The moment we say word ‘airport’, we imagine of a gigantic halls with automatic doors & escalators, well maintained facilities & somewhat courteous staff. Leading road to the airports is mostly well maintained with beautiful landscapes & huge bill-boards. But this also pops up to the question, are some of those things necessary? Isn’t they just add the burden to the overall infrastructure cost with no or little value additions to end consumer.
This prompts me to the question, that if as consumer we are happy with low cost airline, not serving snacks or charging extra for a higher leg space seats, then why can’t be we happy with concept of ‘no frill’ airports? Or is it our mindset on airport that’s not driving this change? Well I have no easy answers on this but this is definitely a proposition to think about.
The International Air Transport Association (IATA) in its report mentions that through infrastructure changes & bringing transparency, they were able to save whooping $475 million only on airport charges in year 2012 (Source link). IATA 2011 data sheet for year 2011 estimates outflow of at least $92.3 billion for the use of airport and air navigation infrastructure, equivalent to 14.4% of the cost of transport. (Source link). Imagine the value being unlocked if we think towards low cost airport models.
Having put my points for the low cost airport let me pen down my thoughts on this model. Unlike LCA where they charge you for anything & everything, these airports would be developed in such a way that they shunt unnecessary luxury (or perceived luxury) associated with airline industry.
– These airport needed be gigantic buildings with one or two terminals but could be buildings good enough to address the security concerns of flight travel (just to ensure that proper check-in counter can be placed & security check areas are segregated).
– Airport is not place to hangout, the leaner the security procedures, the shorter the time person needs to be at airports and better the utilization. If check-in counters are closed 20 minutes prior to departure instead of current 45 minutes to 1.30 hours, not only people time will be saved, but avg. traveler count on airport will also reduce ensuring benefits of reverse economies of scale.
– Is it mandatory to only one airport in city & instead have multiple airports in large cities?
– Why is terminal only at one side of the runway? Better management of planes, I don’t think it helps? Having a one big terminal instead of four small terminals, does help flyers with single point of contact, but the associated infrastructure cost increases like bigger air-conditioning requirement, longer check-in & security queue etc. Instead why not to have smaller but multiple terminals?
– Why to have buses ferrying people to different plane bays? Instead design airport in such a way that people can walk from gate to airplanes. Best example, Nanded Airport, Bhuj Airport, Rajkot Airport & at times Pune Airport in India. Apart from individual with specific needs no one will mind walking few hundred meters if they are going to save on total travel cost.
– Last but the important one, is it required to have only government controlled or privately licensed airports? Why not open up the sector for entrepreneurs to develop green-field airports & bring innovations. (Remember it was only Deccan Airlines brought concept of LCA, which now is lifeline of all major airlines in India).
These are some of the example, I can tip-off based on my flying experiences & if this topic is debated, I am sure industry experts can open up avenues to reduce cost in airport infrastructure, leading to heavy cost reductions & ensuring air travel affordability. This is something that needs to be thought of to assist heavy burdened airline industry & provide individual cost-effective means of travel.
Many times in life one comes across some situations which are generally impossible to generalize with a correct answer to dig the way out. One such situation which provoked my thought today is ‘Why Bandh/Strikes always needs to be destructive? I have never understood the motive behind the destructive Bandh/Strikes.
It’s not that I am Gandhi, who preached the way of non-violence or non-cooperation to express once anger or angst against the wrong or what one perceives as wrong? It’s even not that I don’t like the call for Bandh/Strikes and consider it as loss of productive hours, because I loved it as a Student, because being a child in protected environment, I was never concerned of the cause of strike and also love it as an employee, because such strike call, gives me an opportunity to set myself free from the mechanized lifestyle and think about myself and the world around me. But that’s me…
However, I not at all endorse the destructiveness associated with the Bandh/Strikes. It not only spreads negativity, but sometimes also causes pain to someone who is not at related to the cause of Bandh/ Strike or has any power to resolve the conflict. Bangalore recently observed three major disruptions due to one or the other reason and I feel none of the disruptions did any good to people at large. Had the leaders leading those strike calls had given some thought and innovation, I am sure common people would have appreciated their cause or fight. Let me pen down my thought on how I would have given such strike calls for some of the instances… you can term is as Gandhigiri or Munnagiri… but I am sure, if I can think of these ways, ‘intellect’ in our country can surely make way to more constructive or innovative ways of expressing their views to highest level of power corridors.
