What the Kerala government can do to revive inter-state bus service sector

The state government, instead of favouring the loss-making Kerala SRTC, has to adopt measures to encourage business and competition in the sector.
Kerala SRTC bus
Kerala SRTC bus
Written by:

Aiswarya Krishnan

For many people, bus travel is the go-to option for last minute inter-state travel. But with the spread of coronavirus resulting in the national lockdown, the inter-state bus service sector is caught between a rock and hard place.

There is no specific definition for ‘inter-state’ buses in the Motor Vehicles (MV) Act, 1988. As per Section 66 of the Act, a stage carriage permit/contract carriage permit is mandatory to operate any bus service. A stage carriage permit allows buses to pick up and drop off passengers at various stages of the journey between the origin and destination, whereas a contract carriage permit allows passengers to be picked up from the origin and dropped off only at the destination point without stopping to pick up or drop off passengers anywhere in between.

The Kerala State Road Transport Corporation (Kerala SRTC) runs 566 stage carriages while more than 600 private-run contract carriages operate as inter-state services. Only Kerala SRTC is issued stage carriage permits to provide inter-state services on the basis of the inter-state agreements formed between the Kerala government and other neighbouring state governments. The private buses operate on contract carriage/all India permit for providing inter-state services.

Recently, the Central government had issued a notification to amend Section 66 of the MV Act, exempting the AC deluxe luxury buses (with body code AIS-052 having carrying capacity of more than 22 passengers) from taking permits to provide services. This means that buses operated by private players complying with the specified body code can operate without any permit. If the notification gets implemented, it will improve the ease of doing business which will benefit private players and thus more services could be operated, thereby increasing the revenue for the state government in terms of tax.

In spite of this fact, the state government has opposed the notification foreseeing a possibility of the road transport sector, which was earlier monopolised by Kerala SRTC, to be overtaken by the private entity. Section 66 also mentions: “Provided that a stage carriage permit shall, subject to any conditions that may be specified in the permit, authorise the use of the vehicle as a contract carriage.” Hence, buses with stage carriage permits can operate as contract carriage and not vice versa.

Earlier, heavy fines were imposed on private operators by the Motor Vehicles department for permit violations, but as per the current amendment there is ambiguity on how the department would exercise its powers in regulating the inter-state services provided by private players. The reasons for permit violations could be low patronage or insufficient revenue generation to sustain the business. If the notification gets implemented, inter-state buses run by private players too can operate as stage carriage services.

However, considering the current COVID-19 situation, Kerala SRTC has estimated that its fleet can ply only 5.5 lakh km per day in the post-lockdown period against its usual coverage of 16.5 lakh km per day. With the practice of physical distancing and the possibility of the virus spreading in public transport, one of the major strategies followed by other countries is limiting the number of passengers on board.

Considering the number of daily inter-state/inter-district commuters in Kerala and the existing number of operational services, there is a need for well-thought-out policy changes in the sector based on data. As working from home is becoming the new normal, there is a need for conducting surveys in collaboration with online bus booking platforms having traveller data for forecasting the number of commuters who will use public buses and to determine the fleet size. These surveys can be used to assess the confidence level in the public in using public buses over private vehicles in the future. The revival of the sector needs measures that favour both the players. The implementation of the inter-state agreements as well as the provision for nationalisation of routes shall be nullified considering the coronavirus outbreak, so that both the players can operate services as required on all routes.

The state government, instead of favouring the loss-making Kerala SRTC, has to adopt measures to encourage business and competition in the sector. When considering the economic loss due to investments in the sector, it is the private operators who have to bear the brunt than Kerala SRTC, which has the hand-holding of the state transport department.

Kerala SRTC has been exempted from single point tax1 payment till 2021 by the state government. On the other hand, to provide inter-state services private operators have to pay heavy double tax based on the tax rates per seat charged in different states. After the Kallada issue and ‘Operation Nightriders’, it was reported that there was a considerable decline in the number of services run by private players due to lack of revenue. Considering the present crisis, there is the possibility of a large number of operators withdrawing from the business even after the lockdown is lifted. This is due to the requirement of heavy investment in the operation and maintenance as well as disinfection of buses to continue services.

As an immediate strategy, in a bid to revive the sector, the Kerala government can consider exempting or subsidising the tax rate for private players for a certain period. The government can also consider waiving off loan payments by private bus operators taking into account their investment loss.

In the long run, in order to improve the safety of public buses, a strategy of restructuring the bus infrastructure could be adopted, but that too will be possible only with funding support from the state government.

Aiswarya Krishnan is Project Associate at CPPR-Centre for Urban Studies, Kochi.

1. Single Point tax is the tax paid by state-run buses, based on inter-state agreements, to one of the states where they operate. Kerala SRTC pays taxes to the Kerala state government.

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