No more BEST. Mumbai's public transport is reeling under financial crisis

The BEST is paring its fleet to 3,500 from 3,758, and is looking to cancel about 150 bus routes.

The BEST is paring its fleet to 3,500 from 3,758, and is looking to cancel about 150 bus routes.

For two months in a row, the Brihanmumbai Electric Supply and Transport Undertaking has not had money to pay salaries; it took bank loans to pay its 42,000 employees. That the BEST is hurting, and has been for some time, is not a secret. But now Mumbaikars are feeling the pain too: the undertaking withdrew its air-conditioned buses just as summer began making its presence felt; it is also paring its fleet to 3,500 from 3,758, and it is looking to cancel about 150 bus routes.

What has brought the BEST, not so long ago a fairly robust organisation, to this state? Can anything be done to revive it?

Unprofitable by design

Right from the start, the BEST’s electricity tariffs were supposed to subsidise the transport division.

“The British had envisaged that the transport services should be affordable for the labour class,” says Sunil Ganacharya, BEST committee member and former BEST union leader, “Hence they decided the electricity division would bear the burden; it was always meant to be like that. Electricity rates were decided and fixed by the BEST committee to compensate for the losses made by the transport division.”

In 2003, the Electricity Act allowed the Maharashtra Electricity Regulatory Commission to decide the BEST’s electricity rates. “We went to court against this,” Mr. Ganacharya says, “and though we were allowed to decide our own charges, the Supreme Court ordered that electricity consumers needed to be informed about what amount of TDLR [transport deficit loss recovery] was paid by them to subsidise the transport division.” Once this detail was included in electricity bills, he says, it created a furore; before that electricity consumers were unware of how much they were subsidising the transport division.

“Once people realised, they went to court, and the courts decided that people who did not travel by BEST buses should not be made to pay for subsidising transport bills.” (The action was a result of a petition of a representative of AHAR, the Association of Hotels and Restaurants.)

Jagdish Patil, who until recently was BEST’s general manager, says that the world over, mass transport bodies do not make profits.

This is something Ravi Raja, Opposition leader in the BMC, agrees with. He says, “[The BMC] must subsidise the BEST on a regular basis, and make a separate provision for the BEST in the civic budget. In fact, the BEST should be formally taken over by the Mumbai Corporation.”

Shashank Rao, general secretary of the BEST Workers Union is on the same page. “It is the duty of the municipal corporation to provide subsidised transport facility to its citizens through BEST,” he says. “This is similar to the many other civic services provided, like education, or water. Where is the question of profit in all this? The BEST is a public service initiative and it can only have deficit and surplus, both of which are to be handled by the parent corporation. There cannot be a concept of loss-making routes; the BEST cannot run on sound economics. Instead it must provide transport facility for every person.”

Systemic burdens

Wages are the BEST’s biggest expense. A revised wage agreement in 2006 linked salary hikes to the Consumer Price Index (CPI). “The CPI almost doubled later,” Mr. Ganacharya says, “thus doubling the Dearness Allowances of the workers and increasing establishment costs from 60–70% to almost 120% of the budget. And since the BEST comes under the Bombay Industrial Relations Act, 1946, it can now revise salaries only if the unions consent. Why would unions consent to such terms? Their stand would be that they are working well, why should they suffer due to management faults?” Mr. Ganacharya speaks from experience: he was part of the Shiv Sena-backed union before he joined the Bharatiya Janata Party.

The BEST must take some of the blame on itself, says Mr. Raja, who has served on the BEST committee for the past 18 years: “Mismanagement both by the administration and by the political parties are the major culprits. Many a time, decisions are taken by political parties on the basis of having majority strength in the BEST committee. A case in point is the purchase of the air-conditioned buses, which are now scrapped after causing a loss of over ₹500 crore. High establishment costs and lack of proper planning in routes only add to the burden.”

Competition rising

The BEST is also facing existential challenges on another front: improved public transport options.

From older facilities like share-an-auto services, to infrastructure projects like the Mumbai Metro and the Mumbai Monorail, to private sector offerings like app-driven private taxi services, all have taken passengers away from the BEST.

“Passenger patronage has reduced by over one million passengers in the last six years, from 45 lakh passengers per day to just about 28 lakh passengers per day today,” Mr. Patil says.

Nobody’s problem

As per budget estimates for 2017-18, the BEST’s deficit will be ₹590 crore.

The BMC, the BEST’s parent body, has two looming threats of its own to deal with: the imminent burden of the GST, and that octroi, its major source of income, will soon vanish. It is unlikely that it will take on the burden of financing the BEST’s deficit.

