in a move that might set an example for other states, the Madhya Pradesh (mp) government has decided to abolish the mp State Road Transport Corporation (mpsrtc). Nearly 11,500 employees will be affected by the action. Chief Minister Babulal Gaur said on January 2, 2005, that the body will be shut down in two months and will be substituted by a smaller body. The structure of the new body and how it will be formed is not yet known. The change will cost the government Rs 1,200 crore. The mpsrtc has a fleet of around 1,500 buses, of which 1,000 are on the road.
"The state government is losing Rs 500 lakh every month. We cannot run the corporation anymore. We will introduce the voluntary retirement scheme for its employees," Gaur is reported to have said. The announcement came as a shock. But even last month, state transport minister Umashankar Gupta had told a press conference that the corporation was incurring huge losses and its employees had not been paid their salaries for many months: the salary backlog was Rs 45 crore. It is noteworthy that most state road transport undertakings (srtus) are suffering losses (see graph: Universal disorder). The mpsrtc had a surplus before tax of (-)Rs 1,288 lakh in 2002-03.
mpsrtc officials think the government has acted in haste. The corporation, at the behest of the government, had appointed Madhya Pradesh Consultancy Organisation Limited (mpcon Ltd) to look into mpsrtc's operations. "The government could have at least waited for the consultant's report," says a senior mpsrtc official. "No formal order has been issued by the government for closing down the corporation. The decision will be placed before the cabinet, and then it will go to the central government. It is only after this that the corporation can be closed down. This will take around two years," says mpsrtc chairman Ratan Phulwani.
Privatisation: the way ahead It will now be interesting to see the fate of other city bus undertakings. "Ideally, the way ahead should be increase in private sector participation, with a strong regulator. The decision by the mp government is in the right direction," says P Khurana, deputy advisor, transport, planning commission. In the ninth Five Year Plan period (1997-2002), the country-wide loss by state transport undertakings increased to Rs 8,843 crore from Rs 2,679 crore in the eighth plan period (1992-1997). Lack of operational freedom and timely hike in fares are believed to be among the many reasons behind this. The tenth plan document rightly points out: "The public transport service has failed to live up to the expectation of providing mobility."
> The fallout Load factor, which refers to occupation ratio, in virtually every city transport undertaking is poor. The number of staff per bus on road is also very high. It is around 11 for mpsrtc. Gupta argues: "Whereas we had around 2,700 buses initially, it is only 850 now. That is why the number of employees per bus appears very high." The trip rate per capita in almost all key undertakings has also shown a drastic decline. This means more people use private transport. "This is the most discouraging factor in solving the mobility crisis," says V A Kadam, faculty member, Central Institute of Road Transport.
The future of city bus undertakings "depends on state governments. Some of them might pour money into these bodies. If they still don't fulfil mobility needs, they might be closed down," says a senior official of the Union ministry of shipping, road transport and highways. However, no thought is still being given to restructure public transport institutions. But with the failure of the public transport system, the automobile industry is laughing all its way to the bank. Sales of passenger vehicles, comprising cars, utility vehicles and multi-purpose vehicles, touched 1.04 million units in 2004, up 23 per cent from 2003.
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