INDIAN ROAD TRANSPORT SERVICE EFFICIENCY STUDY –WB ROAD TRANSPORT REPORT

Presented By Siddharth Ranjan

INTRODUCTION

World Bank has been long involved in financing in road infrastructure in India and presently the amount exceeds USD 4 million.

This report has been undertaken to assess the present policy regime, and identify measures which may be considered to improve the functioning of road transport.

The study has focused on 3 most important aspects relevant to investments in highway financing. They are:

- Trucking Industry - Inter-city buses - Motor insurance industry

PROBLEMS IDENTIFIED

Trucking industry-: Trucking freight rates are so low that the industry is

suffering from intense losses. Low reliability and transit times nearly double that of

developed countries. Truck delays at checkpoints .Inter-city buses-: They are incurring losses on urban services. The private sector has won back a rapidly increasing

share . Increase in no. of staff has led to escalation in unit costs

of STUs.

CONTINUED…..

Motor insurance policy-: The motor insurance industry in India is

not performing a critical role needed to enhance road safety penalizing poor driver performance .

There is no legal frameworks such as a statute of limitations, liability limits and thresholds for claims adjudication.

TRUCKING INDUSTRY

India achieved a highly competitive, low cost road freight transport industry for basic services with world’s lowest high way freight rates.

The trucking industry is deregulated in India which is structured by transporters, small operators, broker agents .

Quality of service rendered is very poor. Highly inadequate for high value manufactures. Multiple check points further add on to the transit times.

Low cubic capacity represents freight market of heavy, unpackaged commodities.

TRUCKING INDUSTRY

Recommendations-: Introduction of tractor-trailer multi-axle

vehicles would reduce transport costs and road damage.

To reduce delays at border crossings system such as the European T.I.R. should be introduced.

Audio-visual driver training to the drivers. Carrying of two licensed drivers at all times.

INTER-CITY BUS SERVICES

Creation of State Transport Undertakings (STUs) with monopoly franchises for many inter-city bus services.

The private sector has won back a rapidly increasing share of the inter-city road passenger market.

Unit costs of STU operations have escalated due to excessive staffing.

55% in 1981-82 to 80% in 2002-03 is the nation’s bus fleet in hands of private owners.

INTER-CITY BUS SERVICES

Recommendations-: Deregulation of tariffs, restructuring and

commercialization of STUs, elimination of STU monopoly rights.

Enforce competition rules and ensure access to common user infrastructure (terminals, bus stops).

No restricting entry into the inter-city bus transport markets and allowing market forces to determine both tariffs and the types of services offered .

STU should follow reforms proposed by ASRTU.

MOTOR INSURANCE INDUSTRY

India is among the most road accident prone countries in the world, accounting for only 2 percent of the global car fleet, it is responsible for over 7 percent of all accidents world wide.

Insurance policy form issued by the IRDA which covers both Own Damage (OD) and Third Party Liability (TPL).

Auto and truck liability insurance policies do not have an upper liability limit.

Claims settlement process also imposes significant burden on the industry.

There are various structural impediments such as state of existing legal framework , enforcements of safety regulations in motor industry etc.

MOTOR INSURANCE INDUSTRY

Recommendations-: IRDA should initiate the development of an

integrated claims database. IRDA should also explore the creation of a motor

insurance pool for bad drivers. It is of paramount importance to tighten up

licensing requirements for issuing commercial drivers’ licenses.

Establishing an Insurance Mutual for the Motor Industry.

Introduction of claim threshold.

THANK YOU