Let’s analyze the first call of destructive Bandh/strike. State Transport and City Transport bus drivers & conductors went on strike for two days, working days to be very specific, on reason for majorly better pay and other perks. Was it really necessary to stop plying buses on road and inconvenience general public? Consequences of these two-day strike were, all transport from rural place to other villages/cities can be complete standstill. Secondly, entire Bangalore public transport system came to standstill, including airport services (approx. distance of airport from nearest city point is 25 Kms). All private vehicles in Bangalore hit road for commuting purpose, leading to traffic deadlock. Lastly, poor people who didn’t have their own vehicle traveled on roof of private buses, risking their valuable (read valueless) lives. What differently could have been done by these State Transport Corporation employees? Well couple of things, firstly they would have not worn their uniform but instead would have worn black clothes showing their dis-satisfaction. Secondly, conductors should not have issued tickets but instead would have requested everyone to support them by buying black ribbons and wore on their forehead till they travel in buses. (Remember, every ticket not issued hits directly to pocket of corporation, direct impact to corporation, no direct inconvenience to passengers). Third, drivers would have driven the buses at speed of 20 Kms ensuring that travel is delayed but not halted. I am sure if these three things would have been done, they would have won their case as well as hearts of people they serve without destructive bandh/strikes.
Second call of bandh was even interesting, opposition parties unanimously gave call for strike/bandh against price rise of cooking gas and diesel. Consequences, every activity came to standstill and not even ambulances were available for the needy ones. Aren’t this and little extra in name of bandh/strike. If it has to be something innovative, they would have made their volunteers sit at each petrol pump and have urged people not to buy fuel from these pumps and people could hire shared taxis/autos or do car pooling. They could also have put two volunteer at each gas distribution agency to ensure that all delivery of cooking gas is done as per the booking order queue (such step would have really hurt all black marketing gas agencies). Also the most different would be to move to house of each MLA/MP of opposition and empty their car tanks of fuel and kitchens of gas cylinders.
Third bandh was the one called for showing opposition to Govt/Supreme Court/Cauvery authority against asking Karnataka to release water to neighboring state Tamilnadu. This is highly sensitive point for both states and in past has created lot of trouble in both states. However, if it had to be different, I would say, Karnataka would have released the water for Tamilnadu and have also asked its citizens to implement plan of conserving water (Bangalore gets almost 8 months of rain) and Kannadigas (Residents of Karnataka) would have adopted that suggested plan to ensure they conserve enough water for themselves and their neighbors. I am sure if that would have been gesture created by people of Karnataka, even Tamilnadu would be forced to reciprocate to this gesture and implement similar plan to conserve water.
I am sure, many would question my solutions, but will not question the problem I am trying to address. After 65 years of Independence, we are still living in an intimidating environment created by destructive bandh/strikes. If we really want to be grow, rise and call ourselves mature country, we need to really address these problems differently, innovative and most-important non-destructive.
– Image for representation purpose only – Original Image
Recently UPA lead government overcame the biggest hurdle in reviving economic condition of India by straight increase price of diesel by INR 5/liter reducing its under-recovery to 10-13 INR/liter from one time high of 15-18 INR/liter.
The reaction to this announcement was as expected. Opposition and ‘independent’ media, in name of common man, condemned it, while stock markets and majority of economist applauded it. Personally, I think this was inevitable as UPA would not be able to pull this long considering the curren
t state of economy. They played their cards well; with this diesel huge hike they definitely kept room for themselves, in case they need to do a partial roll-back under populist pressures.
However, I think it’s high time, we step out of our comfort zone and think innovate during such unprecedented circumstances. Price hike was inevitable, due to subsidiary burden and fiscal deficit reaching around 6%. However, the hike will work as catalyst to propel the inflation and will in short term will impact the economy. So what is way out? As usual, I juggled the thoughts and numbers to come up with this solution scenario.
OMC (Oil Marketing Companies), which includes mostly IOC, BP, HPCL have traditionally cried foul over the subsidiary payments and under recoveries in subsidized distribution, however, after lot of research I couldn’t found out any conditions on these companies to improve their refining margins. Refining margins for these companies are almost stagnant for last decade. This is high time when they should be held accountable for the inefficiencies in improving the refining margins. Private players like Reliance and Shell have shown considerable improvements in their Refining margins with help of various tools, including fund hedging and different crude mixes. Unfortunately Govt. held refining companies, have been working on with almost single kind of crude for decades. Why the inefficiencies of government companies be compensated by way of government subsidiaries? Why these companies are not being pulled up for not improving refinery margins? I think they should be made liable and bear up the losses for their inefficiencies. I don’t have correct numbers with me, but I am sure over long term, this will bring down the under-recoveries by nearly 30-50%.
