Government has made state bus companies unprofitable, pricing the bus off city roads
Automakers prefer to sell cars--not buses--because they can sell to individuals, using the gimmicks of advertising, marketing and cheap loans. Buses are owned and operated by transport companies. Invariably, these companies operate in the red. This is because the cost of the bus and its service is often difficult to recover fully. It does not help that public bus companies, often driven by non-revenue concerns like hiring people they do not need, fall behind further in the race for efficient transport.
With Indian cities growing rapidly public bus services declining, private mini-bus operators step in. Their buses rush madly across cities, the most infamous example being Delhi's Blueline buses.Because most cities regulate their bus service only through allocation of routes and permits, nothing formal emerges without a clear public transport plan--just taxis in different shapes and forms.
According to the Union Ministry of Surface Transport, there are about 36 state-run bus utilities in the country. Their combined losses increased from Rs 2,000 crore in 2004-05 to over Rs 2,600 crore the following year.
This when these combined bus utilities earned total revenues of Rs 20,000 crore in that year. But, said the ministry, these figures are misleading. If the tax component of the costs is deducted from the cost incurred by the bus companies, the losses go down to less than Rs 900 crore. In other words, it is partly policy that drives these companies into the red (see table The loss they did not make).
Of the six biggest cities, only the Bangalore Metropolitan Transport Corporation managed to stay in the black--its revenues exceeded costs--making a profit of Rs 113 crore in 2005-06.
Now, the bus company has to use its financial muscle to start carrying more people and taking away the space from cars on the road. All other big bus companies struggled to make ends meet (see table City bus corporations in the red).
While staff salaries crippled large bus undertakings like dtc in Delhi, the cost of fuel and lubricants hit at the bottomline of all bus companies. During 2005-06, total costs increased by 9.7 per cent, with staff costs across the country rising by an average 5 per cent and fuel costs by 20 per cent. Given that new buses are less fuel efficient than the old, this does not augur well for the future.
|The loss they did not make
Without taxes, 36 bus utilities fared better in 2005-06
|Total cost||Rs 22,699 crore|
|Total revenue||Rs 20,015 crore|
|Loss||Rs 2,600 crore|
|Taxes||Rs 1,710 crore|
|Losses after adjusting taxes||Rs 890 crore|
|Source Review of the performance of state road transport undertakings, Ministry of Shipping, Road Transport and Highways, Government of India, 2007
|City bus corporations in the red
Bangalore is the only city with a profitable city bus service-it also has the largest fleet
|Mumbai BEST||3,391||5.56||3.31||10.11||194||850||1,088||- 238|
|Chennai Metro||2,773||8.39||3.77||6.40||209||472||557||- 85|
|Bangalore MTC||3,977||4.47||4.66||4.78||218||687||574||+ 113|
|*Runs on CNG, and price has not increased, so costs of fuel are under control
Source Review of the performance of state road transport undertakings, Ministry of Shipping, Road Transport and Highways, Government of India, 2007
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