Franchise A Live and Let Live Option for Public Transport Undertakings in India

Abstract

Passenger road transport in India has thus far been predominantly under the domain of the public sector. The Road Transport Corporations Act, 1950, paved the way for the upsurge of nationalised bus transport in India. In some of the states in India, nationalisation was accomplished to an extent of 95% of all bus routes. And, these public transport undertakings have monopolistically grown in size with scant regard to efficiency or financial health, primarily due to lack of competition. However, in the ninetees, Indian public transport undertakings have been experiencing a drop in occupancy an onslaught by the ever increasing private operators fleet of maxi buses, mini buses & jeeps. Also, travel by jeeps seems to have become the travel style of the rural poor. The transport undertakings have no doubt built up their infrastructure for bus depots and workshops as well as for passenger amenities fairly well. But now, all such investments in these infrastructural assets, mobile assets and more importantly, in human assets, are proving to be a financial burden on them and these undertakings are incurring substantial financial losses. What then is the optimal mix of public and private fleet for a country like India? The author proposes franchise strategies to commercially exploit their built-up infrastructure based on the experiences of the largest bus operator in India which now faces intense competition from jeeps, maxicabs and buses.