable enough for many operators. This also makes commuting very difficult for most people.

Private participation in bus services is not untried. In the UK, Philippines and Chile where private operators are allowed to innovate in providing better services, there is a wider range of services. Bus services are not truly competitive anywhere and transparency is not the norm anywhere. But whenever the government does not regulate the business too much, the quality of services are likely to improve.