Question

1. Should the freight railways continue to provide their own infrastructure? If yes, should they be subsidized to the extent that truckers are being subsidized indirectly?

2. What are the advantanges and disadvantages of creating a common rail infrastructure corporation?

3. Should the governments (i.e., tax payers) subsidize a part of infrastructure costs?

4. Should the extent of subsidy be equalized across all modes of transportation ? If so, should we subsidize an equal amount per passenger-km or an equal proportion of the total modal costs?

Answer 1

1. For any economic development transport plays a vital role. The economic growth and the reduction of poverty is the objective of any government. For a long period the railways are the monopoly of the same however inflate it is understood that the private participation is important in the growth of the economy. By this not only the private players are encouraged to participate but also the employment is generated. To this the infrastructure owned by the railways should be provided at a reasonable cost.

Truckers are subsidised by giving incentive in the diesel (fuel) however the same is not necessary since large quantities can be carried out in shorter period moreover this can be shared by multiple traders.

Yes in fact the government gives incentive to promote such trade by giving tax holiday in their income. So advisable to have private participation.

2. Advantages of creating common rail infrastructure corporation:

a) Provides huge options to both prive and public to carry out the transport process.

B) Greater economies are scaled among the partners.

C) Generation of employment opportunities.

d) Quick movement of goods from one part of the country to another.

Disadvantages

A) Railways require huge investment which may not be attractive to private players.

B) Administration is crucial when private players enter.

C) Short distance transportation and to hill/rural areas are not possible.

D) Not accessable by all vilages and towns. In comparison to this transport by trucker are advantangeous.

3. Yes the government should come forward and support the initiative by subsidizing through tax payers money since the project requires huge investment which is beyond the imagination of private participants.

4. The subsidy to be decided depending on the model it is developed. The pros and cons to be compared beforre finalizing the subsidy rates.

subsidy per passenger kilometre is advantageous when the passanger travelles longer distance.

Subsidy on total modal cost is advantageous when the passenger travel in bulk, that is frequency per passenger kilometre is more in shorter distance.