In this column, I have maintained that, whereas The Market can take care of all other modes of transportation, The State must supply roads. A pan-India top quality toll-free roads network must be built at State cost for all taxpayers.
Why do I call for State action in this area?
First, we pay taxes. There is a cess on petrol, and a cess on diesel, both dedicated to the Central Road Fund. There are a host of other taxes we pay – and get NOTHING from our The State to show for it. The toll roads of today are a form of “double taxation.”
Further, a huge amount of public money is stuck in loss-making PSUs. If these were privatized, and the entire proceeds dedicated to road construction, we would all be much better off.
As for private businessmen, they will build roads only where traffic is heavy. Thus, they will not be able to cater to the road requirements of the entire landmass.
There is another factor: the low level of car ownership in India, below 10 cars per 1000 people on average. Private businessmen cannot recoup their costs where car ownership is so low.
So what kind of a road network do I have in mind?
First, real highways that do NOT provide access to roadside properties, but are meant for swift movement only.
Second: “Truckways” parallel to all these highways for hauling freight. This will also keep the highways safe. With such excellent roads, tourism will grow.
Third: local roads connecting every property in the district.
Roads, roads and more roads.
Swaminathan Aiyar often speaks of the economist Robert Chambers who told him, 30 years ago, with reference to India:
“If I had money, I would build roads. If I had more money, I would build more roads. If I had even more money, I would build even more roads.”
I fully endorse this view. I would do the same. Roads are the solution to all our problems.
Look at it this way: Today, the socialist State owns a car factory, a scooter factory, and a cycle factory.
Socialists are NUTS!
Hi Sauvik,
ReplyDeleteReally surprised to see you talk about an existence of a role for The State.
Can't businessmen come up with innovative business model to deal with low car ownership?
Why can't they make money by building super fast truckways?
Are people not better off if they fight for property rights and lesser regulations rather than ask inefficient govts to
focus on critical tasks like building roads?
Would be glad to know your thoughts.
-Shankar
Shankar: I can only quote Adam Smith in my defence. In "Wealth of Nations" he said:
ReplyDelete"According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”
It is the third duty of the sovereign that I am referring to.
Thanks Sauvik.
ReplyDeleteIf i may ask another question, would these duties of the state be funded by voluntary contributions?
I wonder if any governing institution that imposes some form of a forced contract, however small, is evil and would keep expanding in scope.
Much like how the America of today is not the America that was founded.
-Shankar
Well, in the case of India and the funding of roads, I say we need privatization, not taxation.
ReplyDeleteTaxation is theoretically "limited" by parliament, but where the State prints money, this limit becomes meaningless. So we need sound money if we are to have sound democratic institutions.
This discipline of sound money is what will ultimately control the State.
Actually, our state already collects cess on diesel for roads but for 50 years, that money was appropriated by State until NDA's highway plans. I recall one pink paper quoting Dr Fake Singh Dhongi who questioned the plan and asked where will the huge amount of money from and Yashwant Sinha (who knows the system as well as Dr Fake Singh) giving the total size of money collected in the name of road cess but never spent for the same purpose (if my memory serves me correctly, the cummulative amount was in excess of Rs 50,000 cr). The same Dr Fake Singh had no problem in finding Rs 40,000 cr for NREGA type schemes. But, for some unexplained reasons, he always gets a free pass from our media and intellectuals!
ReplyDelete