Pawan Jury BhilwaraRj
Rahul Mehta Gandhinagar LsCandidate:
How Japanese rail company can use its MONOPOLY profits to devor other businesses
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Since Japanese rail company will be a monopoly, there will be contractual limit on profits it can make. Generally, the limit on revenue is expenses + depreciations + plus 10% of investments, And thus profit is restricted to 10%. or it may be 12% , but there will be limit.
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But any monopoly knows how to make more profits by taking services from connected company and asking that connected company to over invoice.
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eg say Japanese are running company A , company B and company C. .
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A is running trains.
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B is providing general engineering services
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C is a road making company., and not a monopoly as it will compete with L and T and many other companies.
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Now say B provides services to A and C which in real costed Rs 100 crore and Rs 300 crores..
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Then A will ask to B to send invoice of Rs 350 crore instead of Rs 100 crore. Since A is monopoly, it will simply transfer the cost to consumers. So C will get service worth Rs 300 crore for mere Rs 50 crore. So C will become more competitive than other Indian companies and so other Indian companies will lose business to C.
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Basically, it is a "monopoly cross-subsidizing a sister company in competitive business":.
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All in all, "FDI with no export commitment" is bad idea because it generates forex commitment. And FDi in monopoly is a mother of all bad ideas. And that too a HARD monopoly like railways !!! Other monopolies have some implicit competition eg power company cant inflate costs as other power companies are there to compare against. But train routes are too hetrogenous to make any comparision..
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It is a 350 kmphr ride to hell. All abroad !!!
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Solution I propose is that activists should inform all voters than by fixing Shatabdi routes making mere Rs 10000 crore investment, it is possible to have a dozen 4-hour shatabdies between Ahmedabad-Mumbai every day. There is NO need for this FDI nonsense between Ahmedabad - Mumbai, even if train is mere 1.5 hours.
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So we should request voters to order MPs via SMS to oppose FDi in railways.
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