Does Indian law/regulatory incentivize transport safety?

8/3/2019 Does Indian law/regulatory incentivize transport safety?

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Does Indian law/Regulation

incentivize transport safety?

Submitted in partial fulfillment of the requirements of

Transport Infrastructure (Term 4)

By

Anandh Sundar (PGP 10032)

on

10th

September 2011

Professor

Prof. G Raghuram

Academic Associate

Ms Bhavana Dwivedi


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Table of ContentsIntroduction ............................................................................................................................................ 3

Basic Framework ..................................................................................................................................... 4

Rocking the baby and pinching the cradle .............................................................................................. 5

Terminals ................................................................................................................................................. 5

Right of Way ............................................................................................................................................ 5

Rolling Stock ............................................................................................................................................ 5

Policy induced Distortions ...................................................................................................................... 6

Safety Regulator ...................................................................................................................................... 6

Compulsory Insurance ............................................................................................................................ 6

Ad-hoc compensation norms non punitive ............................................................................................ 7

Sexual harassment .................................................................................................................................. 7

Good Samaritarian Laws ......................................................................................................................... 7

Creative Training ..................................................................................................................................... 8

Efficiency linked grant disbursal delays essential expenditure .............................................................. 8

Measuring the wrong things ................................................................................................................... 9

Heavy Vehicle Diversion due to tolls .................................................................................................... 10

Inconsistent safety norms for seat belts/helmets ................................................................................ 10

Safety not mandatorily engineered in during State level projects ....................................................... 11

Encroachment of footpaths-vendors v/s pedestrians and residents ................................................... 11

Mere Supply Side attempts ................................................................................................................... 11

Aligning Contractual Incentives ............................................................................................................ 11

Refresher Training to commercial vehicle drivers ................................................................................ 12

Parking Space Policy .............................................................................................................................. 12

Conclusion ............................................................................................................................................. 12


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IntroductionIn 2011, Indian transport has been struck with quite a few accidents. Whether it be the recurring rail

accidents, airline safety ,issues of almost collisions/fake licensed pilots, ship capsizing etc, the

safety issues have come to the limelight. Rather than get inured/cynical about the lack of safety, I

thought it would be apt to take a holistic picture of this, and connect the dots.

Policy is often used in two differentways, broad policy statements by government agencies or

officials or specific actions without an explicit rationale. Examples of the former are statements of

intent/desire as expressed in RFD documents, reports, budget speeches, annual reports or Planning

Commission policy documents. But these do not translate into action always. The Executive needs

to implement the legislative intent via specific concrete actions, to influence actions of economic

actors. Given the disparate range of options to act, it is difficult to read the policy tea leaves and

predict the exact change which comes next. For instance, the same policy can be effected by

programs for investment (e.g., direct spending, grants, and credits), taxes and fees of all kinds, rules

and regulations that directly constrain behavior, and legal action by governments. Examples of each

are subsidy for bus replacement, road tax, helmet purchase regulation and lawsuits for hazardous

transport spillages.

Government decisions to adopt such measuresthe real policy decisionsare the policies of

interest here, because, one way or another, such decisions either directly affect behavior of various

entities relating to freight carriage or change in some way the environment in which actors in the

freight system operate and make decisions. Moores law says that if anything can go wrong, it will.

Given the relatively uncoordinated transport policy execution, the doctrine of unexpected

consequences does play a major role in outcomes.

If this paper can help anticipate those outcomes and reduce policy conflicts, I would consider this a

job well done.

Safety can be broadly defined, so for this paper, I define safety not only to mean protection from

physical injury(accidents, collisions) but also safety from pollution(air pollution, noise pollution,

toxic effluent spillage) and from crime(groping, dacoits). Some of these would seem trivial but are in

fact a vital component of safety in the modern aspect. As this research paper will show, rights which

we routinely take for granted in the work place and at home, are often not available when we travel.


