Monopoly of the Indian Railways - Essay Example

Bill Gates, the owner of Microsoft Corporation had once experienced it. The worst thing about monopoly is that the seller gets market command by which he may exploit the customers either by charging a high rate or sacrificing product quality. Though monopoly is not a good thing in the market, it cannot be avoided from the market. Suppose, when the seller has a monopoly over certain resources which are used for producing a particular item such as oil, minerals, etc. Sometimes, when a seller is equipped with a unique skill, which others in the same industry lack. In certain occasions, a monopoly is legally attained for the patent or copyright for a product/service. The government also allows certain organizations to have sole power over certain product/service by legislation. One such organization is what this paper is going to discuss.

Indian Railway comes under the department of the Indian Government, which came into being in 1853. It is the world’s second-largest rail network. All the rail operations are managed by the state-owned Indian Railways, which falls under the jurisdiction of the Ministry of Railways. Rail transport is one of the common modes of transport for a large population of the country. Its network spreads across 28 states and 3 union territories with limited services to places like Nepal, Bangladesh, and Pakistan (Indian Railways, para. 4). It is the second largest commercial employer in the world and has more than 1.54 million employees and runs as many as 11,000 trains daily (Official web site of Indian Railway). It has been assisting the growth of the Indian economy directly and indirectly since its inception. During the many ups and downs of the country’s economy in the past, the railway has been an integrating force to stabilize the economy and maintain the economic growth of the country.

Indian Railway is not a private corporate body. It operates under the Railway Department of the Ministry of Railways of the Government of India. But, in recent times it is striving to attain professionalism in management which is similar to that of giant corporate bodies. Since its inception, Indian Railway has been enjoying a monopoly in rail transport by the sole power granted by legislation. In most countries in the world, rail transport is owned and managed by Government. The reason for the non-existence of competition is that the railway requires huge investment in the form of physical assets and human capital, and the return therefrom is also uncertain. In such a situation, private players will not enter the market for fear of loss of huge amounts.

Created and maintained by legislation. Indian Railway came into force by an Act of Parliament and it is being protected by the provisions of the Act. It has been serving the Indian populace for over fifteen decades with a right track record and public image. It is not enjoying the privileges of a private corporate body but trying to introduce professionalism in operations and management.

Huge initial investment. Private players always have second thinking about posing a threat to the publicly managed railway. One reason for such thinking is the huge investment requirement. The railway needs a huge initial investment, which cannot be easily obtainable from the market.

Uncertain Return. Not only is the huge investment, but the uncertainty about the return from investment also stopped the private players to keep away from the rail transport business. Investment is always return oriented as the funds might have been procured from various sources like loans and securities which expect a regular and stable return. If the business turns into a loss, the investment cannot be recouped and the return cannot be paid.

Low-cost service. Since its inception, Indian Railway has been trying to charge a minimal price from the passengers for its service. Many occasions have come in the history of the railway to enhance the charge for their services but dropped the decision due to pressure from the politicians and the public. The availability of low-cost parallel services such as airlines has also paved the way for maintaining low charges for the service by railway.

High political support. The support extended by the various political parties to the Indian railway is worth commanding. They feel that the railway is an important means to expose their strength in their next elections to attain public confidence.

Employment Generation. The number of employment generation is another reason for the fast development of the railway. As stated earlier, it has a manpower strength of 1.54 million workers (Official website of Indian Railway).

High public confidence and support. Because of the support for the economic development of the country as a means of employment generation to the youth, it has got immense public confidence and support which resulted in high business and reputation.

High Financial Performance. Though Indian Railway had passed through some unprofitable years, it came back with high performance and profitability in recent times. This resulted in a further reduction in the service charges.