ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Storm Has Not Blown Over

have a minimum distortion effect on relative prices. Since transport costs form only a small part of the prices of most goods, especially of the high value traffic which is best suited for transport by trucks, they have relatively little impact on overall economic activity and can be in any case easily passed on to the consumer. Given a basically buoyant economy, increase in the costs of transport would have little effect on demand for transport services. But in a situation where the large capital investment in the railways is seriously underutilised, tax concessions or any differential subsidy to road transport would only lead to diversion of traffic to the roads. The public revenues will then suffer twice over through reduced tax receipts and reduced profits on railways.

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