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Basic FrameworkProf Raghuram breaks the sector into 3 parts for analytical purposes-rolling stock, terminals and

right of way. I propose to do the same, for the purpose of analyzing their safety issues and offering

constructive solutions.

What Road-freight Road

passenger

Rail Air Maritime

Terminals Informal

sector only!

Few

Passenger

amenities

NIL Bird-plane

crash/slums

Coastline vast,

poor security

Right of way Dacoits, theft,

murders

Emergency

facilities

Tracks

quality

Navigating

equipment

Pirates, cross

border tussles

Rolling

Stock

Overloading,

Old, tax

Over

speeding,

Overloading

Old design,

collisions

Maintenance

, flying hours

Flag of

convenience,

limited liability

Policy

induced

Distortions

Cheap diesel,

excise duty

Public

transport

treated badly.

Freight over

charged

MRO hub

not

incentivized

No incentives to

scrap old ships

Safety

Regulator

State Govt State

Transport

itself

RDSO

reporting to

MOCA

DGCA Ministry of

Shipping

Compulsory

Insurance

No Third party No Yes( industry

Norms)

Yes(as per

industry norms)

Ad-hoc from

State

None State Govt at

times

Railway

Ministry

Central Govt None


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Rocking the baby and pinching the cradleIndia has excellent policy makers, who sometimes work at cross purposes, and negate each others

contributions. For instance, the environmental ministry would love wider public transport adoption,

but the Finance Ministry(till recently) used to have higher excise duty on those vehicles thus making

it costlier. Also, while it is widely recognized that clean fuels like CNG should be used over diesel,

the polluting fuel diesel is heavily subsidized while natural gas/commercial LPG are not.

TerminalsWhether it be the unguarded railway stations, bird hit/terror strike prone airports, theft prone ports

or crowded bus terminals prone to stampedes; there is no uniform policy relating to safety and

security of public transport terminals. These have certain unique features of being herd prone,

crowded, needing automated O&M(for fast turnabout times), open access affordable amenities etc.

If neglected, it could spark off mishaps and issues. Hence, there is need for a policy detailing the

minimum rights/amenities/security at these terminals . Land encroachment around the terminals

is an economic and security issue, so that needs to be dealt with this lens also.

Right of WayBollywood has popularized (romanticized?) the dacoits robbing buses, trains and trucks. Merchant

Shipping in recent times has suffered attacks from Somalian and Malaccan pirates. The rising metal

prices has prompted some to dig up manhole covers/ rail tracks/equipment and sell them for a quick

buck, thus endangering the lives of those who travel on them. While the solution for this needs law

and order, some unconventional solutions like using cheaper but durable metal substitutes, frequent

inspections OR automatic sensors to detect sabotage are options. The Railway Minister in her

budget speech announced 2 special trains/year for those states who managed to ensure trouble free

operation of trains in their areas. About the piracy menace, the shipping ministry recently issued

guidelines on armed guards on Indian merchant ships. Given the vast range of issues, the policy

response seems destined to be fragmented.

Rolling StockHere, there are a laundry list of issues right from overloading(railway freight, buses, 2 wheelers,

ships, trucks), inefficient old vehicles(trucks, buses, ships), few mandatory safety devices

needed( cars, buses), driver fatigue(bus, trucks, cars) and underinsurance of rolling stock(third

party insurance scope limited for motor vehicles, ships registered under SPVs under flags of

convenience to limit their liability as Exxon Valdex spill showed). While there are significant


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initiatives to tackle these issues individually, there is little collective action on this front. Given the

magnitude of the issue, size of players affected(Insurance Sector/Auto

Industry/Unions/Govt/Commuters), one needs a national level debate and consensus(aka GST

committee) on what exactly are the acceptable standards in each case. It is too important to be left

to the realm of academic debate.

