The Maharashtra State Road Transport Corporation (MSRTC) in the Competitive Era. The Life-Line of Maharashtra

Textbook , 2022 , 131 Pages , Grade: 1.00

Business economics - Business Management, Corporate Governance

This book is an attempt to make the reference work, which is intended for practitioners, as well as a textbook, available to students. The contents of this book may be broken down into seven sections, which are as follows: historical development; systems and technologies; comparing options; planning; management and operations; policy issues; and the future. But because public transportation in general and MSRTC, in particular, is a dynamic subject, it was necessary to revise the book in order to ensure that it will continue to serve its readers well into the twenty-first century. Should transportation support current lifestyles, or should it promote or compel change in lifestyles? This is one of the new and developing topics that are addressed in the revised and updated version. Other new and emerging topics include: Who should be responsible for paying for transportation services: those who use them, taxpayers at the local level, or taxpayers at the national level? How can we maximize the improvements to air quality, energy consumption, land use, and modes of transportation to offer the necessary mobility at the lowest possible cost? How can we coordinate the many parts of transportation systems management (TSM) to make them more effective and efficient?

TABLE OF CONTENT

CHAPTER 1: INTRODUCTION
1.1 Public Transport In India: An Overview
1.2 Road Transport In India: A Brief Note
1.3 Maharashtra State Road Transport Corporation (MSRTC): Brief Profile
1.4 Scope/Statement of The Problem (SOP)
1.5 Reasons For Selecting The Problem
1.6 Theoretical and Practical Relation For Selecting The Problem
1.7 Objectives of the Study
1.7 Research Framework

CHAPTER 2: LITERATURE REVIEW
2.1 Public Transport In India: Problems And Challenges
2.2 Road Transport In India
2.3 Public (Bus) Transport
2.4 Performance of Public Transport In India
2.5 Rationale For Restructuring
2.6 International Experience In Reforms In Public Transport
2.7 Brief History of Maharashtra State Road Transport Corporation (MSRTC)
2.8 Problems Currently Faced By MSRTC
2.9 Service Quality and Customer Satisfaction
2.10 Defining Indictors of Public Transport Efficiency
2.11 System Efficiency Indicators
2.12 TQM In Public Transportation
2.13 TQM Principles For The Public Transportation Industry
2.14 Niche Marketing Strategies In Public Transport Service
2.15 Financial Aspect: Impact of Taxation on Cost of Operation . of MSRTC

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CHAPTER 1: INTRODUCTION

Chapter Overview

The chapter opens with a brief description of the concept of public transport in general and road transport in specific. It discusses the rationale and purpose behind the present research and gives an overview of the study's objectives; it also explains why a study on understanding the managerial and administrative practices of MSRTC was necessary. In the end, the chapter provides a snapshot of the research framework.

In several Asian countries, the public sector occupies an important position in the economy. The public sector should strive to create customer value just as the private sector does (Rahman & Rahman, 2009). Over the last few years, companies have gradually focused on service quality and customer satisfaction. This strategy is very profitable for both companies and customers, particularly for transit agencies and passengers. An improvement in the service quality delivered will attract further users. This would resolve many problems such as helping to reduce traffic congestion, air and noise pollution, and energy consumption because individual transport would be used lesser (Eboli & Mazulla, 2007). Pred (1977) in (Pacione, 1989) notes that quality of life is closely related to people accessibility to alternative employment, educational and medical facilities, essential public services, and nature or extensive recreational open space. Transit service quality is an aspect markedly influencing travel user choices. Customers who have a good experience with transit will probably use transit services again, while customers who experience problems with transit may not use transit services the next time. For this reason, improving service quality is important for customizing habitual travelers and for attracting new users. Moreover, the need for supplying services characterized by high levels of quality guarantees competition among transit agencies, and, consequently, the user takes advantage of better services. To achieve these goals, transit agencies must measure their performance (Eboli & Mazulla, 2009).

1.1 PUBLIC TRANSPORT IN INDIA: AN OVERVIEW

White (2002) defines ‘public transport' as all modes available to the public irrespective of ownership. The importance of public transport services in a successful transport system is widely recognized (Nash 1982; May and Roberts, 1995) cited by (Murray et. al. 1998).It provides mobility for those who cannot drive their own car, helps in creating and maintaining livable communities, relieves highway congestion, and assures long term sustainability in terms of resource consumption and the environment (David et. al.) cited by (Paul 2001). It can also provide a very efficient means of moving large numbers of people with considerable flexibility; in order to meet demand throughout the city (Armstrong-Wright et. al. 1987).

Transport in the Republic of India is an important part of the nation's economy. Since the economic liberalization of the 1990s, development of infrastructure within the country has progressed at a rapid pace, and today there is a wide variety of modes of transport by land, water and air. However, India's relatively low GDP per capita has meant that access to these modes of transport has not been uniform. Public transport is the predominant mode of motorised local travel in cities. This is predominantly by road, since commuter rail services are available only in the seven metropolitan cities of Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad, and Pune, while dedicated city bus services are known to operate in at least 25 cities with a population of over one million. Intermediate public transport modes like tempos and cycle rickshaws assume importance in medium size cities. However, the share of buses is negligible in most Indian cities as compared to personalized vehicles, and two- wheelers and cars account for more than 80 percent of the vehicle population in most large cities.

