Skip to main content

Why Indian Railways hiking fares is LOUSY GOVERNANCE!

Frankly, I find the 'good governance' logic behind Indian Railways hiking their fares pathetic! Good governance is biting the bullet and hiking fares so Indian Railways can stop bleeding!?

You must be joking!

Good governance is government not running businesses, because if they do you can pretty much be assured they will run it sans efficiency (read, high cost), and highly mismanaged (read, lousy products and services to consumers). Why? Because they will be monopolies run by the state with zero accountability. Why no accountability? Simple, it ain't their capital they are burning, its the taxpayers', and pray who in government answers to taxpayers?

So then what can be done for better governance?

Simple. Get the government out of business, and foster free markets that bring with it competition (read, also end crony capitalism). What happens then? Products and services get better for consumers, and prices go down! Why? Because firms will compete with each other for consumer patronage, and the only way they'll get that patronage is when they better their offerings, and lower prices? How will they do that? By upping efficiency and focusing on creating value for consumers (none of which the Indian railways does).

Don't believe me? Look around you, and at you. The clothes you wear, the phones you use, the cars and bikes you drive, the TV you stare at, the washing machine that does a superlative job, the tablet that lets you work while mobile, the accessories that you adorn, the schools your kids go to, the medicines you pop when you are ill (the list is numerous),.... have only gotten better, and cheaper (cost to you, relative to your income)!


'Cos it ain't government firms that make any of those! Its made instead by private firms that compete in a marketplace.

Still don't believe me? God help us then. 


Popular posts from this blog

Situational Involvement of Consumers

There are two types of involvement that consumers have with products and services, Situational and Enduring. Situational involvement as the term suggests, occurs only in specificsituations whereas Enduring involvement is continuous and is more permanent in nature.

Decisions to buy umbrellas in India are driven by the onset of Indian monsoon. Monsoon rains arrived in India over the South Andaman Sea on May 10 and over the Kerala coast on May 28, three days ahead of schedule. But then, after a few days of rain, South India is witnessing a spate of dry weather. Temperatures are soaring in the north of India. The Umbrella companies in the state of Kerala are wishing for the skies to open up. So is the farming community and manufacturers of rural consumer products whose product sales depend totally on the farming community. The Met. department has deemed this dry spell as 'not unusual'.

India's monsoon rains have been static over the southern coast since last Tuesday because of a…

Prior Hypothesis Bias

Prior Hypothesis bias refers to the fact that decision makers who have strong prior beliefs about the relationship between two variables tend to make decisions on the basis of those beliefs, even when presented with the evidence that their beliefs are wrong. Moreover, they tend to use and seek information that is consistent with their prior beliefs, while ignoring information that contradicts these beliefs.

From a strategic perspective, a CEO who has a strong prior belief that a certain strategy makes sense might continue to pursue that strategy, despite evidence that it is inappropriate or failing.

Ref : Strategic Management : An Integrated Approach, 6e, Charles W L Hill, Gareth R Jones

Consumer Spending

Carpe Diem Blog: From Visual Economics, a graphical representation appears above (click to enlarge) of Consumer Expenditures in 2007, using data from the Bureau of Labor Statistics. Note that total spending on food ($6,133), clothing ($1,881) and housing ($16,920) represented 50% of consumer expenditures and 30% of income before taxes in 2007. In 1997 by comparison, 51.1% of consumer expenditures were spent on food, clothing and housing, and 44.6% of income before taxes was spent on food, clothing and housing (data here).