Building roads not enough

Much has been made of India's Golden Quadrilateral project. Among its key claims are that truck speeds have increased more than 40 per cent as a result of better-quality roads. While improved road quality has certainly generated a virtuous circle of greater productivity and enhanced supply chain efficiencies by unlocking working capital for user industries, it would be wrong to conclude that all's well with India's road transport business. In fact, the key findings of a recent report by Marketing & Development Research Associates (MDRA), done for Transparency International India (TII), present a sobering counterpoint to the belief that the transport sector is being reformed.

To be sure, the broad focus of the study is hardly new""chronic corruption in the trucking business. Most Indians are so inured to the sight of truckers paying bribes at nakas or octroi points all over India that it no longer attracts comment. However, by quantifying the impact of corruption, the study underlines the point that there is an urgent need to address the issue. On aggregate, the study has found that the trucking industry pays more than Rs 22,200 crore a year in bribes. In fact, the study says the amount involved in bribes is almost equal to what is formally paid to truck drivers as remuneration.

Given that the trucking business accounts for 4 per cent of GDP, this means that bribes account for a huge 10 per cent of trucking operations. Road transport accounts for 70 per cent of the transport business. Eliminating this level of costs from transport operations can have significant trickle-down effects through the entire production value chain in terms of improved competitiveness and margins.

Bribes are one element of the inefficiency paradigm in the trucking business, the frequent freight bottlenecks that are caused by them are another. More than a fifth of trucks on India's roads take eight days to do an inter-state journey. Even with better roads, the average speed on Indian roads is barely 50 km per hour. Assuming we are some way from global standards in this respect, there is no reason why trucks cannot cover much greater distances in a day. It would be quite easy if trucks were not stationary at various check points for 11 hours out of every 24.

The short point is that there is little justification in spending Rs 40,000 crore or more on creating a road network when the gains to both the government (in terms of direct revenue loss) and the economy are being dissipated by sheer corruption and wrong government processes. In a world in which cost and time are key elements of global competitiveness, it is untenable for the industrial eco-system to absorb such high costs of institutionalised dishonesty. The central and state governments, therefore, urgently need to collaborate on reforming the "soft" side of the transport business. The study lists several suggestions, all of which are obvious and would go a long way in eliminating the corruption deficit that plagues the transport industry. They include issuing a single no-objection certificate on behalf of the myriad departments from which permissions are required and creating a national computerised transport office network that allows for online permits and virtual checkpoints. Governments have an ideal opportunity to streamline procedures to minimise the opportunities for rent-seeking by petty bureaucracy. All it needs is the will to do so.