1.2 ROAD TRANSPORT IN INDIA: A BRIEF NOTE

In India Road Transport Corporation Act was passed by parliament in 1950. This Act advocated nationalization of passenger road transport undertakings operating in various Indian states. Under the auspices of the above Act many states nationalised their passenger road transport services and thus State Road Transport Corporations (SRTCs) were formed. Road transport is divided into 5 types. These are (i) National Highways (ii) Slate Highways (iii) Major district roads (iv) Other district roads and (v) Village roads. India has a total of 55 National Highways.

Table - 1 : Trends in road characteristics in India

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The length of the road was 31, 987 kilometers in 1986. Though only two per cents of the road system, carries nearly one third of the total traffic. National Highways connect the capital, district, and important cities of the State.

India had 4 lakh kilometers of roads during the time of independence. Out of that only 1 lakh 57 thousand kilometers of roads were developed. Now the total roads of India have increased to near about to 12 lakh kilometers. Out of this, 5 lakh kilometers are developed and 37% of the total roads are polished. The road transport sector in India has expanded manifold in more than fifty years after independence, both in terms of spread (total road length & road density) and capacity (No. of registered vehicles on road and the volume of passenger and freight traffic handled). The total road length has increased from 4.0 lakh km. as on 31.03.1951 to about 42.4 lakh km as on 31.03.2008, an increase of more than 10 times. Table 1 illustrates that the total length of National highways has increased from 22.2 Th. Km to 66.8 Th. km, an increase of about 3 times only, during this period.

The oldest Indian state transport undertaking is North Bengal State Transport Corporation founded by the Raj Durbar of Koch Bihar Kingdom regime on 1 April 1945 with three buses and three trucks. It is still vibrant and running, providing service to commuters of North Bengal region. Buses take up over 90% of public transport in Indian cities, and serve as a cheap and convenient mode of transport for all classes of society. Services are mostly run by state government owned transport corporations. However, after the economic liberalization, many state transport corporations have introduced various facilities like low-floor buses for the disabled and air-conditioned buses to attract private car owners to help decongest roads. Table 2 illustrates the fleet size of different States' Road Transport Corporations.

Table - 2: Fleet Size (no. of Buses) of various SRTCs in India

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Road transport enables the people reach their houses and enable the commodities and goods to reach near the businessmen. It is considered as complementary to other form of transport and helps economic development. However, currently State Road Transport corporations (SRTCs) find themselves plagued by several problems, partly external but largely self-inflicted. With declining financial support from both Central and State Governments after liberalization and in the wake of intense competition from private operators, these organisations have had to largely fend for themselves. A popularly held hypothesis has been that many of these organisations are oversized and hence splitting of these organisations into smaller organisations could vastly improve their physical productivity and hence financial performance. This idea has gained further ground after the dramatic turnaround of Karnataka State Road Transport Corporation (KnSRTC) after it had been split into smaller organisations. Through this study, the researcher intends to examine how efficiently MSRTC is using the input combinations available at its disposal given the current operating environment.

1.3 MAHARASHTRA STATE ROAD TRANSPORT CORPORATION (MSRTC): BRIEF PROFILE

The Maharashtra State Road Transport Corporation is established by State Government of Maharashtra as per the provision in Section 3 of RTC Act 1950. It is operating it's services by the approved scheme of Road Transport Published vide Notification MVA 3173/30303-XIIA dated 29.11.1973 in the official gazette.

Maharashtra is one of the few States where passenger transportation has been completely nationalized. MSRTC carried out an ambitious expansion plan by laying down the principle of linking each and every village by bus service. MSRTC's principal slogan is “Where there is a road there is a bus service”. This approach has been responsible for extensive route network in the entire state of Maharashtra. MSRTC has made significant contribution by creating a good road transport infrastructure for developing the rural economy in the state. The MSRTC has four tier organizational setup like Central Office at Mumbai, six Regional offices at Mumbai,Pune, Nashik, Aurangabad, Amravti, Nagpur, 30 Divisional Offices situated different Districts, and 248 Depots are situated almost at Tahasil Places.

Table - 3: Fleet Size of MSRTC under various categories of Buses

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**Source: MSRTC's central office

MSRTC provide transportation service throughout Maharashtra and neighboring sates with the help of 17500 buses and it conduct 85000 trips a day and near about 1, 04,000 employees are working in MSRTC in all over Maharashtra. MSRTC not only working in the area of providing transport facility to passengers but also it provide service of carriage of parcels, cargo, courier and Allied Material by using the carriage of buses. MSRTC also has 3 Central Workshops at Aurangabad (Chikalthana), Pune (Dapodi), Nagpur (Hingna). MSRTC runs one Printing press at Kurla, Vidyavihar, Mumbai for printing of tickets and other stationary, it runs Education centre also. Table - 3 exhibits the fleet size and differentiation of MSRTC while Table - 4 provide details on the presence of MSRTC in general.

Table - 4: Presence of MSRTC

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1.4 SCOPE/STATEMENT OF THE PROBLEM (SOP)

Although the MSRTC who have optimal resources available with them is the need of Maharashtra's public but still MSRTC is in continuous loss from last 30 years due to unable to rendered the quality services to the consumers and private players of the industry are taking the advantages of the circumstance ultimately catching up with the industry by increase passenger traffic.