Mr. Rao says that even though the BMC is sitting on bank deposits of over ₹60,000 crore, it still refuses to bail out the BEST. Mr. Ganacharya thinks that the BEST’s parent body, the BMC, should help its undertaking, but the civic body seems to think its aid is discretionary rather than its duty. Certainly, the BMC’s actions indicate it has no intention of supporting the BEST.

Even when the BMC has given loans, it has levied high interest rates: its current loans to the BEST — around ₹1000 crore — come with a punitive 10% interest price tag. Despite being an undertaking, the BEST gets no concessions even on property taxes or octroi, or surcharges levied by the corporation.

For every bus ticket purchased, the Maharashtra government takes about ₹0.15 as a nutrition surcharge to fund its tribal development schemes, which amounts to ₹10 crore a year. But the State government has preferred to look the other way too.

Adding insult to injury are the unpaid bills from government bodies, collectively worth over ₹38 crore, as The Hindu had reported on April 22. Various departments of the BMC have defaulted on electricity bills of ₹11.38 crore (including ₹8.32 lakh from the office of the Commissioner of Mumbai), State government departments owe ₹23.87 crore, and Central government departments owe another ₹3.12 crore.

Further muddying the waters are allegations that the BEST is being set up for failure. “There are strong rumours of an industrialist eyeing a takeover of the BEST,” Mr Raja says. “Which is probably why BEST is being deliberately left out in the cold.”

Disowned by the BMC

Municipal Commissioner Ajoy Mehta seems to be quite firm about not helping the BEST until it is clear how the Undertaking will spend the money. Not only has he refused to release funds, he even asked the BEST to first implement corrective measures before seeking funds. Mr. Mehta also reportedly shot down a proposal to levy 0.8% surcharge for BEST from property taxes levied in Mumbai on the grounds that “those who don’t travel by bus should not be made to pay for it.”

When the BEST asked the BMC for a financial package of ₹1,000 crore, the civic body asked it to shape up and bring out an action plan. A senior political functionary at the BMC said, “If we help out the BEST at this stage, they will get into the habit of turning back to us for help at every given opportunity. Let them adopt and implement some corrective measures and then we shall help them out.”

There is political consensus about getting the BEST to clean itself up before any aid is given. Manoj Kotak, leader of the BJP in the BMC, says, “Staff payments and enrollments need to be discussed. The BMC is ready to offer help to the BEST, but there has be accountability and transparency about spending. They cannot be allowed to just walk away or waste the money that is handed over to them.”

Yet Mr. Kotak is against the BEST trying to help itself by hiking fares and optimising routes: “There should be no tariff hike if they receive help from the municipal corporation. Also, the re-routing should not inconvenience passengers.”

Atul Shah, BEST committee member, says, “Services cannot be curtailed just for the benefit of the staffers. What about the inconveniences caused to the 28 lakh passengers?”

Some solutions

“The BEST can very much run profitably,” says urban analyst Sudhir Badami. “If they are allowed to have a dedicated bus lane, that could help them deliver faster services. The BEST could also try to introduce a ₹25 ticket for 24 hours that could be used across the board and generate estimated revenue of ₹2,250 crore per annum and be close to breaking even at today’s traffic of 28 lakh passengers per day.” He feels that unlike the Mumbai Metro, the BEST is a “robust transportation system with greater flexibility and reachability” that needs to be strengthened in the interests of the city.

Mr. Patil concurs: “Passenger traffic has fallen due to high commuting time and buses not reaching on time due to traffic. An hour-long route takes two to two-and-a-half hours to complete. If there are dedicated lanes, then we can deliver quicker services.”

Before his transfer, Mr. Patil had submitted a BEST Action Plan to the BMC, which outlines measures that will trim expenses and raise revenues, projecting a cash surplus by the end of the current financial year. (See box, ‘Shaping up.’)

Among his suggestions were that the BEST could better utilise its roughly 300 acres of bus depot land, especially on the periphery of the island city, by developing them into bus hubs or terminals for long-distance bus services. “Currently, long-distance buses have no terminals, and they park on the roads. eating up a major portion of road space. If I can create satellite bus stations near the entry points of the city, where the long-route buses can park or culminate, the BEST can carry these passengers into the city. We could also create mini hubs within the city, at places like at Dadar or Chembur, where long trunk routes could be truncated to create shorter routes.”

Another suggestion is that drivers also perform the conductors’ roles to cut salary costs. There are already services that run without conductors, with passengers buying tickets from a counter before boarding, and new mini air-conditioned buses will have swipe devices fitted near doors for e-payments.

The action plan also suggests a complete freeze on recruitments, and staffing new services by contracting people instead. Will this be enough, especially considering the opposition to raising fares, one of the few revenue-generation measures? It seems that the best the BEST, and Mr. Patil’s successor, Surendra Bagade, can do for now is cross their fingers.

Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Jul 2, 2022 5:46:02 am |