Air India... And A Historic Opportunity

True to form, our Chacha State keeps moving from crisis to crisis – the latest being the pilots’ strike at Air India. The state-owned airlines' annual losses exceed Rs. 7500 crores and its borrowings are over 15,000 crores. That is, in a market economy such a firm would have closed down long ago. Other, more efficient, airlines would have taken its place.

However, under State-ownership, this company of losers is allowed to remain in operation and, what is more, “compete” with efficient private players.

How can anyone compete with a firm whose losses are underwritten by The State? In reality, Air India has been “outcompeted” long ago. The private airlines have won the battle ages ago. However, the losing party keeps coming back into the fray with taxpayer support.

This is “unfair competition.”

There is a case made out for legal action – and the decision should apply to all PSUs: that they inject unfair competition into markets.

I witnessed this raw power of loss-making transport PSUs in Mangalore, when the State-owned bus company announced the deployment of 50 additional buses on a busy inter-city route. This set the cat among the pigeons of the private bus operators. They had to “lobby” hard to get rid of this unfair competition. In effect, they were blackmailed by a loser.

Ditto for Air India announcing tomorrow that it will run 50 low-cost Mumbai-Delhi flights a day.

No one will be able to compete.

And, instead of encouraging enterprising businessmen, our society will be encouraging tax parasites.

I suggest legal action at the Competition Commission. Indeed, if I recall right, the commission is empowered to take up such issues suo moto. It should do so.

This crisis of The Chacha State can then be turned into a historic opportunity to get rid of the entire public industrial sector. Total privatization. The entire proceeds, which represents the “commonwealth,” should be invested in a world class, pan-India, toll-free roads system. This means additional taxation will not be required for the purpose.

But look at the matter in any way you like, you will arrive at the same result:

=> How can a private school compete with a “free” government school?

=> How can the steel industry be competitive if the loss-maker SAIL dominates the market?

The conclusion to draw is “when the king trades, the people become beggars” – an old Gujarati proverb, I am told.

I leave you with this thought:

“A government does not exist to conduct the affairs of men. It exists to administer justice among men who conduct their own affairs.”

It is time to get rid of The Total Chacha State.