1.5 REASONS FOR SELECTING THE PROBLEM

This study has their own importance and reason linked with MSRTC in related fields, study is basically going through four major sectors, that is:

a. Public Transportation.
b. Tourism, Industry & Education.
c. Rural Development.
d. Social.
e. Government.

a) Public Transportation: In this sector the main concentration area of study is qualities of the services of the other players present in the industry in the competition of MSRTC. Maharashtra state having the huge population the present facility of public transportation is almost insufficient for such a huge crowed. Optimal utilization of the available resources will solve lots of problem ultimately it will increase the revenue of the Government and provides good quality and convince to their customer.

b) Tourism, Industry and Education:

a. Maharashtra is the state of traditional, cultural, historical, God gifted natural scenic beauty; hence the Maharashtra will be the ideal destination for the Indian as well as international tourist.
b. Maharashtra is the Economical capital of India hence lost of National as well as Multination Companies are located in Maharashtra so good public transport system is requires, as people around the nation form all classes are traveling to different areas of Maharashtra.
c. The education in Maharashtra is of world class quality standard which attracts lots of student from across the globe. To reach their target of good quality of education, Lots of renowned international university and colleges are also located in Maharashtra hence to reach their desired goal and to fulfill their dream a perfect public transportation system is required.

c) Rural Development: Maharashtra is the land of agriculture 75% of Maharashtra in population is leaving in rural area their major source of income is farming which required an efficient public transportation facility to fulfill their basic daily needs.
d) Social: As it is rightly said that a common man has the freedom of speech freedom of education and above all “freedom of movement” 30-35% of rural as well as urban population in Maharashtra is traveling daily to earn their livelihood to one place to another place so comfortable and efficient public transportation system is a must.
e) Government: The stronger the public transport system, the higher the revenue to the Government. Public transport is the back bone for the development of the society. It is the moral responsibility of the Government to connect rural to urban and urban to metropolitan city, which should be comfortable, secured and effective for a common man. The optimum utilization of the asset of MSRTC is the basic requirement to make the system run in profit and to compete with the private players in this sector. MSRTC has the best state of art facilities, but government is lacking in proper utilization and maintenance of its resources.

1.6 THEORETICAL AND PRACTICAL RELATION FOR SELECTING THE PROBLEM

The study of topic “An empirical study of overall administration and management of MSRTC - An attempt to suggest a business model to bring MSRTC in profit” have lots of scope in certain areas and serve their contributions like Public transportation industries, Tourism services, social and the Government. Because previous study focus single area like financial out-comes and views about the other public transportation alternatives available and their development. But no one is concentrating on the up gradation of the facilities and services, expectations of the end consumers and ultimately the profitability of the MSRTC. Government is also unable to implement strategies due to the disinclined nature and also unable to regulate the price control system effectively due to the unawareness of exact reason due to that unable to provide the prices versus returns to the consumer rather consumer paying decides tariff.

- MSRTC
- Tourism Development
- Rural Development
- Government
- Social

1.7 OBJECTIVES OF THE STUDY

- To study the overall management practices of MSRTC.
- To study the relationship between footfall and facilities with MSRTC.
- To study the relationship between footfall and Hygiene in MSRTC.
- To study the brand image of MSRTC in the view of common man.
- To study the relationship between tariff and comfort of MSRTC.
- To identify the expectation of consumer from MSRTC.
- To identify new avenues for the development of MSRT.
- To design a new business model for profit of MSRTC.
- To promote better practices along with the standard service level benchmarks in Urban Transport
- To study how public transport make efficient use of roads in comparison to private vehicles.
- To study 3E Transportation Systems of China through sustainable development measures.
- To study how to channelized and disciplined the traffic resulting in a holistic development and urban as well as rural public transportation rejuvenation through MSRTC.
- To study the benefits of the unified fare collecting systems - like revenue, better priced and better transit data, passenger benefits, boarding and disembarking as well as environmental benefits like less pollution.
- To study the need of mobility and the solution to promote MSRTC and strengthen public transport system.
- To suggest Innovative technological solutions how to implement in MSRTC, which will provide the riders with safe, reliable, efficient and comfortable modes of transport through rebranding of MSRTC?

1.7 RESEARCH FRAMEWORK

The research framework and procedure followed in the present study has been illustrated in Exhibit 1.1.

Exhibit 1: Research framework

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CHAPTER 2: LITERATURE REVIEW

Chapter Overview

This chapter includes the review of related literature like papers published in national and international journals and periodicals, research papers and desertions related to the objectives of the study in chronological order which majorly includes Problems and Challenges to public transport in India, Road Transport in India, Rationale for Restructuring, International Experience in Reforms in Public Transport, History of MSRTC, Problems currently faced by MSRTC, Defining Indictors of Public Transport Efficiency, TQM in Public Transportation, Niche Marketing Strategies in Public Transport Service, etc. These literatures will be helpful to adopt the research methodology and help the study to provide the conclusions.