Coming back to practical approach on diesel pricing, we can divide the diesel consumers into four categories, (a) Cars including SUVs, private buses, small shops & apartment which use it for electricity backup, (b) Industries who consume truck loads of diesel like generators in IT companies or manufacturing, (c) Truck & Heavy vehicles which being used for transportation of goods and (d) Railways and public vehicles (State transport)
Out of above mentioned categories which require subsidized diesel is category (c) and some portion of category (b) users. Some time ago, we had a wonderful view of differential pricing which was negated due to the fear of the black-marketing and practical hindrance in implementation. Let me first describe of the easy once that can be termed as ‘quick wins’ Category (b) industries generally procure the fuel directly from the OMC and thus can be charged at market rates (non-subsidized) and wherever they have subsidized requirement, equivalent tax credits can be provided on monthly/ yearly basis.
Now, category (d) Railways is biggest consumer of diesel and they also procure from directly from OMC. They can like category (b) users be charged at market rates (Non-subsidized) and if government want to continue populist railway budget, Railways can be provided with oil subsidiaries via Rail Budget allocations. Two benefits, first railways subsidiary bills can be accountable and their efficiency improvement can be tracked. Secondly, government if wanted to maintain fiscal health policy criteria, will be forced to present genuine railway budget rather than current populist budget. Similar story goes for the state transport vehicles, only funding medium will change from centre to state.
There is no doubt in my mind that category (a) users should be charged minimum at market rate (non-subsidized) and because still in India cars, specially diesel cars, are considered as luxury items, they should be charges extra via additional Road Tax and Excise Duties. The argument will now arise that this will kill the automobile industry which is currently under pressure, blah blah blah…, so let me remind you, the ultimate aim should be to kill such industry which destroys environment and doesn’t invest in R&D for fuel efficient systems. The saying ‘Necessity is mother of Invention’ will help the so pressured automobile industry to survive and if not, there are option of petrol, electric, CNG, hybrid cars. Perhaps, we might find solar cars running in India.
Now let’s focus on final category, category (c) which represents Trucks and vehicles transporting goods. Fuel price rise in this, will have direct impact on cost of goods being raw material or finished goods and would directly contribute to inflation and hit every individual. Thus it’s imperative that this category gets subsidized fuel. However, it’s virtually impractical to have differential pricing. So let this vehicle procure fuel at market price but implement the following:
– Reduce the excise duties to minimum: The reduction will have a loss on exchequer but can be mostly compensated by marginal hike in duties of car. Again, number of cars sold is much higher then number of trucks sold, so by simple arithmetic solution, the hike in car excise duties would be marginal and help survive automobile industry.
– Reduce the road tax to minimum: Same as excise duties, road tax if reduced will help trucker save money and with same logic as excise duty, private car owners will not have to share hefty hike.
– Eliminate the State Permit: Elimination of State Permit will ensure that the truck would be freely available to ply between any routes and any place. This will also help truckers to quick move to profitable routes and competition will ensure that market correction will give optimum rates of transportation. Unlike right now, permit costs would not increase the transportation cost and this move will be equivalent in monetary terms as subsidies in fuel cost. Again, as there would be no state permits, the trucks would not get stacked at state entry check-post for a day or two, giving around 1-2 days more for trucker to earn.
The question will now arise that who will bar loss of State Permit charges. Well these charges will be compensated by Centre on reducing basis over few years. Post few years this would not be required as the trucker would be working more efficient and would be doing more rounds, they would deliver higher quantities of goods leading to higher VAT/Sales Tax/ GST collections.
Again, free movement of trucks within states, will create burden on the State Government to reduce the current taxes on diesel prices as truckers will mostly fill up the tanks where they get cheapest fuel. So if trucker is making rounds between Bangalore and Chennai and if Chennai has even 10 paisa less fuel price, trucker will fill most of fuel from Chennai and thus Bangalore eventually have to reduce their prices (taxes) to compete with Chennai.
Again, this is my hunch on how to handle diesel scenario for this country. But I am sure this one is also not full proof and requires lot of ‘consensus’, which in today’s narrow world hard to come by. Still with all the positives, I am floating these thoughts for all intellectuals out here to read, comment and suggest some ‘out of box solution’ to this not so simple problem.
