Turning around the public bus

The Indian Railways carries over 22 million passengers per day. Given the sheer volume of people carried, and the critical role that the railways plays in India’s economic and social life, it’s hardly surprising that the Railways has always had its own ministry. Till a couple of years ago, it even placed a separate budget before Parliament — a privilege that no other ministry has enjoyed. Those budget numbers made national headlines and were analysed threadbare by the media.

But there’s another mode of transport in India that moves over 68 million passengers a day — three times that of the Railways, but gets far less attention. These are the inter-city and intra-city public buses run by state and city governments. Collectively known as State Road Transport Undertakings (SRTUs), they operate well below the media’s radar except for those times when services are disrupted (which often happens) or when buses are involved in accidents leading to loss of life. Operating under the jurisdiction of state governments, comparatively little is known about how well they are doing.

The answer, based on one of the few publications that reviews the performance of SRTUs across states, is, not that well. Titled ‘Review of the Performance of SRTUs’, it is released by the Ministry for Road Transport and Highways annually. 2015-16 was the last year for which the report was released.  

The report has data on 47 of the 54 SRTUs in India. It tells us that 40 of these 47 SRTUs made losses. Despite moving over three times the number of passengers of the railways, public bus services do not even earn a third of the railways revenue (Rs 517 billion vs Rs 1.68 trillion by the railways). 

Given the weak financial performance of the railways itself, it’s easy to imagine how much worse the financial state of SRTUs are. State bus services made a combined loss of Rs 113.5 billion in 2015-16, led by DTC (Delhi, Rs 34.1 billion) and BEST (Mumbai, Rs 10.6 billion).

And like all public services, poor financial health leads to a series of cascading effects. Services are cut back, forcing passengers to seek other modes of transport (which are not necessarily as cheap). Operations below capacity (the occupancy rate was just 70 per cent), further affect financial health. It’s a vicious spiral.

Despite the huge number of passengers they already service, what’s needed is for the SRTUs to expand their operations, not contract them. The review tells us that of the 210 million registered vehicles in March 2015 in India, only 1.97 million — not even 1 per cent — were buses. Of these only 143,000 were used by SRTUs. In other words, public bus transport — which makes the best use of available road space and fossil fuel among all motor vehicles, and is the most affordable — accounts for only 0.06 per cent of the vehicles on road in India. There is immense potential for buses to play a much larger role in public transport than they currently do.

Yet, as the review reports, 13 SRTUs reported a decline in fleet strength and three did not add a single bus. Three SRTUs — Maharashtra, Andhra Pradesh and Telangana — accounted for over 28 per cent of the fleet strength. The last big addition to public buses was five-10 years ago through the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), of about 20,000 new buses for intra-city travel. It is time for the next big upgrade, especially for inter-city travel and using electric buses for intra-city travel.

But fleet augmentation is immensely difficult, given the SRTUs’ poor financial health. Losses are high for three reasons: Salaries of the 738,000 SRTU employees (45 per cent of expenses), fuel (25 per cent of costs) and interest costs (7 per cent). High and increasing losses have resulted in unfunded pension liabilities and delays in clearing arrears. A collateral damage of this is service disruptions, a case in point being the recent strike by employees of Tamil Nadu’s SRTUs. 

The Centre should consider steps like those taken by it to revive power distribution companies: budgetary allocations to lower debt levels, but backed by tough conditions. Further, the 15th Finance Commission could make a one-time allocation to states to settle the pension and salary arrears of SRTU employees. And while states ask SRTUs to subsidise customers, compensation for these subsidies are often heavily delayed. Such delays should be cut down.

Further, SRTUs should play to their strengths — for instance, they own large areas of land for maintenance and as bus depots. If developed, these can be an excellent source of non-operating revenue.

Metro fares are now fixed through an independent regulatory mechanism. Similar procedures should be adopted by states to fix bus fares, insulating them from political pressure.

Between costs and revenues, there is ample space for more efficient operations using technology. On an average, a public bus travels 305 km a day, at 70 per cent occupancy. By comparison, according to the Bus Operators Confederation of India (an association of private bus owners), buses of big private companies log 460 km a day. SRTUs have data on route traffic and profitability, but they don’t channel it into operations. IT support, in terms of software to help SRTUs figure out scheduling and plan optimum routes can play a crucial role.

The government should make an immediate allocation for scheduling and ERP software, which will minimise downtime and increase revenues. As suggested by the ASRTU (the Association of State Road Transport Undertakings), a single software platform will be cheaper for its members, who can pay on a per-bus basis. The core of the software can be developed for just Rs 250 million. User training and language customisation will cost extra, and this can come from the Union Budget.

Further, providing a cheap, accessibly digital platform for ticketing can dramatically expand the reach to passengers. The Railways’ own e-ticketing platform is a potential model here and while there are attempts like busindia.com or redbus, much more can be done. Digital payments have the potential to plug leakages (given that the bulk of ticket payments are currently in cash).

Fixing our bus operations through better finances, better technology, and better management is not difficult. It requires a little political will and a little more money. But if done quickly, it can transform public transport and benefit millions of passengers. More importantly, it can provide the transformational software to ride on the hardware of India’s iconic highways development programme. />
The author is chairman, Feedback Infra vinayak.chatterjee@feedbackinfra.com; Twitter: @Infra_VinayakCh