Stampede at the station

Sunday's stampede at the New Delhi railway station , in which two people were killed and many injured , highlights not so much unruly behaviour by people who do not take responsibility for their own actions , as railway minister Mamata Banerjee denied having said, as the economics of shortage at work.

The supply of train seats is grossly inadequate to meet the demand. Hence people have to queue for the available seats, or grab them when queuing is not an option — as it is not, for unreserved compartments. If the conditions in which such grabbing takes place becomes a free-for-all , such as when departure platforms are switched at the last moment, stampedes follow.

In a functional market, the price of whatever is in shortage would rise, leading to a fall in demand and a rise in the supply. However, in the case of trains, as with piped water supply and urban public transport, the market does not function.

To say public policy intervenes to prevent the market working in these cases is to give bankrupt politics a good name. When the price of a good is kept repressed, it creates queues for the good in short supply , but also makes it affordable for a section of the population that would have been excluded by a price that cleared the market. This concern for the poor has been touted by our politicians as the reason for building a shortage economy for a variety of public services.

Concern for the poor should not get them killed in stampedes. Or deny them buses or drinking water. Over a prolonged period, allowing a crippling shortage to continue is far more anti-poor than anything else, including higher prices.

In the case of essential public services that raise economic productivity going beyond the benefit accruing to the individuals who avail of the service in question, there is a strong case for augmenting supply using resources that are not necessarily garnered through higher prices.

That said, there is a strong case for raising user charges of the service in short supply as well. For, very often, the subsidy that is justified in the name of the poor is indirectly transferred to the non-poor buyers of the labour of the poor. There is no case for tolerating the bankrupt politics that generates shortages and stampedes.