Monday, December 17, 2007

Blueline solution in Indore, Dec. 16, 2007

To be able to kill 113 persons in less than 12 months in broad daylight is something of an accomplishment. The distinction belongs to Delhi’s Blueline buses. Desperate citizens tend to blame drivers, police, politicians, or transport officials. They are all guilty, of course. The real problem, however, lies elsewhere. A few months ago a prominent public figure even blamed ‘privatization’. A staggering comment, I thought, considering that major cities in the world (including in France and England) have excellent, privately run bus services.

Closer to Delhi lies Indore, a city of 20 lakh people. Vivek Aggarwal, a 34 year IAS officer, became its Collector in 2005. He had a hobby—he studied bus services in different cities. With a tiny capital of Rs 25 lakhs, he launched a public-private bus partnership in Indore based on best practices in the world. Two years later Indore has a fleet of 98 modern, low-floor buses with computerised ticket-vending. Electronic signboards at bus stops announce when the next bus is due based on satellite data. Investment in the system has risen to Rs 40 crores, all done privately. The city has made a profit since inception; so have its 6 private partners who run the buses. Soon it will have a 500 buses Indore is now quoted (with Bogota) as having the best bus service in the world.

What can Delhi learn from Indore? First, it must ditch the old socialist idiocy of ‘one bus one owner’--a product of the ‘small is beautiful’ thinking of the eighties. This same stupidity made India reserve 800 industries for the ‘small scale sector’. Economists believe this was perhaps the most harmful industrial policy of the past fifty years, which and has effectively prevented our industrial revolution. Indore did not have such socialist hang-ups—it selected the most capable entrepreneurs and companies to run its buses. Secondly, Delhi must not allow two operators to compete on the same route. This leads to speeding and accidents as drivers scramble to maximize revenue. Bus owners must get exclusive routes and earn revenue based on distance traveled, and this can be easily monitored by an affordable satellite system that tracks bus movement. Indore has a daily and monthly electronic pass, whose revenues are shared between companies. Tomorrow, if Delhi switched to a system where Blueline buses earned revenue per kilometer, traffic deaths would disappear.

Delhi must also have a regulatory body which assesses demand, plans routes, fixes fares, gives out tenders, and monitors daily performance. Indore has a five person team which does this continuously, and this is the secret of its success. Delhi is finally planning to have a Unified Metropolitan Transport Authority, but unless it gives it teeth, it won’t succeed. Some will argue that Indore is too small to be an example for Delhi. These are the same second rate minds who scoffed at Japan’s miracle in the sixties and Korea’s in the seventies, arguing that these countries were too small for India to copy. Just think of Delhi as ten Indores!

Another painful lesson from this tale of two cities is that it takes a bit of luck to throw up officers like Vivek Aggarwal, who have the knowledge and the will to deliver. The average IAS officer spends a lifetime pushing files and still gets promoted. Vivek Aggarwal, I fear, may actually be punished by a system that puts down achievers. But before that he would have had the moral satisfaction of bringing a smile on 20 lakh faces in Indore--something that most of his colleagues will never experience in an entire life time.

Tearfully yours, bania-ji, Dec 2, 2007

India is a land of ironies. Even so, the prospect of the Left shedding crocodile tears for the petty trader is truly bizarre. For sixty years the Left bashed the bania--every time food was short, it wanted to nationalize the grain trade and send the ‘profiteer’ to jail. In the early 1970’s it almost succeeded. Now, when the nation has begun a historic transition from small, unorganized retailing to supermarkets, the Left wants to stop it in the name of the bania

There is a legitimate concern, however--what will happen to the millions of jobs in the neighbourhood grocery stores as supermarkets like Reliance Fresh open across the country? The answer to that question has just come in. Thomas Reardon, a world authority in retailing, and Ashok Gulati, India’s premier agricultural economist, conclude in a recent study that the number of employees per square metre in organized and unorganized retail is almost the same. The difference is that employees of supermarkets are better paid, have pension benefits, are trained on computers, and have the opportunity to rise economically and socially. Hence, millions of youngsters are all set to benefit. With franchising, thousands of traders will also gain simultaneously.

This is not the first time that the Left has tried to stop history. When Rajiv Gandhi wanted to introduce computers in banks and railways, the unions went on massive strikes. This delayed our computer revolution by 15 years. A union leader confessed later that computers had actually increased jobs, not reduced them. The same virtuous circle will repeat itself in a bigger way in retailing as the benefits will touch the entire society. The farmer will get a higher price for his produce when he sells directly to supermarkets and is freed from the clutches of our corrupt mandi system. The housewife in the city will also pay a lower price at Reliance Fresh stores because the middlemen have been removed.

Yes, wholesalers and artiyas will lose, and they are the ones behind the current agitation in Uttar Pradesh, Bengal and Kerala. As often happens, the young, idealistic Leftist ‘jhola-walla’ has been captured by these vested interests and has ended on the wrong side. Politicians have also got into the act. If Mukesh Ambani hired and trained 10,000 Dalits for his Reliance Fresh outlets, he would get Mayavati on his side.

The epic, Mahabharata, seems to have been aware of our Indian ironies. It tells the story of Jajali, an arrogant Brahmin, and Tuladhara, a trader of spices in Varanasi. Jajali observes the shopkeeper as he weighs his spices disinterestedly, treats his customers alike, and lives “like a piece of wood flowing in a stream”. Ian Proudfoot, the Sanskrit scholar, explains in Ahimsa and a Mahabharata Story that the trader, with multiple suppliers and buyers, doesn’t depend upon anyone’s favour. His gains and losses are the result of impersonal market forces. He pursues his own interest (like the stick) and this leads to the common good through the “invisible hand” of the market (the stream, in this case). Tuladhara’s life is in contrast to those who doggedly strive for social advancement and influence.

There is an ironic twist in a trader teaching a (Leftist?) Brahmin on how to live. The Mahabharata holds up a worldly merchant as model of detachment before an egoistic, forest dwelling ascetic. Is it the epic’s way of telling the Leftist and RSS Brahmins that sometimes it is better to go with the flow, like a stick in the river, rather than impose your will on history? Think of an India without computers.