Black Money, as Wikipedia defines as funds earned from black market, on which income or other taxes have not been paid. This has been favorite topic of discussion for scholars and perhaps best tool in any leader’s kitty to win popular kudos as it’s really a grey area in Indian Economy. As there cannot be any legitimate estimates of the Black Money, it’s importance can be described from the term quoted ‘parallel economy’.
Well lot has been said on and little has been done to bring the money back from tax heavens, but that’s not much of concern for me at least. A major concern is that, it’s still continuing and there is nothing whatsoever been done to check or restrict it from this point forward. So leaving aside bringing back the black money, here is something, I want to suggest to ‘intellectual’ individuals – a way to track, restrict and provide deterrent to this ‘Parallel Economy’.
I had always wondered why the currency notes were having serial numbers and did lot of research over internet to identify the purpose of this serial number and could only find that the utility only restricted to give each note a unique identifier and a step ahead, a quick identification of where it was printed. This is definitely a requirement of the currency note but it’s now old fashioned and need more out of it. With advancement of technology, even currency notes needs to be upgraded. Now its time to introduce bar-codes on currency notes, even a step further, Sim-card type micro-chips would be best. However, looking at the cost factor and the purpose, I will be happy to settle with Bar-codes. Let me explain how I intend to track black money and money laundering using these bar-coded currency notes.
Have you ever heard of website ‘Where’s George’? Well it’s wonderful concept of some hobbyists to track US currency notes. Based on similar idea, there are lots of websites which provide such currency notes tracking. In fact, I also came across Indian Rupee website, ‘Track Gandhi’, a website developed to track Indian currency notes on lines of Where’s George. Currently all these websites, gives you excellent statistics on where the note you are holding with you have been traveled before it reached you. Backed by some wonderful analytical tools and intelligence, one can see which state holds how much currency and much more things, one can imagine. Of course this all is possible through that unique serial number on the currency note.
Now let’s get back to our topic, bar-coded currency notes. So the plan is very similar to what this websites does; only the scale of operation differs, just because we are not hobbyist but into serious business of curbing illegal money from the system. So here is what we what we do:
A wonderful initiative by IBM India to discuss the ideas of progress for India, India Onward. Posting my views on the topic of ‘Driving Social Inclusion through Cooperative Banking’ as initiated by Robert Parker (Link to Website)
Until recently, banking services in India were nothing short of an ordeal. An average consumer would take half a day off from work to manage simple banking transactions, like creating a demand draft or sending an outstation cheque. Today, with internet banking, ATMs and mobile banking facilities, such a situation would be considered unthinkable. The banking sector in India has grown exponentially in the past decade, but has the growth been inclusive?
According to available data only 40 percent of Indians currently have access to basic banking facilities. There is a staggering disparity across geographies, socio-economic categories and the pervasive urban-rural divide. Such exclusion is a result of a combination of factors such as physical inaccessibility, cost of access, lack of awareness and a trust deficit.
Cooperative banks, in general, are better equipped than commercial banks to address these issues, with their widespread reach, lower operating costs, flexibility, and deep-rooted connections with the local communities, which, in turn, inspire trust. With over 95000 rural and 1,600 urban cooperative banks registered in India, these organizations can play a pivotal role in the “real last mile financial inclusion”.
However, the cooperative banking sector in India, particularly in the rural areas, is plagued by poor financial health, high non-performing asset (NPAs) and inadequate infrastructure.
Technology can play a significant role in addressing this issue. With an effective application modernization approach, cooperative banks can expand their reach even further, improve operational efficiency and address customer needs more effectively.
Towards this end, the government has set up two funds: the Financial Inclusion Fund and the Financial Inclusion Technology Fund, worth INR 1,000 crores which are being extended to banks through NABARD However, government initiatives have to be supported by technology service providers, who need to perceive inclusion as an opportunity. They need to create technology and business platforms that suit the need of these banks.
One of the initiatives from the technology vendors, aimed at addressing the needs of cash-strapped cooperative banks, for an example, was the new Application Service Provider (ASP) model. ASP is a cloud computing model which allows the cooperative banks to use the hardware maintained in a shared data centre owned by a third party vendor. The banks do not need to maintain an IT support staff, helping reduce operating costs significantly.
IBM, in collaboration with its Business Partners, has been helping cooperative banks to achieve their modernization goals. However, this is just the beginning. Cooperative banks, in collaboration with the government and technology service provider, will need to aggressively pursue application modernization initiatives to enable true ‘financial inclusion’ in the society.
