Budget proposals may stop KSRTC's dream run

BANGALORE April 9. The Karnataka State Road Transport Corporation (KSRTC), which is on the road to recovery and has been posting profits, is likely to be in the red if all the Budget proposals pertaining to the transport sector, particularly the KSRTC, is implemented in toto.

Sources in the KSRTC told The Hindu on Wednesday that several proposals in the State Budget, presented by the Chief Minister, S.M. Krishna, on March 21, were likely to take a heavy toll of the corporation's financial and economic health.

The Budget proposals have come as a bolt from the blue for the KSRTC, which, for the first time, posted profits after a long period in which it incurred losses. Officials of the KSRTC said on condition of anonymity that the four major proposals that would affect the corporation, if implemented, pertained to the increase in the tax slab on KSRTC buses operating on both mofussil and town and city routes, reduction in the reimbursement for student passes, repealing of the Contract Carriages Act, and privatisation of city transport services in district headquarters. The four proposals, if implemented, could set back the KSRTC by at least Rs. 300 crore to Rs. 350 crore a year.

Sources in the Government maintained that the proposals had been recommended by the Tax Reforms Commission. However, KSRTC officials said the four proposals could undermine the level playing field in the transport sector, and load the dice in favour of private transport operators.

Citing an example, KSRTC officials said the Budget proposed taxing State transport undertakings and bringing them on a par with private operators. The tax on KSRTC buses operating on mofussil routes was to be increased from 6 per cent to 7 per cent, and on buses plying on city/town routes from 3 per cent to 5 per cent of the gross traffic revenue earned by the four State road transport corporations.

This measure, the officials said, meant that the KSRTC would have to pay Rs. 21 crore as additional tax to the Government. Similarly, the decision to impose entry tax with retrospective effect would cost the corporation Rs. 35 crore.

Besides, the reimbursement for student passes was likely to be brought down from Rs. 107 crore to Rs. 65 crore, and the KSRTC would have to meet the shortfall of Rs. 42 crore from its own resources.

The decision to privatise bus services in cities and towns in district headquarters is likely to lead to fierce, and in most cases, unfair competition by private operators. The Government has decided to provide stage carriage permits to private operators to ply within 20 km. of district headquarters.

The move to repeal the Karnataka Contract Carriages (Acquisition) Act will pave the way for private carriages to ply all over the State and compete with the State undertakings.

`Fare hike imminent'

Officials of the KSRTC said that the corporation would have no other option but to increase fares to meet the additional financial demands likely to be faced by it. The fare hike, they said, might not be far off and was likely to be substantial.

The four proposals, if implemented, could severely cramp the corporation's operations, and there are fears that it may push the KSRTC back in the red again. However, officials averred that they are prepared to meet any eventuality and give the private bus operators a run for their money.