The spatial structure of cities, in developing countries particularly, is highly variegated. In some areas services and facilities are adequately provided while there are inadequate or no services provided in others. Similarly, there is variation in socio­economic characteristics of the dwellers from place to place. Moreover, the urban vulnerable groups are located mostly either at the city centre, economic heart, or at the fringes, where no one else wants to live. Theses variations ooze the challenge of getting equal and efficient urban services for the disadvantaged and vulnerable groups. As a consequence the quality of life in most developing countries is poor. Pred (1977) in (Pacione 1989) notes that quality of life is closely related to people accessibility to alternative employment, educational and medical facilities, essential public services, and nature or extensive recreational open space. The essence of urban planning is to provide adequate and equitable services to all groups. One of the important urban services is transport services. It has influence and impact on regional patterns of development, economic viability, environmental impacts, and on maintaining socially acceptable levels of quality of life (Murray et. al. 1998). Hanson (1995) states, transport are an absolutely necessary means to an end and allow people to carry out the diverse range of activities that make up daily life. It is a means to access business activities, education, employment, and recreational opportunities (Murray et. al. 1998). It contributes to pro-poor policy by providing access to opportunities, and enhancements to security (through reduced isolation), as well as providing job opportunities in the sector (World Bank 2002). There are many reasons why people take trips in urban areas, but trips to work (40±50 per cent of urban trips in developing countries) and school (20±35 per cent) are major components of travel (Mohan 1994) in (Ingram 1998). In general, transportation systems form the basis by which economic development can occur and the means by which society interact (Murray et. al. 1998).

However, Public transport faces severe problems in almost all countries of the developing world, although the situation varies from one country to another, and even from one city to another (Vasconcellos, 2001). Third World are plagued by chronic corruption and inefficiency, overcrowded and undependable service, congested roadways that slow down buses, and an operating environment that is often chaotic and completely uncoordinated. Such problems of public transport occur within the broader context of daunting urban transport problems in general. Air pollution, noise, congestion, and traffic fatality levels are often much more severe than those of developed countries. One might expect the much lower incomes in developing countries to assure a huge potential market of public transport riders. In fact, many city residents are so poor that they cannot afford even low fares, and routes are not designed to serve the poor at any rate. Thus, the poor in developing countries suffer even more than those in the Western World from low levels of mobility and accessibility, especially to jobs.

In many respects, the situation in India is typical of other developing countries. The most important commonality is India's low per-capita income—only US $2,540 in 2002, less than a tenth of the average incomes of countries in North America and Western Europe (Central Intelligence Agency 2002). With 23 percent of its urban population living in poverty, India has been forced to keep its public transport fares extremely low. That has sharply restricted the operating revenues of all pub lic transport systems, making it difficult to afford even routine maintenance and vehicle replacement, let alone system modernization and expansion.

Poverty is not only a problem at the individual level, but also in the public sector, with cities and transport systems desperately lacking the necessary financial resources for investment in infrastructure, vehicles, new technologies, and fare subsidies. The financial problems stemming from India's low per-capita income are probably the most important challenges facing Indian public transport, but there are many others as well: inefficiency, roadway congestion, traffic accidents, lack of planning, overcrowding, noise, and total lack of coordination of any kind

2.1 PUBLIC TRANSPORT IN INDIA: PROBLEMS AND CHALLENGES

The rapid growth of India's urban population—as in other developing countries—has generated an enormous need for efficient public transport services to carry high volumes of passengers through dense, congested urban areas. By 2001 over 285 million Indians lived in cities, more than in all North American cities combined (Office of the Registrar General of India 2001). There has been especially rapid growth of the very largest metropolitan areas such as Mumbai (Bombay), Kolkata (Calcutta), and Delhi, which now exceed 10 million residents each. Chennai (Madras), Hyderabad, Ahmedabad, and Bangalore each have more than 5 million residents. And 35 metropolitan areas have populations exceeding 1 million, almost twice as many as in 1991. Since large cities are far more dependent on public transport than small cities, the need for public transport services has increased faster than overall population growth.

Moreover, the lack of effective planning and land-use controls has resulted in rampant sprawled development extending rapidly in all directions, far beyond old city boundaries into the distant countryside. That also has greatly increased the number and length of trips for most Indians, including those by public transport.

Most public policies in India actually encourage sprawl. In an explicit attempt to decongest city centers, government regulations limit the ratio of floor areas to land areas for buildings in the center, and thus restrict the heights of buildings and density of development in the center. For example, the so-called “floor space index” in sampled city centers in India was only 1.6, compared to indices ranging from 5 to 15 in other Asian city centers (Bertaud 2002; Padam and Singh 2001). By contrast, government regulations permit higher floor space/land area ratios in suburban developments, yet more inducement for firms to decentralize. Indeed, local governments even advertise the less stringent regulations in the suburbs to promote more development there. Such land-use policies obviously discourage development in the center and force both firms and residences to seek locations on the suburban fringe. Moreover, local governments have permitted scattered commercial and residential development in outlying areas without the necessary infrastructure such as roads, utilities, hospitals, shopping, and schools. That generates long trips between residences and almost all other trip destinations.

Just as in North America, most new commercial development is in the distant suburbs. For example, Tidal Park is a software center on the outskirts of Chennai; Gurgaon is a large new industrial area outside Delhi; and Pimpri-Chinchwad is a similar center outside of Pune (Bertaud 2002). Similarly, Bangalore is planning several technology parks on its fringe as well as several circumferential highways in the suburbs, both of which will induce further decentralization. In most cases, there is inadequate infrastructure to serve these new suburban developments and the residences locating around them. Ramachandran (1989) characterizes Indian suburbs as an “uncontrolled mix of industrial development, dumps, and obnoxious uses,” with the “extension of urban settlement causing conditions in the overtaken villages to deteriorate, both physically and socially.” The leap-frog development typical of suburban sprawl tends to follow major highways out of Indian cities to the distance countryside.