Well the idea of empowerment of the cooperative banking through the technology is good but I think its too theoretical. Barring bigger (stronger) cooperatives , I think this would not help smaller RRBs or cooperative banks. Let me explain my logic behind the same.
Firstly, most of these cooperatives are chaired by local political/business big shots that had led these cooperatives to poor financial conditions. Though RBI has cleaned lot of dirt by way of regulations, these people don’t have strong desire to induce accountability and transparency in cooperative banking procedures.
Secondly, ASP model might be best available solution for technology of these cooperative, however, I see serious lack of supporting Infrastructure in many parts of country. For e.g., in Rural India, rolling of 3G services would still take lot of time and thus the idea of social inclusion via ASP model would be at very slow pace.
Third, existing alternate solutions like, gprs based business correspondent device and platform, aadhaar based authentication mechanisms enabling PSU & private banks to expand its reach will probably get more push, both financially from government as well as socially from individuals, due to sheer lost of trust in cooperatives due to scams.
Lastly, enabling cooperative banks & RRBs with advance technologies would make them vulnerable to the risk of merger & acquisition(read takeovers) by the bigger banks, more by the new private banks which would get license to operate soon. This would be last thing the current administrator of cooperative will want to happen.
On personal front I believe financial inclusion will lead to social inclusion, but I hardly see it coming from cooperatives or RRBs. I see it coming from independent entrepreneurs, working as extended arm of bigger banks or from the mergers of small cooperatives & RRBs into new private banks.
A wonderful initiative by IBM India to discuss the ideas of progress for India, India Onward. Posting my views on the topic of ‘Managing electricity theft menace’ as initiated by Jeby Cheiran (Link to Website)
India has world’s fifth largest installed capacity for power generation, but more than 300 million people in the country still do not have any access to electricity. One significant contributing factor to this insufficiency is the staggering network loss, exceeding 30 percent. Such a huge loss in transmission and distribution (T&D) further raises the demand and places increasing pressure on the installed capacity.
Though it is difficult to quantify the proportion of electricity theft in T&D losses, it is undoubtedly a major contributor. As a consequence, utility organizations have been running huge losses, resulting in increased power tariff for the end user.
Power theft results in a situation where all the stakeholders, including those responsible for the pilferage in the first place, get affected. While stronger vigilance and better technology can address the issue to an extent, I believe there is a greater need for awareness among people and having greater focus on building the overall infrastructure. While, citizens must have access to such an essential element of modern day life, they should not expect it for free either. What do you think?
By Jeby Cheiran
The author is Strategy Leader of IBM India/South Asia
Very well said in your last line. We, the people should not expect such essentials for free or even at discounted rates as ultimately its going to hit the pockets of someone like us only. I think not only T&D loss but the entire sector needs major reforms post its first phase of reforms initiated by segregating the generation, transmission & distribution companies.
Though I agree with all the above, I think technology is not the only solution to this problem, we need a mindset change and strong willpower both of government & people to overcome this. Today, how many times we as people have reported power theft incidents? Forget reporting, I can bet more than 80% people would also not know how to report such incidents. We need technology and digital metering up to last mile to box-in the origins of power thefts. Also, we need stricter punishments for those who get caught in scenarios of power theft.
For implementing technologies solutions, we need to think out of box to bring accountability. One of the genius enlightened me with a wonderful example in this area. For industries (major consumer of electricity), consumption of electricity can be directly proportional to output of the goods/services they manufacture/offer. These goods/services quantum which they manufacture is always reported in their excise/service tax filings. Can’t we use analytic engines on the past data available to derive this equation and monitor on monthly/quarterly basis, the electricity consumption. We can right? We just need appropriate linkages between data available with two different government agencies.
Another aspect to the mounting theft are power tariff. People generally steal things which are dearer. Political parties are sabotaging the power balance for petty political gains. Just because the agriculture forms backbone of your country doesn’t mean it should be cheap power to gain popular votes. We need strict action by State ERCs to ensure that every power is not provided below cost price. But unfortunately, State ERC boards are appointed at will & mercy of these political parties and thus they are mostly helpless to these proposals.
Lastly, we need to use technology for generating complex billing structures for rewarding those who,
– use electricity in off-peak hours
– use sanctioned loads
– use rated instruments
and punish the violators.
Yes, I agree, the road ahead is challenging in country like India, where people lacks responsibility towards society, but with strong will power of few, use to innovative thinking and applying right set of technologies, we can definitely take a step closer to achieve balanced electricity consumption.
Refer Original Thoughts & Support, please visit India Onward