We've missed the bus

As overstaffed transport corporations make losses, the government says privatise

By Anumita Roychowdhury
Last Updated: Sunday 07 June 2015

We've missed the bus

-- Kill it, let it die, let's not drag this colossal waste. Bankruptcy with monthly losses totaling Rs 5 crore, indignity of unpaid salaries for 11,500 staff members who help run only 1500 buses forced this euthanasia on the government-run bus transit undertaking in Madhya Pradesh. But we were probably expecting this to happen. Not just to this undertaking in India's largest state but to numerous other city-transport undertakings that have state governments as their bosses.

India's largest state is not alone. The crisis engulfs government-run city transport undertakings in most other states. Cities face either a total collapse of public transport, or chaos with private bus operators running amuck. Institutional failure of this magnitude spells disaster -- especially when there is increasing interest in transportation solutions to the congestion and pollution mayhem.

The chances of recovery look grim. The losses for Mumbai city undertaking have increased by a whopping 255 per cent during 1990- 2001. Chennai saw an increase in losses by 206 per cent in the same period. As revenues go down, fleet size or service enhancement become impossible. And then, more losses ensue. Pressured into maintaining low fares, subsidies and services on unprofitable routes, most state-owned city-transit undertakings cannot recover their operational costs. Let's take the overall balance sheet of the Delhi Transport Corporation (dtc), for instance. If by convention, experts consider four persons per bus as efficient, dtc employs nearly 40,000 people to manage a fleet of 3,398 buses -- a staff ratio of eleven persons per bus! Salary costs eat up an astounding 91 per cent of dtc 's total earnings.

The corporation is still afloat because the government affords it immunity from financial shocks. But dependence on government loans on a monthly basis, to cover working deficits, will never be adequate to sustain dtc -- or any other corporation -- for long.

Why are we concerned? For the simple reason that this inefficiency has translated into a mobility crisis. At a time when demand for travel is rising, bus occupancy in all major city bus undertakings has fallen dramatically. In Mumbai and Kolkata, the decline has been most dramatic -- a quarter drop from 1990 levels. Nearly half of the Pune corporation's bus fleet run empty. Fleet utilisation in some metros such as Kolkata is a dismal 66.5 per cent.

State-owned transit agencies are expected to provide the bulk of services in bigger cities. But poor financial performance casts doubts on their viability. And that is worrying. For, then more people desert buses and go for cars and two-wheelers. Meanwhile, the government despairs and says 'privatise'. Two key policy documents -- the Tenth Plan and the draft national Urban Transport Policy -- make the case for greater private participation. This, when all over India, nearly 90 per cent of the buses are already in private hands. Only in some cities do state-owned bodies have a larger presence -- 33 per cent bus ownership in Delhi for instance.

Ad hoc privatisation, with route licenses being issued in varying numbers to small bus operators, has already caused enough chaos. Mismanaged and unhealthy competition between the state-owned and private bus agencies has made roads unsafe. This makes a regulatory framework imperative. But as of now, there are no signs of individual operators being consolidated into cooperatives or transit companies to make them amenable to regulations. If we wait longer, there could be resistance from these unruly operators to regulatory demands. Unregulated autonomy may lead to unfair practices and the negotiating power of the regulator will only get weaker.

While the Urban Transport Policy has failed to give any directions on this matter, the Tenth Plan document leaves it to state governments to issue guidelines on privatisation. It arbitrarily suggests a minimum viable fleet size -- preferably 50 -- and sets criteria for technical and financial soundness of the operators. That's all. City authorities remain clueless about regulating bus transport -- network structure, service quality criteria, fare structure and safeguards for the poor. And they are not even interested. Just as private operators desperately require reorganisation, state-run transit agencies can only survive with reforms. But city governments show no signs of revving up. Such a policy vacuum!

Anumita Roychowdhury is associate director, research and advocacy, Centre for Science and Environment, New Delhi

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