There are important consequences of such low-density, sprawled decentralization for public transport. Just as in North America and Europe, it generates trips that are less focused in well-traveled corridors and thus more difficult for public trans port to serve. In India, it has led to rapid growth in car and motorcycle ownership and use and thus increasingly congested roadways that slow down buses, increase bus operating costs, and further discourage public transport use.

2.1.1 Trends in Public Transport

The best statistics for public transport in India are for suburban rail, because it is centrally own and operated by Indian Railways. As shown in figure below, suburban rail usage has sharply increased over the past five decades, with a 14-fold growth in passenger km of travel (Indian Railways 2001). There are no comprehensive national statistics on bus service supply, let alone the number of riders, but the fragmented statistics for individual cities suggest substantial growth. For example, in the 10 years from 1990 to 2000, there was an 86 percent increase in the size of Mumbai's bus fleet, and a 54 percent increase in Chennai's bus fleet. While the size of Delhi's public bus fleet actually fell, the number of private buses rose by almost twice as much, yielding a net 28 percent increase (Association of State Road Trans port Undertakings 2002).

Figure. Growth in Suburban Rail Travel in Indian Cities 1951 to 2001 (in millions of passenger km)

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Source: Indian Railways 2002

Buses carry more than 90 percent of public transport in Indian cities. Indeed, most Indian cities have no rail transport at all and rely instead on a combination of buses, minivans, auto rickshaws, cycle rickshaws, and taxis. Even in most of the largest cities, rail transport carries less than a third of public transport passengers. The only exception is Mumbai, which has India's most extensive suburban rail net work, carrying more than 5 million passengers a day—58 percent of total public transport passengers in the region (vs. 42% by bus) and 80 percent of total pas senger km (vs. 20% by bus) (Brihanmumbai Electric Supply and Transport 2003; Indian Railways 2002).

In general, the larger the city size, the higher the percentage of urban trips served by public transport in India: 30 percent in cities with population between 1 and 2 million, 42 percent for cities with populations between 2 and 5 million, and 63 percent for cities with populations over 5 million (Sreedharan 2003). Thus, the especially rapid growth of large cities suggests a further rise in future demands for public transport in India.

As shown by Figure below, however, there is substantial variation among cities of the same size category. Almost 80 percent of all trips in Kolkata are by some form of public transport, compared to about 60 percent in Mumbai, and 42 percent in both Chennai and Delhi. Divergences in land use and roadway supply explain some of the variation. Delhi and Chennai are lower density, more polycentric, and more spread out than Mumbai and Kolkata. Delhi also has a particularly extensive roadway network, while the supply of roadways in other large Indian cities is much more limited. For example, 21 percent of Delhi's total land area is devoted to roads, compared to only 11 percent in Mumbai and 5 percent in Kolkata. Mumbai and Kolkata also have more restricted geographies, since both are situated on peninsulas that channel travel and land-use development in only a few directions. Such focused travel corridors especially encourage suburban rail use, as in Mumbai. Delhi has no such geographic restrictions and sprawls out in all directions. Thus, Delhi currently relies primarily on auto rickshaws, motorcycles, taxis, and private cars to serve the multi destinational, less focused travel patterns of its residents.

Figure. Percent Distribution of Urban Trips by Means of Travel for Selected Indian Cities, 2002

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Sauries: Percikur 20C2 ird World Dark 2DD2

The range of public transport services available also varies considerably, even among the largest categories of cities. Only Mumbai, Kolkata, and Chennai have extensive suburban rail services. Delhi has limited suburban rail services. Until recently, Kolkata had India's only underground metro system (16.5 route km), but Delhi is currently constructing a far more extensive metro (62.5 route km) (Delhi Metro Rail Corporation 2003a). Chennai has a hybrid surface and elevated metro, designated as Mass Rapid Transport System, which currently extends 8.6 km and is being expanded by another 11.2 km (Southern Railway 2003). Finally, Kolkata has India's only remaining tram system, a 68-km double-track network of old, seriously deteriorating tracks, and vehicles.

As noted previously, buses account for most public transport services, even in these large cities, and for virtually all public transport services in cities with less than 5 million residents. Moreover, all Indian cities feature large numbers of auto rickshaws (3-wheeled motorized, minicars), taxis, and cycle rickshaws (humanpowered carts).

2.1.2 Problems and Challenges

The sharply rising demands for public transport have overwhelmed the existing public transport systems in India. Trains and buses in most cities are dangerously overcrowded. On suburban rail lines in Mumbai, peak-hour trains must carry more than twice their maximum design capacity, leading to inhuman traveling conditions, with so-called “super dense crush loads” of 14 to 16 standing pas sengers per square meter of floor space (Varshneya, Jain, and Sahai 2002; Ministry of Railways 2002)! On peak-hour trains, many passengers are forced to hang out doors and windows or to ride between train cars or even hang on the outsides of cars. Suburban trains and stations seem hopelessly overcrowded and desperately need expanded capacity.

