“Gone case” were the words used by Telangana Chief Minister K Chandrasekhar Rao to describe the state’s Road Transport Corporation (TSRTC), for having been a loss-making entity since its inception. This amid the 52-day long strike by 48,000 employees of the TSRTC, the longest by any transport corporation in India.
Refusing to give in to the demands of striking employees of the TSRTC, KCR instead chose to deal a blow to the ailing transport corporation. On November 2, in the midst of the agitation, the Chief Minister proposed privatising 50% — or 5,100 buses. The TSRTC has a total of 10,460 buses, of which 8,320 were owned and 2,140 were hired as of May 31. Pointing to the mounting debt in excess of Rs 5,000 crore, KCR said the corporation has to be brought on the path to profits.
While the union leading the strike eventually relented on November 25, the ruling TRS has also softened its stance towards both TSRTC and its employees. On December 1, the Chief Minister announced that the government will allocate Rs 1,000 crore every year for the TSRTC from the next budget, among a slew of other promises.
For the moment, privatisation is also off the table, but the government still wants to make the corporation a profit-making entity as soon as possible. So the question is, should public transportation aim for profits?
Subsidy v/s investment
The narrative about public transportation being a loss-making entity and a burden on a state’s finances is not new. However, given the very nature of the entity, experts say that the only reason for a public transportation system to function cannot be profits.
Shreya Gadepalli, the Program Director at the Institute for Transportation and Development Policy (ITDP) says that typically, public agencies think of public transportation as a drain on the exchequer, but when the entire gamut of spending on infrastructure for transportation (roads, flyovers etc.) is taken into account, the view changes.
Citing an analysis that the organisation did in Chennai, Shreya says that when they divided spending on public transportation by the number of trips taken, the government was spending Rs 2 per passenger trip (the total number of passengers who board public transportation).
“This, we call a subsidy. What we do not acknowledge is that the government, which also spends money on roads and flyovers — does not view this as a subsidy, but as an investment,” she says.
In the same study, Shreya says that while the government was spending Rs 2 per passenger trip for public transportation, it was almost ten times on individual vehicles — nearly Rs 20 for every car trip.
Shreya points out that if one accounts for the fact that most vehicles get free parking on the street, even a very conservative estimate suggests that the total subsidy that cars effectively get is about Rs 80 per trip.
“On the one hand, the Rs 2 that is spent on public transportation is called a subsidy and is seen as a drain on the exchequer while the Rs 80 given to car users is not a subsidy, but it's called an investment,” she adds.
Shreya says that this amount can be considered as a direct investment. In addition, other researchers also make the case that investing in a robust public transportation network helps the economy — as people can access places of work and education which may otherwise be beyond reach.
Profits when privatised
Hyderabad-based transport researcher GSR Chaitanya says that the motive for public transport should never be about profit or loss — and that the TSRTC does make profits on city routes and a few intercity routes where the fare is quite high.
“The nature of operations is that a lot of villages are connected by TSRTC buses, for which the fare is kept low. It is a bit inefficient if you look at it from a business point of view, but it does help people access education, healthcare and jobs. If TSRTC is enabling economy in the state, it makes sense for the state to support TSRTC even if it is incurring losses on a few routes,” he says.
When it comes to the private sector, Chaitanya says that they will not be willing to operate buses in these routes which obviously make losses.
At present, Chaitanya says, even Hyderabad city is under-serviced. He says that while there are about 3,800 buses for Hyderabad, the actual requirement is closer to 6,000. According to the TSRTC, 844 villages are yet to be connected by buses.
While the Telangana government has for now shelved its plan to partly privatise the TSRTC, the idea itself isn’t new. It was done in New Delhi, where the results were disastrous.
In 1992, the Delhi Transport Corporation (DTC) introduced Redline and Blueline buses, which came after employees went on strike, demanding that the Fourth Pay Commission be implemented.
These Redline buses were private, but the administrative control lay with the DTC. Anyone could apply for a permit, and once they received it, would be eligible to ply private buses. However, reckless driving and an increased number of road deaths due to these buses led to the government introducing Blueline buses in 1996.
