In 2008, when the BJP government was in power in the state, the then transport minister, R Ashoka, had announced that private transport companies would not be allowed to operate on ‘nationalised’ routes. Put simply, private operators would be barred from offering services on certain routes that were nationalised, clearing the way for the government to create a monopoly and earn larger revenue.

That proposal never saw the light of day.

Now, in 2016, the Congress administration is preparing to reintroduce that policy, but with one significant difference. It is proposing to nationalise all bus routes in Karnataka, leaving private firms to look for alternate ways to operate on state roads.

There are a number of problems with nationalising something as simple as bus routes. Where the government could have set up competent regulatory authorities and allowed competition to flourish, they have chosen to stifle private operators.



As a reference for this process of nationalisation, the government has mentioned the names of the two neighbouring states with nationalised bus routes, Maharashtra and Tamil Nadu.

However, bus services in Maharashtra and Tamil Nadu are nothing to write home about.

Lets look at why Karnataka’s new plan is ill-conceived.

Fortunately, we have the examples of Tamil Nadu and Maharashtra - the very states Karnataka cites as references for its new policy.

First, there is simply no value addition to the customer. The Tamil Nadu government operates close to zero premium buses. Maharashtra operates them only on few routes. They’ve scrapped routes on which they couldn’t compete with private players. In Tamil Nadu, the quality of bus transport is absolutely in the pits. While Karnataka State Road Transport Corporation’s buses are superior, the quality of services has been on the decline for some time.



Second, private operators will be subject to more harassment. In order to operate using existing loopholes in the law, they may have to pay huge amounts of bribes to Regional Transport Office, police and other government officials.

Third, populism will ensure state transport companies are run badly. Bus fares in Tamil Nadu were frozen between 2002 and 2011, leading to dreadful losses, resulting in bad buses and a pathetic administration. Maharashtra, with a more liberal and decentralised structure, has multiple transport companies operating at the municipal level, and fare revisions do happen periodically.

Fourth, the states will only lose revenue from private operations. In order to operate the buses, private players may register their vehicles in other states and run them in Tamil Nadu or Maharashtra. This robs these states of various taxes.