Policy induced DistortionsIn our Carbon Finance class, a professor remarked that virtually every Indian subsidy is

environmentally unfriendly. While I do not intend to make such sweeping generalizations in the

context of safety, it is true that well intended policies have unintended effects. For example, the FDI

policy did not allow foreign aviation players to have majority stake/control in aviation infrastructure.

Hence, MRO Hub was not set up in India and the airlines need to overhaul their planes in

Singapore/Dubai which increase the cost and downtime. This would incentivize them to delay the

overhaul, which is easier given the manpower shortage at the DGCA. Another example is the

stepmotherly treatment given to public transport-we invest more in flyovers than on public

transport. Even simple things like dedicated lanes, priority access etc are not done thus turning more

people towards private transport. And the cheap auto credit loans(till recently) spurs on more light

vehicles/2 wheelers, that are more accident prone. The lax monitoring of truck overloading not only

increases the risk of the truck collapsing, but also causes higher wear and tear on the highways. And

though it is known that old ships are carbon/energy inefficient, they are still allowed to ply without

withdrawing the tax benefits accruing to the shipping industry.

Safety RegulatorWith the exception of road transport(a State subject), Central agencies/independent regulators

oversee safety for other modes of transport. But like other Govt bodies, they are understaffed

where it counts the most-in field inspectors/staff. Because of that, unsafe buses/trucks ply for

decades, ships are refurbished and put the lives of their crew at risk, and near miss aviation

accidents are increasing. Like how SEBI/IRDA have done, it may be better to levy a cess on the

industry to fund the cost of regulation, research and monitoring. This transparent funding will also

lead to more open debate on the cost benefit analysis of regulation.

Compulsory InsuranceAt first glance, it may seem absurd. How can insurance have anything to do with changing safety risk?

The answer lies in moral hazard. Once there is compulsory third party insurance(airlines, shipping,


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cars), there is less incentive to drive safely, as postulated by microeconomic theory. This holds

especially for old vehicles where the salvage value is quite low, and that may even lead to not having

insurance because then the owner will be willing to jettison the accident spot and take his chances

with the law. Maybe, some prepaid insurance should be taken for 5yrs+,to reduce this risk.

Ad-hoc compensation norms non punitiveAll animals are equal but some animals are more equal than others. This Orwellian edict applies

even while compensation norms for the dead are fixed. Air>Sea>Road>Rail is the usual pecking order

wherever the Govt compensates for loss of life due to terror attacks OR its own rail/road services.

There should be consistency in this approach, since the non air passengers should not be treated as

children of a lesser god. And the private sector road/inland water way transporters should be made

to take insurance/bear the ad hoc compensation so that they pay more attention to safety. To

ensure this, piercing the corporate veil OR encouraging consolidation within the sector to create

deep pockets are both options.

Sexual harassmentThe landmark Supreme Court ruling in the Vishaka case did reduce sexual harassment at the

workplace/college, but did nothing for the situation in public transport. Women fear to ride Delhi

buses in the fear of being groped/molested. Mumbai has reduced this problem by introducing

special ladies compartments in trains and reserved seating/special buses in BEST. But this

segregation is not a sustainable issue when more women step outside the four walls. Instead,

gender sensitization and severe immediate penalties are necessary to curb this menace. Public

sentiment has a large role to play in this. If women are generally respected/less objectified, then

public transport would be safer for them.

Private transport is not much better, with rapes & murders of female BPO employees in

Pune/Bangalore by their night shift drivers. That prodded the industry to take safety measures like

dropping schedules, background checks, security guard etc. But not all can afford it, nor has the

impact outlasted these incidents. One therefore needs a policy covering this aspect for both public

and private transport. And like how daylight rapes in tinted cars prompted the RTO ban on tinted

windows in cars, it seems ghastly incidents/popular outrage will be necessary to force regulation.

