Cost of free stuff

 To reduce morning rush in suburban trains towards downtown, Singapore Land Transport Authority or LTA has introduced free train journeys with a few riders in Singapore's metro or MRT as a trial that would last for one complete year. Looks funny isn't it? But it is not. Official announcement says: “ From 24 June 2013, free travel on the rail network would be available for commuters who end their journey before 7.45am on weekdays at 16 designated MRT stations in the city area. In addition, commuters who exit at these stations between 7.45am and 8am will be given a discount of up to 50 cents off their train fare.” Naturally, The Government of Singapore will be funding this one-year trial.

The objective of this trial, which looks self defeating Prima facie, is to encourage commuters who are able and willing to make changes to their travel schedule and can travel earlier into the city area before the peak hour. This would help spread out the morning peak hour crowds to the pre-peak period, and ease the crowding situation on city-bound stretches of the MRT network.

Many commuters are likely to be happy. Singapore MRT travel is not exactly cheap. A ride to the city from suburban areas could easily cost between USD 1 and 2. For people, who need to travel every day, the cost works out to be noticeable. The measure might succeed or might not succeed, which we can know only after one year, but the point that is perhaps missed here is the real cost of this new trial, borne by the Government, and which is likely to be around SG$ 10 Millions. This money has to come from either diverting some other expenditure or by increasing Government income or taxes. Either way, final pay out is made by the people themselves only. The commuters may feel elated now, but these free rides are bound to hit them in same way or other.

In India, some of the Petroleum products like Kerosene, Diesel and LP Gas are subsidized very heavily. India's finance minister, in his annual budget last year, proposed that each consumer shall be given only 6 LPG cylinders with a subsidized price. Any further quantity would be available at market prices. There was a huge hue and cry from the people because they were now expected to pay out a substantial extra cash for the LPG cylinders. After much consideration, the limit of subsidized cylinders have been fixed at 9 per consumer. At these subsidized prices, oil companies loose Millions of Rupees on sale. Government therefore gives the oil companies compensation in some form or other. Now, where from this compensation money come from? This again is the same story. This money either has to come either from diverting some other expenditure or increasing taxes. In India, both these options are tough for the Government because of political pressures. So Government follows the easiest way; it prints more money. Unfortunately, this money does not grow on trees.

In India, there are hundreds of things that are subsidized, in this fashion. The net effect; any economist would tell you; is high rates of inflation and weakening of Rupee. Inflation kills the common man, because all goods and services that are available to him cost more and the cost of living keeps increasing all the time. Economists naturally, are very much aware of this cascading effect of giving subsidy and keep advising against it to the Government, which unfortunately finds itself unable to take any effective measures.

This is the main pitfall in giving subsidies, which can be a very populist measure by the Government. Finally,real brunt of these subsidies is again borne by people of low or fixed incomes only, who in the first place, are expected to be benefited by the subsidies, because income levels for others, normally keep increasing with the inflation. I have always thought that giving subsidies is a kind of a deception. In India at least, there seems to be no way out as no Government can withdraw subsidies because of political pressures. We therefore appear to be surely headed to a rather gloomy economic future. Cost of free stuff is indeed very high.

3 July 2013

For us,lips of wisdom, the real precious jewels

When we entered our school building in Pune, from the main door, the first room was a circular lobby. In this lobby, right in front of the main door, bass relief statues of our school founders, fixed in the wall, would be seen. On the left of these bass reliefs, there used to be a big notice board. I also remember few sign boards hung on the wall, somewhere in this arrangements. These nicely polished wooden sign boards, used to have in engraved letters, writings and sayings of the famous saints and poets of Maharashtra. I do not clearly remember now, what were these sayings? However I do recollect one sign board which said that "Talk without corresponding action, is worthless." Unfortunately, no one ever paid any attention to any of these sign boards, even though we used to see them at least couple of times each day. I never felt that there was anything of substance to be learned from these sayings.

However, I keep on remembering this particular sign board, these days very often. During course of last year (2011), Punaites or citizens of city of Pune, had only one subject in their mind. Subjects such as presence of garbage heaps on the streets, water supply irregularities, crowded streets, squalor and dirt, were all forgotten. All the so called local leaders, were trying to join the din and noise by expressing their opinions on this subject rather vehemently. There were citizens forums discussing the topic. The common subject of all this heated discussions,  was the Metro train for Pune. There were questions and questions. Should we have the metro? Should it be elevated or underground? Where should  the stations be located? etc. etc. Finally, ordinary Puneite even hoped that the Metro train may actually run in Pune one day and would provide some relief to the harassed commuter. After a considerable debate, local Municipal corporation approved the plan. However, more than an year has passed since then. It now appears that bureaucracy has probably swallowed up the project file as there is no talk, no action by anyone on the subject. If we now ask a Puneite about the Metro, he is surely going to react with a counter question, What Metro?.

Virtues of singing!

The day before, I had an occasion to travel by Singapore's MRT or metro train. Earlier, I used to travel extensively by MRT. Now-a-days this is a rare event. The LTA or Land Transport Authority of Singapore has recently commissioned a new Metro line called Circle Line. While traveling on this line, I got dawn at the Bishan junction station and was waiting for my next train towards Jurong east station. After waiting for about four or five minutes, I was startled to hear suddenly, nice musical tunes from overhead loudspeakers. I thought first, that it must be an advertising jingle from the TV monitor fixed overheads at a distance. After having a look at the monitor, it was clear that this tune was not coming from there, but from overhead speakers only, as TV monitor was showing a non musical programme.  I listened carefully to the musical tune. Someone was singimg and the words, which could be heard clearly were something like this. 

” Train is coming!—-Train is coming!—Train is coming.!”