Buses in Indian cities are doubly disadvantaged by congested conditions. Buses themselves are seriously overcrowded, with some passengers forced to ride on the outsides of vehicles. In addition, however, buses must negotiate extremely con gested, narrow streets, with no separate rights-of-way at all, having to fight with a mixed array of animal-drawn carts, minivans, cars, taxis, motorized two-wheelers, auto rickshaws, pedestrians, cyclists, and street vendors. Severe roadway conges tion has slowed down most buses to a crawl during much of the day—as slow as 6 to 10 km per hour in many large cities (Gakenheimer and Zegras 2003). These congested conditions in public transport vehicles, stations, and rights-of way not only slow down travel but make it outright dangerous. Tens of thousands of public transport passengers are killed or injured every year in accidents. Many buses and trams do not even have doors and windows that can be closed, and that only encourages passengers to ride by protruding from inside the vehicle or by hanging on from outside. Clearly, riding on the roofs or sides of buses and trains is inherently unsafe and results directly from the severe undercapacity of public transport systems in India. Slow, uncomfortable, undependable, and unsafe conditions in the early 1990s led to riots of passengers protesting these inhumane conditions, forcing some of the service expansion efforts described later in this article (Acharya 2000).

One consequence of insufficient service quantity and terrible service quality is that public transport has been losing market share in many cities. Dissatisfied public transport passengers are increasingly turning to the private car, and even more dramatically, to the relatively low-cost motorized two-wheelers, which have experienced a boom in ownership and use in the past 10 years. As shown in Figure 3, the total number of private cars and motorized two-wheelers increased roughly four times faster than the number of buses over recent decades (World Bank 2002; Ministry of Road Transport and Highways 2003). For much of the Indian middle class, the motorcycle offers an affordable, far more flexible, convenient, faster, and more dependable way of getting around than public transport. For affluent Indians, the private car offers an even higher level of comfort and greater prestige, although it is more likely than two-wheelers to be slowed down by roadway congestion.

The deteriorating quality of public transport service reinforces the impact of the rapid decentralization of Indian cities. Both trends encourage a shift away from space­saving public transport toward individual motorized transport. That has greatly increased roadway congestion, further reduced travel speeds, and aggravated traffic safety problems. Perhaps because of its separate rights-of-way and thus higher speeds, suburban rail continues to experience strong growth in passenger levels, in spite of crowded vehicles and stations and undependable service. By comparison, bus systems in some cities have suffered losses of passengers in recent years, as their overcrowded buses get bogged down in slower and slower traffic.

Figure. Growth of India's Motor Vehicle Fleet by Type of Vehicle 1950-2 001 (In thousands of vehicles)

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Another crucial problem of Indian transport is inefficiency, lack of productivity, over staffing, excessively high operating costs, and large subsidy needs. Especially since the mid-1990s, operating deficits have been rising rapidly. For bus systems in the largest cities, the combined operating deficit quadrupled (Association of State Road Transport 2002b), and for Indian Railways, the annual operating defi cit tripled. As shown in Figure 4, most publicly owned bus systems in large cities generally cover about 70 to 90 percent of operating costs, much higher than large public transport systems in Western Europe. The most unprofitable bus system is in Kolkata, which covers only 42 percent of costs through passenger fares, while Delhi (72%) and Mumbai (80%) cover about three-fourths of costs. At the high end of the scale, Bangalore (105%) is actually profitable, and Hyderabad (92%) almost breaks even. It is notable that both of the publicly owned bus firms in Bangalore and Hyderabad contract many of their services to privately operated companies, which probably explains the better economic performance.

Figure. Proportion of Operating Expenses Covered by Passenger

Revenues for Selected Cities in India, 2000-2001

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Clearly, much could be done to improve the efficiency of both bus and rail operations, most of which are publicly owned, operated, and regulated. There are many institutional obstacles to any fundamental changes, including powerful labor unions representing employees, which have blocked changes that would disadvantage them.

2.1.3 Privatization

One possible solution too many of these problems might be the selective privatization of India's public transport sector. That could be done either through opening up the market to private firms (who would own, manage, operate and finance their own systems) or by having public agencies contract with private firms to operate services on a system wide basis, for selective routes, or for selected functions (like maintenance). Rail systems have only rarely been privatized anywhere in the world (except for certain narrow functions), while there is considerable experience with bus privatization. Thus, privatization seems an option only for bus services, but they account for more than 90 percent of India's public transport.

Privatization of public transport in India was strongly encouraged by the World Bank (2002), which accused publicly owned and operated systems of being inefficient and highly unprofitable, providing insufficient and low-quality services, and failing to respond to market demands. Although there were some minor attempts at privatization in the 1980s, the first large-scale privatization of buses occurred in Delhi in 1992, when numerous small, private bus firms entered the market. Unfortunately, the new private operators were not adequately regulated and coordinated, leading to complete chaos. The new private services tortured passengers with lengthy, zig-zag routes, long waiting times, completely unreliable service, extreme overcrowding, unqualified drivers, speeding and reckless driving, fights among competing buses, and even running down passengers waiting at bus stops. Moreover, the private buses were often poorly maintained, unsafe, noisy, and highly polluting, adding to the already severe congestion, safety, and air pollution problems in Delhi.

