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When profit rules

Print edition : Aug 27, 2010 T+T-
At the Indira Gandhi International Airport in New Delhi, an Air India Boeing 777 landing on the third runway, which was inaugurated in August 2008. It features CAT III-B instrument landing systems at both ends.-KAMAL NARANG

At the Indira Gandhi International Airport in New Delhi, an Air India Boeing 777 landing on the third runway, which was inaugurated in August 2008. It features CAT III-B instrument landing systems at both ends.-KAMAL NARANG

Private enterprise is essential but is not the only way forward as long as profit, and not customer service, remains its bottom line.

THE splendid new airports in Hyderabad and Bangalore, and the awesome splendour of the new state-of-the-art terminal, one of the biggest in the world, at the Indira Gandhi International Airport in New Delhi are some of the shinning examples of what private enterprise can do. There are also the new airlines that are doing such a fine job of providing air connectivity to the country on a scale that the erstwhile Indian Airlines and Air India could not even think of.

Apart from airports and airlines, there is a surge of new enterprise in different fields of industrial activity. In the automobile industry, for example, there are more and more cars being turned out every day new, sleek models incorporating new features both in their engines and in the design and comfort of the interiors. Even in the field of road transport, public-private ventures have sprung up in different areas, providing well-finished, wide expressways and highways.

Roads are not the only kind of services that private enterprise is providing. In cities such as New Delhi, it has taken over the distribution of power; so far private enterprise in this field was restricted to the Tata's providing power to a substantial portion of Mumbai for a long time and the CESC (Calcutta Electric Supply Corporation Ltd) in some parts of Kolkata.

It is only in agriculture, where production is wholly private, that there is little or no improvement, except in Punjab and some other areas. In most parts of the country, farmers eke out a frugal living, if at all, from their labours. Perhaps, in time that will change and the remit of corporate India will include agriculture, just as it includes tea estates and coffee plantations today.

Before one rejoices at these fine examples of private enterprise, it is necessary to take a good look at some of the features that underline them. No one will dispute the statement that private airlines provide passengers with a level of service that is distinctly ahead of the publicly owned Air India; passengers checking in for a flight by a private airline and those doing the same for an Air India flight will know the difference.

The surly indifference of the Air India staff and the slapdash crude ways of their baggage handlers are only too well known, while the smallest private airline has staff who are polite and baggage handlers who are cheerful and take better care of baggage than their Air India counterparts. This is a generalisation that will need several caveats; in times of dislocation or delays, say, owing to fog or some other reason, the staff of all airlines are often less than helpful and, frequently, disappear. But on normal working days the generalisation holds good, by and large.

But consider this. In winter, Delhi is sometimes blanketed by dense fog. To ensure that this causes the least amount of inconvenience to the thousands of people travelling to and from the capital city, sophisticated equipment costing crores of rupees has been installed. This is basically a very advanced instrument landing system (ILS) labelled Category III-A, which enables aircraft to land and take off when visibility is even as low as 50 metres. But it is not enough for the airport to have this equipment, the aircraft must have corresponding equipment on board to receive signals from the ground and interpret it for the pilots. Not just that, the pilots need specialised training a process that takes some four months or so to use the system.

Now, while Air India has trained a large number of its pilots in the use of the Category III-A ILS and installed the necessary equipment in a large number of its aircraft, the private operators have been reluctant to do so because their marketing geniuses have told them that the number of days Delhi is fogbound is too small to warrant the expenditure. It was only when the Directorate General of Civil Aviation (DGCA) cracked the whip, and made it clear that operators would lose their landing and take off slots in Delhi during the winter months, that some of them installed the equipment on a few of their planes and got some of their pilots trained.

They still had a trick up their sleeve, which they played. They pointed out that the roster of duties was such that it was not possible to ensure that a Category III-A trained pilot was flying to or from New Delhi on the day there was fog. Back, then, everyone went to square one. The DGCA will, in all probability, find a way to outsmart them on this one, if it has not done so already, but the basic point is painfully evident. The private airlines are not really concerned about passenger safety and convenience but about their profits. They may put it differently, but that is the bottom line.

Something similar is happening in Delhi with the private distributors of power. Individual consumers are required to pay huge sums, a part of which is shown as arrears. Fair enough; if they have not paid in previous months they need to pay the arrears with the current amount due. What is, however, most remarkable is that there are arrears shown every month.

Now, if one has not paid the full amount in the previous months it is, rightly, collected as arrears along with one month's bill. Thereafter, logic would have it that the consumer's account has been squared up and all that he/she has to pay is the current due. But that is where logic and money-making part company. Using elaborate casuistry, the private companies explain that the arrears are recurring dues, and since they are in some cases, more than the current dues, the amounts the hapless consumers have to pay are enormous.

The assumption behind this is clear enough. The private power distribution company is not there to provide a service so much as to cream off as much as it can from consumers whom they have over a barrel. Conventional wisdom says that they are far more efficient than the earlier corruption-ridden state power agency. Well, all one can say is that a clever enough public relations agency is all that the private company needs to convince everyone that black is really white and that we had been fooled into thinking it was black all along.

It is no different with the expressways that one has to pay a toll to use. It seems, and is, logical, until the rates keep going up and up. Very impressive sounding reasons are given for this, and behind them is a veiled threat: pay the higher toll or the maintenance of the expressway may develop snags. Again, the assumption behind the eagerness to build world-class expressways is no different from that of the private airlines and power companies.

One can argue, and accept, that this is inherent in the very nature of the system and that benefits outweigh disadvantages. The dangers arise when it is considered to be the only way forward; that private entrepreneurs bring to the table far more expertise and quality of work than stodgy state agencies, and consequently it is essential to involve private enterprise and skill in development. But one needs to keep in mind the basic assumptions that exist on both sides and safeguard against exploitation by either side.

Finally, it comes down to the difference in work ethic. In other countries, private airlines train their pilots, or hire pilots who are skilled in the use of the Category III-A ILS system, and all their aircraft have such equipment fitted on them. It is no use saying that they have a greater incidence of fog; there are places in many countries where fog is much rarer than it is here. It is a question of ensuring total confidence and trust among the passengers that, except in major incidences of bad weather or other calamity, they will be transported to their destination. What is needed is an import of that work ethic, if private enterprise is to play a larger role in the total development effort, as indeed it should.