This was supposed to be an improved, better version of the Redline buses — a public-private partnership where these private buses had to follow the DTC’s timetable, would have a DTC conductor on board and only the driver would be employed by the operator. For this service, the DTC agreed to pay a fixed amount per day on certain parameters.
Here is where the problems began — the need to turn a profit and also manage all expenses that arose with buses, and with the condition to follow a fixed route removed — means that there were no guidelines to govern drivers, who were made to achieve targets with no break. Profit margins had to be achieved by hook or crook, and this led to the buses being called a menace. So many people had been killed by these buses that they were even dubbed ‘killer buses’.
In 2012, following years of public outrage, these buses were finally removed.
Delhi currently has a cluster bus system after the failure of the Blueline buses — it has taken away the burden of fare collection from the owner, appoints the conductor. The bus owner is compensated based on cost per kilometre they quote at the time of bidding. “Our profit margins are very, very low," one of the cluster owners told Business Standard.
Raising ticket fares
C Ramachandraiah, a professor at the Centre for Economic and Social Studies says that ticketing is the main source of revenue for the RTC, and a major chunk of the corporation’s expenses are salaries and diesel.
“Diesel prices have gone up by almost Rs 20-25 per litre in the last four to five years. The ticket prices haven’t changed, and salaries were revised once. If the price of the ticket had been moderately hiked, maybe there wouldn’t be as much loss. The government didn't allow the TSRTC to hike the fare and government also won’t pay," he points out.
He squarely places the blame for the TSRTC’s condition on the government.
After the strike ended, KCR gave the green signal for a hike in fares. On December 2, the TSRTC announced a hike in fares, effective from midnight of December 3.
As for KCR’s promise on Sunday that Rs 1,000 crore would be allocated to TSRTC in future budgets, a researcher who did want to be named says that while the government thinking about grants to the corporation is a step in the right direction, things need to move forward. Another aspect to consider is the government’s delay in reimbursements as well as amount disbursed to the corporation, which is lesser than the budgetary allocation.
“They’ve never kept their promise of releasing grants. I’m skeptical when they say they will release grants, but it’s a step in the right direction. However, I think more work needs to be done,” the researcher says.
The researcher adds that this allocation, however, won’t be enough as TSRTC requires help with clearing a few loans, as well as reduced tax burden. TSRTC is still looking at fares as the major source of revenue and has hiked fares now, but these ad hoc measures are not the way to go about it, the researcher says.
Are there other solutions?
Shreya from ITDP says that if the state actually doubles the little amount it spends per passenger on public transportation (Rs 2 in Chennai to Rs 4), thereby increasing the quality and quantity and even possibly getting people to switch over from cars — and in turn charge car users for the road space and stop spending on roads and flyovers, we can have better public services that have multiple positive effects.
Chaitanya, offers a solution in a similar vein, of increasing the fleet.
“Hyderabad's ridership has stagnated at 33 lakh per day, but the population is going up. Bus ridership isn’t increasing because the fleet has stagnated. If you increase the fleet, the network, the ridership will come and eventually, you will make money on some routes but there will still be routes where you won't make money,” he says.
Among the major cities in the country, Hyderabad has the highest average distance travelled by cars and two-wheelers, and the public transportation ridership was the lowest, according to an analysis by the Centre for Science and Economy.
“...given the growth trajectory and economic position of the city, it [Hyderabad] could become a highly polluted city in time. While the city has had a good bus system traditionally, it hasn’t kept pace with the city’s growth pattern in terms of fleet size and, therefore, the volumes of passengers it carries. The metro system, which has become operational recently and will expand in the near future, will help mitigate this situation, but only marginally,” the analysis stated.
Profit as a motive?
World over, Hong Kong’s Mass Transit Railway Corporation is one of the few public transportation systems that actually turns a profit — but its profits don’t entirely come from transportation. Hong Kong has capitalised on the land around a bus station or metro, and has deals with shop owners around these areas as the density of passengers is high. Sometimes, it owns the business around the station itself — effectively controlling the transportation system as well as the places people visit when they exit. This too, according to the Guardian, has led to issues with housing affordability and income disparity.
A viable public transportation model is difficult to achieve, as seen across the world. However, the effects in the event of a lack of such a system are even worse — not just economically and socially, but also environmentally.