In the years since 1992, regulations have been strengthened and better enforced. Moreover, the many private bus operators are now much better coordinated than at the outset. Service quality problems still remain, but privatization appears to have brought some substantial economic benefits. In a comparison of public and private bus operators in Delhi, the World Bank found that private bus firms carried twice as many passengers per bus per day (1,584 vs. 751), earned twice as much revenue per bus per day (2,700 vs. 1,321 Rupees), required less than half the staffing per bus (4.6 vs. 9.6 employees), cost less than half as much per bus km (7.7 vs. 17.2 Rupees), and actually made a profit (3.2 Rupees per bus km) while the public bus firms ran a loss (11.0 Rupees loss per bus km) (Marwah, Sibal, and Sawant 2001).

These financial comparisons between public and private buses are somewhat exaggerated, since private firms can usually select profitable routes, while public firms are often required to provide unprofitable services on lightly used routes to achieve social objectives and ensure comprehensive coverage to the entire city. Moreover, private bus companies offer their employees much lower wages, less job security, and less generous fringe benefits such as pensions and health insurance. Thus, to some extent, the private bus firms have lower costs due to lower salaries for their workers.

Kolkata currently has a large number of privately operated buses as well (about 1,800 private vs. 1,200 public), and as in Delhi, they have fewer employees per bus, lower costs, and much higher cost coverage through fare revenues than the publicly operated buses. Privatization in Bangalore and Hyderabad has so far been limited to the contracting out of certain routes to private operators, but still with the overall coordination of a public agency. It appears that privatization does indeed have much potential to improve efficiency, but that it must be accompanied by strict regulations, performance standards, and overall coordination to ensure an integrated network of services. In light of the transport funding crisis in Indian cities, they may have little choice but to seek the cost savings possible with privatization and increased competition.

2.1.4 Funding

Since passenger revenues do not cover the full costs of operation and capital investment of public transport, government financial assistance is obviously crucial. As owner of Indian Railways, the Central Government must bear whatever operating deficit remains after the substantial cross-subsidies from profitable freight services. In the past, the Central Government also bore most of the costs of c ap ital investment, but in recent years, state governments have financed growing portions of these costs, especially for the expansions and improvements of suburban rail systems in Mumbai, Chennai, Kolkata, and Hyderabad (Ministry of Railways 2002). To encourage more state contributions, Indian Railways now gives priority to projects with up to two- thirds state government funding.

Funding for new and expanded metro rail systems comes from the Central Government as well as state and local governments, but there is no exact formula, and the distribution of contributions varies from case to case. The World Bank, the Japanese Bank for International Cooperation (JBIC), and other international lending agencies have also provided loans for large infrastructure projects. For example, a JBIC loan is funding two-thirds of the capital cost of building the Delhi Metro (Delhi Metro Rail 2003b). Rail system operating deficits, however, are primarily borne by local governments. Most bus services are still publicly owned and operated by STUs (State Transport Undertakings), whose operating and capital investment costs are covered by a combination of state and local government subsidies, grants, and loans that vary from state to state. Significantly, no government level has any dedi cated taxes whose proceeds would be automatically earmarked for public transport. Thus, financial support for public transport is tenuous, depending on annual budgetary appropriations. With critical shortages of revenues at every government level, public transport must compete each year with many other urgent needs for public funds. The willingness of the Central and state governments to fund public transport can vary substantially over time, making long-term planning very difficult.

2.1.5 Recent and Planned Improvements

In spite of severe shortages of both public and private financing for improving public transport, several Indian cities have been trying to provide more and better services to meet burgeoning travel demands. The most extensive improvements are in Mumbai. For example, Indian Railways has already opened two new sub-urban rail lines and has plans for additional extensions. Several existing lines have been vastly improved by constructing additional tracks (from one to two tracks and from two to four tracks) to permit separation of local and express trains. Moreover, cars have been added to trains, average speeds have increased, and frequency of service has also risen— measures aimed at mitigating the overcrowding problem. By relocating more than 6,000 illegal slum dwellings that encroached on land directly adjacent to railway tracks, Indian Railways increased service depend ability, speed, and safety (Mumbai Metropolitan Region Development Authority 2003).

An especially innovative initiative is the planned Sky Bus system, which will fea ture several lines of express buses on elevated guide ways. The initial phase, which extends 8.3 km, scheduled for completion by 2006, should help to relieve the most congested suburban rail and bus routes in the same corridors (Konkan Railway Corporation Ltd. 1999). Finally, the main bus operator in Mumbai (BEST) has already introduced smart cards for fare collection on some premium bus services and also plans to introduce low-floor buses to facilitate travel by passengers with disabilities (Brihan Mumbai Electric Supply and Transport 2003).

Delhi has been innovative on at least three different fronts. It has been construct ing a new metro system with three lines, but only a small section is currently in service. When completed, it will have 12.5 km of underground lines and 50 km of surface or elevated lines. By the year 2005, the Delhi Metro is expected to carry more than two million passengers a day (Delhi Metro Rail Corporation 2003c). Delhi has also been at the forefront of innovations in bus services, both by requiring a complete switchover to nonpolluting CNG buses and by introducing privatization and increased competition among bus firms to reduce costs. As noted earlier, both of those policy changes caused enormous disruptions in service for several transitional years, but the overall result has been positive.

