Irrefutable Law of Economics

Indian Express ( 08 Sept 2016 ) carries following news report :

" Railways to introduce surge pricing for Rajdhani, Shatabdi, Duronto trains "

"  The Ministry of Railway on Wednesday said that it will introduce flexi fare pricing in its Rajdhani, Duronto and Shatabdi trains from September 9.

The fares will increase by 10 per cent with every 10 per cent of berths sold.

“The base fares will increase by 10 per cent with every 10 per cent of berths sold subject to a prescribed ceiling limit. There will be no change in the existing fare for 1AC and EC class of travel,” a railway ministry release said.

While 10 per cent of the seats will be sold in the normal fare in the beginning, it will go on increasing by 10 per cent with every 10 per cent of berths sold with the ceiling limit at maximum 50 per cent depending upon the demand "

Now even as some State Governments ( and possibly central Transport Ministry ) , are seriously considering forcing Uber / Ola taxi-share operators to give up their practice of Surge Pricing , Shri Suresh Prabhu ( Railway Minister ) must find lakhs of crores of rupees to modernize our ancient and dilapidated train services

Over the decades , one after another Railway Minister ensured that the railway passengers did not have to pay for the actual / real cost of running these trains

They took the easy way out by keeping Rail Fares much below the cost , by incurring losses , subsidized by tax payer money !

But Shri Prabhu says :

"  This cannot go on for ever !  People must pay the true cost of this service !

   Aren't people paying varying prices for Petrol / Diesel for some years now ?  At one time , these too were highly

 

  subsidized and if govt tried to raise these ( mostly thru annual budget ) , there used to be riots on the streets !

  Now these get adjusted every fortnight and no one even notices !

  Economic law of Demand and Supply must dictate the prices , from time to time "

No doubt , Shri Prabhu  !

But under this very Law , when existing operators start making tons of profit, dozens of competitors enter that field and increase the " Supply " to catch up with the huge " Demand "

In turn , that increased competition forces the incumbents to drop their prices to match the new operators and the Consumers gain

Precisely , what is happening for the past few weeks in the Mobile Telephony Services , with arrival of Reliance Jio !

But the question is :

Will NDA government permit private sector companies to lay down rail tracks and compete with Indian Railways ?

If so , that would be GREAT , because Indian Train passengers will have " Options " to choose from !

You must not say , " Heads I win , Tails You Lose " !

Incidentally , in order to increase " Supply " , here is what the Central Transport Ministry and the State

 Governments should do by :

#    Encouraging Kali-Pili taxi owners to form their own Mobile App based " Share Taxi " scheme to take on Uber /

      Ola , playing by their " rules " , by installing Digi-Met / Fare-Calc , as recommended in my blog,

     "  Tablets in Taxies " { http://myblogepage.blogspot.com/2016/05/tablets-in-taxies.html  }

#   Enabling many more private sector Start Ups to launch, " Share-Bike " / " Share-Rickshaw " operations

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08  Sept  2016

www.hemenparekh.in / blogs