Good Samaritarian Laws

Indian law does not cast an explicit duty on the public to aid accident victims. Only recently did the

Supreme Court order that no medical practioner/hospital could refuse to treat accident victims. But


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to bring the victims to hospitals, the public cooperation is needed. Due to fear of intrusive police

questioning, most people hesitate to lend a helping hand. In this regard, Circular No

No. 16518-70/AP III dt 20Nov1987 issued by Delhi

Police(http://morth.nic.in/index2.asp?langid=2&sublinkid=119) is quite instructive. The circular

instructs that the police personnel on duty either in police stations or in the hospital should politely

put the following questions to the person who brings the injured to the hospital.

(i) Where have you brought this person?

(ii) Do you know anything about the case of the injury of the person?

(iii) May I have your particulars?

The circular envisages that the person would answer the first question, may not have an answer for

the second and hesitate to reply the third in which case it should not be insisted upon. The escorters

should, under no circumstances, be detained in the hospital for interrogation. On the other hand, he

should be treated with courtesy.

Also, provision for reimbursement is made in that circular which states that the local police should

pay the transportation expenses to the public man who brings the victims to the hospital his given

address in accordance with Delhi Administrations letter No. F.1/6/82-AC, dated 29.7.87, which

empowers the Head of Office to reimburse the hire charges of vehicles up to Rs. 100/- in each

case. This will well help in acquiring public help to save the human life.

Sadly, such laws are missing in other parts of India, and are necessary to ensure that more members

of the public help those in need. For this , education at the school level would be useful too.

Creative TrainingThe conventional driving license tests/procedures can be easily gamed(both by coaching and bribing

RTO inspector). Instead, engaging the first time driver/renewals with games/multimedia would be a

good idea. In this regard, the Ministry of Road Transport and Highways has published 2 games

downloadable from its website(http://morth.nic.in/index2.asp?langid=2&sublinkid=171). Also, the

ad spots(both radio and AV) are downloadable from the site. It is suggested to leverage the

Like/Share icon on Facebook to popularize these games through viral publicity.

Efficiency linked grant disbursal delays essential expenditure

It is said that sanctions affect mainly the children and elderly people, who cannot fend forthemselves in other ways. Similarly, the target based disbursement of funds when followed by the
http://morth.nic.in/index2.asp?langid=2&sublinkid=119http://morth.nic.in/index2.asp?langid=2&sublinkid=119http://morth.nic.in/index2.asp?langid=2&sublinkid=119http://morth.nic.in/index2.asp?langid=2&sublinkid=171http://morth.nic.in/index2.asp?langid=2&sublinkid=171http://morth.nic.in/index2.asp?langid=2&sublinkid=171http://morth.nic.in/index2.asp?langid=2&sublinkid=171http://morth.nic.in/index2.asp?langid=2&sublinkid=119


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Planning Commission may lead to undermining essential expenditure. For instance, the Ninth Five-

Year Plan said that funds for fleet replacement would be made available only if the State

government was able to commit a similar amount for this purpose and the state transport

corporations were financially viable. Since this was not done, the result of this policy was the

withdrawal of capital contribution to the public transport sector in urban areas. Consequently, fleet

replacement and augmentation has suffered leading to a decrease in the penetration of public

transport.

Measuring the wrong thingsSubsidized fuel, cheap credit and rising aspirations lead to the proliferation of personal vehicles on

the roads. The multi vehicle mix on the road is not conducive towards road safety

Similarly, an emphasis on the efficiency on transport networks has resulted in an increase it

expenditure on improving the road infrastructure for motorized transport at the expense of non-

motorized modes.

Personal Vehicle pollution not tracked enough

Sadly, many people prefer to bribe and get a PUC than run the risk of having to pay fines/incur capex

to set right their vehicle.

While there has been substantial progress in improving emission characteristics of vehicles in India it

is well recognized that current vehicle technology in India is inferior to that in the developed world,

especially for heavy-duty diesel vehicles. Diesel vehicles do not have particle traps to reduce the

emissions of particulate matter. Buses are built on a truck chassis and designed for speeds that are

possible only on highways and not within the city. The largest segment of the vehicular fleet, namely

two-wheelers, mostly uses the highly polluting two-stroke engine.

