In light of Transport Minister K.N.Nehru's announcement in the Assembly recently that the State Transport undertakings are set to incur a loss of Rs.1,000 crore this fiscal, the focus has shifted to defining this ‘loss.'
The Minister was essentially referring to the cash loss that is likely to be incurred, a little over one-third of which is due to the implementation of the Sixth Pay Commission recommendations, and the rest due to operational loss. Are there any grounds on which this cash loss can be translated into social profit?
Since the benefits of public transit are broader than are apparent with strict financial book-keeping, is there a rationale for universal free public transport?
Can Metropolitan Transport Corporation buses be made completely free for everyone to use? The idea might sound utopian, but experts point out that there is sound logic behind offering free public transit.
In fact, a number of mid-sized towns and cities across the world already have free public bus, train, or tram systems. The city of Hasselt in Belgium, for example, converted its entire bus networks to zero fare in 1997. Public transport ridership increased by as much as 13 times by 2006, according to a study done by the Belgian government.
Even while making the bus services free, the authorities through a combination of measures have made personalised transport expensive. This includes earmarking certain areas where entry of personal vehicles is by a fee and levy of a green tax.
The free bus service results in various benefits for the residents such as better air quality, lesser congestion and reduction in fuel consumption, a significant shift to public transit, fewer traffic accidents and increased access to work places for the poor.
According to an annual survey of air quality conducted by Simple Interactive Models for better air quality (SIM-air), an NGO based in New Delhi, the health cost of polluted air in Delhi in 2009 was Rs.2,450 crore.
A study by the Asian Development Bank in Bangalore shows that a 20 per cent increase in bus ridership reduces the city's fuel consumption by 21 per cent. It frees-up road space equivalent to taking off nearly 4,18,210 cars.
Anumita Roychowdhury, Associate Director of the New Delhi-based Centre for Science & Environment, says: “If public transport is made free, more people would use it. Fewer automobile miles would be driven. Carbon dioxide emissions would drop. Everyone would benefit. It would be fair then that the cost is borne by everyone through a small tax.”
Subsidising public transport is fair, experts say, because personalised transport already receives hidden subsidies through investment on flyovers and broader roads, and free parking.
In the last four fiscal, the Corporation spent Rs.127.31 crore on six flyovers. According to the Chennai Comprehensive Transportation Study, the main beneficiaries of these facilities that were built using public money are car users, a segment which accounts for only 6 per cent of the city's daily trips.
A senior MTC official said that free transit is a great idea as it would eliminate establishment cost, which amounts to a third of all expenses. There would be no need for conductors, ticket checkers, ticket printing or expenditure on revenue accounting. Excess manpower could be diverted to other activities that would increase overall efficiency.
“Every time the corporation incurs a loss, the government provides loans at 12.5 per cent to 15 per cent. It is almost impossible to pay back even the interest. When the transport corporation was incorporated in 1971, one of the object clauses was to ‘run it on sound commercial principles' and hence zero operational subsidy. The primary reason for the MTC must be relooked,” he said.
