Curtail Cartels and Conniving Collusions

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Each story has many facets and there are infinitely many sides that one can take or attack when talking about Nepal’s transportation industry. While the nation itself is mired in difficult terrain and inaccessibility, there are also other factors which contribute to the sub-standard service that many users of transportation have to endure. It need not be elaborated that virtually all aspects of the market relies on transportation—through its usage in transporting the food that goes on your plate, to ferrying individuals from different locales to different places in order to earn enough money to put that food on your plate—its importance can be well experienced simply by being part of this economic system. However, the recent surge in news about road accidents, rife with death and tragedy, paints a bleak picture on the efficiency and reliability of Nepalese transportation sector.

In the novel The Godfather, the Stracci family owns trucks, which are usually overloaded, as they have a transportation business. Now, because they are heavier, their trucks effectively damage highways faster. However, the family has large stakes in the construction business, so, they are also contracted to do the highway repairs.

As a regulatory agency, it is always easier to regulate the activities of a few groups than face the hassle of properly evaluating a multitude of players involved in an activity. Similarly, a few participants will allow the regulatory agency to extract enough benefit from the participants; not unlike the Stracci family, from the above mentioned fiction-novel, who also wielded political influence to be allowed to ply heavily laden vehicles on the road and, simultaneously, be awarded contracts to repair them. The ill functioning transportation regime of Nepal may be the fallout of a regulatory body that perceives its actions as being important for the well-being of the population while actually suppressing competition and removing the ability of consumers to choose from different service providers.

However, the regulators have barely managed to properly enforce the law on transportation sectors’ proprietors. Little seems to have been done to ensure the well-being of consumers by checking to see if transportation service providers comply with the basic rules that us regular citizens abide by. For example, even a cursory observation will show that many tippers, trucks, and buses do not have functioning brake lights or turn signals. Similarly, many cargo vehicles take little measure to ensure their contents are not being scattered about the roads. I have fond memories of trucks carrying sand and gravel spraying contents in the eyes and mouths of us individuals behind these large vehicles.

According to Status Paper on Road Safety in Nepal 2013, published by GoN 43.7, 6.1, and 5.2 percent of all road accidents were caused by driver negligence, technical fault of vehicle, and overload vehicles respectively. Of the accidents that happened this year, the bus that plunged into the Bheri river on November 20, which claimed 40 lives, and the bus that fell 50 meters in Nuwakot, killing 10, were both cited as having been overloaded and/or overspeeding.

While various activities regarding transportation safety—from “Maa Pa Se” checks to mandating that public vehicles be packed just enough for the doors to close—are occurring in the valley, the risky situation that consumers outside the valley are subject to gives us little faith in our transportation system.

It is now time to reevaluate the condition of the vehicles that are plying on roads and to make sure that the (transportation) system is not mired by inefficiencies and impediments to possible entrants. In a competitive market, consumers have the choice to choose between products and, hence, choose between product/service providers. High school economics also tells us that in light of competitive environment businesses tend to price their product close to the costs involved in production. The government set fares hint that our market for transportation services may be monopolistic. And this gives reason for the government to step in to “protect” consumers from high prices. However, this protection is simply a painted veil that our government has set up to cover the ugly curtain that our transportation lynchpins hide behind.

Anurag Pant

About Anurag Pant

Anurag holds a Bachelors of Science in Economics and works as a Research Assistant at Samriddhi, the Prosperity Foundation. He also lectures on Economics at Xavier International College.