Petroleum fuels sold in India have less stringent specifications compared to those sold in other parts

of the world. For example, the sulphur content in diesel here is higher than that sold elsewhere in

the developed world. Some recent developments have seen a tightening of the fuel quality

standards, particularly for Delhi. However, other cities in the country are yet to follow suit and policy

directions would be necessary if the same standards as those applicable to Delhi are also to apply to

other urban centres. Here again, the constraint in the financial resources to build the required

capability in the refineries.

The turnover rate of vehicles in India is low and the progressively stricter mass emission norms for

new vehicles will have only a limited impact. It is, therefore, necessary that policy initiatives apply


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to in-use vehicles as well. So far, these initiatives have been directed largely at commercial vehicles,

by not allowing those of a certain vintage to operate in the city roads or requiring them for use with

cleaner alternative fuels. The strategies for making in-usevehicles less polluting would revolve

around mandating stricter emission standards coupled with a requirement for periodic

certification. While we do have the PUC system in place before fuel is sold at certain pumps, that

system is full of holes and is becoming a joke, so there is a case for stricter laws.

Heavy Vehicle Diversion due to tollsIn the USA, research shows that when confronted with toll, heavy vehicles tend to divert to the non

toll route since those owner-drivers value the fuel savings more than time saved. This imposes a

negative externality on the users of those non toll roads, because the diverted vehicles try to make

up time by over speeding/rash driving, thus hampering safety. Anecdotal evidence of this is visible

on the NH adjoining to the Mumbai-Pune expressway. While the modern way out is to give both

roads to the same PPP for tolling, this can invite opposition from the truck lobby which would

(rightly) not need any rationale to toll the existing roads. Maybe an all India toll pass allowing X

number of trips across all toll booths, may do the trick given that monthly pass is of little use for

long distance truck drivers. This will pose revenue allocation issues but is doable.

Inconsistent safety norms for seat belts/helmetsSection 129 of Motor Vehicles Act, 1988 makes it compulsory on the part of all two-wheeler riders

and pillion riders to wear a protective head gear conforming to relevant Indian standards. The law

however makes certain exceptions for persons who can not use helmets on account of the religious

reason of having to wear turbans. The law also empowers State Governments to exempt certain

categories of two-wheeler users by notification in their official gazettes. The judicial proclamations

on the issue have consistently supported use of helmets. Recently the Central Government has also

mandated sale of a helmet conforming to Bureau of Indian Standards (BIS) along with the first-time

sale of a two-wheeler. It has not been possible on the part of police authorities in the States to fully

enforce the provision on wearing of helmets on account of lack of adequate personnel and stiff

resistance by the community of two-wheeler riders. The Central Government has been launching

awareness campaigns on the issue Only recently did the Govt insist that all two wheelers should be

compulsorily sold with helmets. This measure was long overdue because people take a weird pride

in driving without helmets, as if it enhances their masculinity. Similarly, rear searbelts are not yet

mandatory, and even using seatbelts in the front seats is not compulsory in all states/areas.

Education and awareness campaigns are must, besides a Central push for the same. Perhaps,


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compulsory bundling/seat belt provisions/insurance credits are necessary to universalize this

practice. Also, the sight of an entire family on a 2 wheeler moved Ratan Tata enough to design the

Nano, but sadly child restraint devices are not compulsory in India yet.

Safety not mandatorily engineered in during State level projectsRoad safety specifications / designs are incorporated in the planning and execution of NHAI. Design

of highways is done by reputed consultants meeting all relevant geometric and safety standards

which include provisions for flyovers, grade separators, by-passes, Railway Over/Under Bridges,

bus/truck lay-byes, service roads, junction improvements, overhead signs, cautionary /regulatory/

informatory retro-reflective sign boards, crash barriers, median railings, thermoplastic road markings,

traffic lights and delineators, etc. However, this high tech practice is restricted to National Highways,

and it is not compulsory during State level projects which generally do not explicitly factor in safety

during the planning process. This is one drawback of decentralization at State level.

