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E-Pao! Opinions - Predicament of Road Transport Corporation

Predicament of Road Transport Corporation
By: Thiyam Bharat



Despite the increasing roles played by the private road transporters in the State, the MSRTC has to play a cardinal role in providing road transport services to the people especially the poor people of the society

Efficient transport system is a sine qua non for economic development. It is heart to the lives of people. It helps not only in boosting economic growth but also increasing the well being of every citizen. While transport system facilitates to expand the size of market for goods and services, it makes possible for a large scale production through specialization and division of labour. Development of transport also helps to get access to far-flung areas and identify latent resources for production. Road transport is one of the important service providers among all modes of transport system. Road Transport services have become a part and parcel of everyone's life. They are used for going to workplace, school, holiday leisure, shops, business purpose, movement of people, etc., in general and movement of essential commodities in particular.

The Manipur Road Transport Corporation (MSRTC) is a public utility, which has been rendering invaluable services to the people living in the State for the last many decades. Public utility generally indicates a company or enterprise which is the sole supplier of some essential goods or services and is in consequence subject to some form of government control. It may be noted here that the service of the corporation has been utilizing in the State during unwanted and unfavourable situation like bandhs, strikes, natural calamities, etc. In other words, the corporation provides service to areas that might not be serviced by the private operators. Thus the social obligations impose a heavy financial burden on the functioning of the corporation.

Recently, the vialibility of MSRTC has come under cloud following the announcement of the erstwhile President rule regime to shut down a few sick public corporations in Manipur. Since the conversion of Manipur State Transport into MSRTC in mid 1970s, the corporation has been incurring heavy lossess over the past many year.There was a gap between the revenue and expenditure of the corporation. The expenditure of the corporation has so far been outstripped the revenue. For intance, the average income and expenditure of the corporation, which stood at around seventynine lakh and one hundred fiftytwo lakh during 1976-1982 swelled to about one hundred twentyone lakh and three hundred twentyfive lakh in 1990-97. During 1976-1982, the average loss was to the tune of -72.34 lakh and then it accelerated to -203.9 lakh in 1990-97. (Report, A.H.Chowdhury, IAS (Retd.). The revenue of the corporation has been fallen short of expenditure, which has resulted in mounting of debt and perennial loss over the years. The high expenditure has eaten up the capital contributions meant for capital investment, improvement and expansion of the corporation. Ultimately, the financial health of the corporation deterioratd year after year.

Various factors are responsible for worsening the ill health of the corporation. Some of the important factors are pricing policy, low capacity utilisation, excess unemployment, poor accountablity, political interference, etc. The pricing policy has an effect on commercial profitability of MSRTC. It may be mentioned here that the pricing policy of the Public Sector Undertakking (PSU) is not guided solely by the principle of profit maximization as happened in the case of private firm. The pricing policy of public sector is regulated and controlled by the government. It is because the public sector has to keep in mind the social implications and therefore prices are to be kept low even when costs and prices are rising. The MSRTC has also followed this principle and has been giving concession to students, sportspersons, old-aged persons, etc., living in the States for the last many years. But the government has not compensated the amount of concession in terms of subsidy. As a result, the corporation incurred heavy lossess over the years.

Managerial inefficiency is one of the crucial factors that led the corporation to the brink of catastrophe. There have been frequent changes of incumbents of Managing Directors over the years. There was an extra ordinary case of six time changes of Managing Director (MD) in one month. Altogether General Manager/MD were changed as frequently as twentynine times during the last decade. It was reported that manpower had exceeded the actual requirements. In other words, there were disguised unemployment in the corporation that led to zero marginal productivity of labour. Poor manpower planning, overstaffing & under utilization of staff and political interference were some of the major factors for causing heavy losses. It was also found that the corporation procured vehicles without realistic planning and assessment which resulted in poor operational performance. Besides it was also found that the then Board of Directors did not meet rugularly to discuss problems to take important decisions on obtaining instituitional finances, rehabilitation packages as recommended by the Cabinet Committee.The corporation has so far not been able to make payment of staff salaries leading to frequent employee's strikes that further exacerbated the financial health of the corporation. A large stock of surplus vehicles parts have become obsolete and unserviceable which could have otherwise been disposed of by inviting sealed rate quotations from the intending purchasers. The wave of liberalisation and privatisation is another factor which is responsible for making the corporation uncertain. This is because the process of liberalization involves reduction of State activity as well as public expenditure. In the post liberalisation era, the private sector has taken the commanding height of the public sector.

Although it is of course true that there are few sick PSUs in the State of Manipur, yet it is true that there are so many loss making public enterprises across the country. For example, out of two hundred and thirty five enterprises in 1998-99, as many as one hundred and four underwent losses. The profit making enterprises are limited only to four sectors, namely, petroleum, power, service enterprises and agro-based industries. A recent quantitative study on the subject has sought to establish the fact that State-owned enterprises are systematicallty only two-third as efficient as private sector enterprises.

From the above, we know that the existence of MSRTC is uncertain. Despite the increasing roles played by the private road transporters in the State, the MSRTC has to play a cardinal role in providing road transport services to the people especially the poor people of the society. Therefore, every efforts should be made to revive the corporation and to reorganise it for increasing its efficiency to provide competitive fare structure with the private road transportors. By reviving the corporation, the activity of monopolists in the State Transport Sector could also be contained in the interest of the massess. At the same time, the services of the corporation could be rendered to the length and breadth of the State during priod of bandhs, strikes, blockade, natural calamities, etc.


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