Why does the government run a three wheeler company?

by Manshu on July 13, 2012

in Opinion

The Financial Express has a story today about a possible diesel price hike after the presidential poll and as ridiculous as this is, unfortunately, it is a common thing, and shouldn’t surprise anyone. To be clear, the price hike is not ridiculous, the heavy burden that under recovery of diesel prices puts on the India’s finances leaves no option but to increase prices and pass that on to the consumer, but the timing is crazy.

What does a presidential poll have to do with diesel prices?

As long as you have the government involved in diesel pricing, this politicking will continue and there is simply no way out of it. As crazy as this may sound, it is nothing compared to the other things that the government is engaged in.

Air India has been bleeding money for ages and somehow the government and even a large group of ordinary folks who will never set foot on an Air India plane think that it will somehow hurt national pride (whatever that is) if the government got out of the airline business and left it to private hands. What rationale does the government have to run an airline, specially when it does such a terrible job of it?

This however, is not as ludicrous as the government running a three wheeler company! Scooters India Limited is the “future of three wheelers to come” according to the much fashionable flash intro on their website which fails to mention that it is also a sick PSU which the government has been unable to divest and as a result continues to run it at a loss.

What sense does this make?

The experience of the post liberalization era has shown the the private sector is able to compete with foreign firms and is able to provide a lot better services than the the government when it is allowed to.

Indians of this generation have not been smarter or more hard working than their parents, yet they enjoy a much better material life. Why is that? It’s because they were lucky to have a better system around them.

Far too many of us assume that it is India’s destiny to keep growing and improving the standard of living of millions, and I’m sure everyone thinks that India 20 years from now will be a lot better than India today, but that’s a misguided assumption because without the drive to free markets and further liberalization, there is now way to keep forging ahead.

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