Encroachment of footpaths-vendors v/s pedestrians and residentsNational Urban Transport Policy, 2006 states that encroachment of footpaths affects pedestrian

safety adversely and requires strict enforcement coupled with public participation. The ground

reality is far different. The encroacher typically have political backing, and(in case of hawkers)

sometimes have residents support also. In the court battles, the pedestrian safety issues is an oft

ignored factor, and the issue is instead presented as a Resident v/s Hawker issue without

incorporating the voice of the pedestrian. It is essential to factor this in.

Mere Supply Side attemptsWhen faced with a problem of congestions, accidents etc, the Govt throws more resources at the

issue by funding expansion of infrastructure, mandating supply side safety devices etc. Rarely are

demand side measures attempted like insurance deductibles, time of day analysis, shifting transportuse patterns via subsidies etc. The demand side management to reduce overload is must, because

there is a point till which one can raise supply to match the ephemeral demand.

Aligning Contractual IncentivesThis is one thing which the Govt has done right. In the earlier EPC regime, the construction work was

separated from the O&M work, thus inviting a blame game where corners were cut on safety. In the

new BOT/BOOT/DBFOT contract regime, the private party needs to maintain the road during the

concession period, adhering to certain minimum SLAs. Owing to the repeat nature of game, and


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having to eat its own pudding, the PPP has the incentive to engineer quality into the picture to

minimize its life cycle costs. Of course, this depends on the quality of monitoring. For example, the

Mumbai flyovers O&M responsibility was given to the toll agency with the tolling rights for the city.

But thanks to lax monitoring, those stretches are filled with potholes. Thanks to the NHAI and NGO

supervision, such incidents are rare in the NHDP program.

Refresher Training to commercial vehicle driversResearch attributes 72%+ accidents to driver error. For heavy commercial vehicles(trucks), the

accident causes are often simple things like fatigue, poor O&M etc. To reduce preventable accidents,

the Ministry of Road transport aims(as per RFD 2011-12) to train 80000 HMV drivers. That program

is unique as it is not only free but also compensates the drivers for their opportunity loss of earnings

during that 2 day program. In addition to this, other private sector organizations like Shriram

Transport Finance(via its NGO), Volvo(for purchasers employees) are engaged in this. Perhaps, on

the lines of vocational training subsidy, it is time to give subsidy for this also, given that otherwise

the experienced truck drivers would not willingly pay for such training, nor can they be compelled

to given the strong truck lobby.

Parking Space Policy

A builder needs to get umpteen number of clearances/permits/approvals but at present, he is not

required to ensure adequate number of parking spots in the building. Also, there is no incentive to

build multi storey public parking places as present in other parts of the globe. This leads to

encroachment on public spaces(roads) and resultant fines, towing away and time waste. This all

would be avoided if the number of vehicles were limited by issue of permits. But that being

infeasible in the Indian context, one would need a stricter policy on illegal parking on

roads(especially by commercial vehicles) that constricts the road size and increases the probability of

collisions and accidents. Of course, the issue of individual illegal parking is often seen as a David v

Goliath issue, but the issue of increasing parking space is one for the Govt, builders, commercial

space owners and automobile companies to consider. If parking space is explicitly recognized as

constrained, then manufacturers and customers will prefer easier to park/smaller cars.

ConclusionThis paper may seem a mosaic of unrelated content, but aims to drive home the point that without

an uniform and consistent policy framework, measures will often neutralize each other. To minimize

these coordination issues and unexpected consequences, NGOs/academics have a role.

Does Indian law/regulatory incentivize transport safety?

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