Kolkata is currently extending its existing 16.5 km underground metro by another 8.5 km (Metro Railway Kolkata 2003). Chennai completed the first phase of its Mas s Rapid Transit System in 1997, which includes 6 km of elevated track and 2.6 km of surface track. Currently, the system is being extended by another 11.1 km, with at least 40 km of future expansions planned (Southern Railway 2003). The initial phase was disappointing because it was not well coordinated with bus and suburban rail services, but those problems are currently being handled through significant improvements in parking and better connections to bus and suburban rail. Connections are also being improved between three of the suburban rail lines in Chennai, with physical links now possible thanks to gauge conversions for compatibility. Finally, Chennai has plans to introduce privatized, competitive bus services on roughly half its bus routes, following the example of Delhi and the recommendations of the World Bank.

Bangalore had planned a new light rail system, but it has been indefinitely post-poned due to a shortage of funds. Instead, a less expensive system of grad-esepa rated busways and high-capacity articulated buses are being considered (Gaur 2002).

The suburban rail services in Hyderabad are being expanded and improved, with a special focus on upgrading station areas and enhancing safety. In addition, transfers between bus and rail services are being facilitated by better coordination between the city bus services and Indian Railways.

2.1.6 Recommended Policy Shifts

Given the rapid growth of India's largest cities and the desperate need for better and expanded public transport, it is crucial that policies change to improve the entire range of public transport services offered. Unfortunately, the Indian government has been emphasizing instead the need to further develop the nascent automobile industry in India and has actually encouraged more private car owner - ship and use. Indian cities are simply not equipped to handle increased volumes of private vehicle use. Roadways are already hopelessly congested, with average speeds declining each year. Even for automobile users, it will be important to improve public transport, if only to remove some traffic from the streets and thus reduce congestion to manageable levels and increase travel speeds.

Clearly, public transport must be given priority attention to avoid further deterioration of air quality, traffic safety, congestion, and noise in Indian cities. While some improvements can be made even with existing funding levels, most would require massive infusions of new funding for expanded and modernized bus and rail systems. Equally important, state, and local governments must give traffic priority to buses, both through special bus lanes and signal priority over private transport.

With more than 90 percent of public transport passengers in Indian cities relying on buses, it is especially important to upgrade bus services through modern, safe vehicles and priority on the congested roadways. The heavy, high-floor buses currently in service in most cities are noisy, polluting, fuel-inefficient, and unsafe. They are built on truck chassis with such high floors that boarding is slow and difficult. Moreover, they have slow acceleration as well as poor fuel economy due to their weight, and are inappropriate to urban use. Many buses do not even have closable windows and doors to protect passengers from the weather and from falling out of the vehicle. It is essential to replace these outdated buses with modern, safe, clean, and fuel-efficient vehicles.

Improving and expanding rail systems are also crucial, since they are insulated from the congestion delays caused by roadway traffic. Unfortunately, they are usually very expensive, and it is not realistic to expect that even most large Indian cities will be able to afford new rail systems. Moreover, for medium and small cities, where public transport services are either nonexistent or very infrequent, as well as slow and crowded, improved bus service is the only feasible option. Private vehicles have a much higher share of total trips in small and medium-sized cities precisely because the bus services there are so inadequate.

Within the current funding limits, it would still be possible to vastly improve the transfer connections between rail and bus lines, as well as to introduce integrated ticketing for all public transport modes. In addition, the privatization and increased competition among bus services already implemented in Delhi and a few other cities might be adopted more widely, as it would increase efficiency and reduce costs. That would, however, have to be accompanied by strict regulation and enforcement of safety and pollution standards combined with overall region wide coordination of all public transport services. It was the failure to regulate and coordinate the new private bus operators in Delhi that led to the serious problems of unsafe, overcrowded, unpredictable, and uncoordinated private buses.

The main problem in Indian cities, however, is financial. To some extent, operating revenues of public transport firms could be greatly enhanced by targeting fare subsidies to low-income passengers and raising considerably the fares for the middle and upper classes. As noted earlier, fares on most systems are extremely low—and passenger volumes are extremely high—so that even modest increases might yield substantial revenues for system maintenance, modernization, and expansion. Fares cannot be raised too high, however, even among middle-class riders, since they might then be diverted to private transport modes, which cause the most urban transport problems. Thus, larger subsidies from the public sector will be essential.

Until all levels of government in India devote the necessary funding to expanding and improving public transport, it will remain overcrowded, unsafe, undepend able, and unpleasant, thus encouraging ever more Indians to turn instead to private cars and motorcycles, which would lead to even more serious congestion and pollution problems in Indian cities. The ideal source of such funding would be some sort of dedicated gasoline or private motor vehicle tax whose revenues would be devoted specifically to the improvement of urban transport conditions, including better roadways, better bicycling and walking facilities, and above all, better bus and rail services. Many of the world's developed countries have used such dedicated gasoline and motor vehicle taxes for decades to fund their public transport improvements. In India, it would be doubly beneficial. Such a tax would discourage nonessential private car ownership and use. Moreover, the burden of the tax would fall on relatively affluent Indians, so that the overall impact would be quite progressive. The solution to public transport's financing problem in India seems quite clear, but does the Indian government have the political will to implement it?

2.2 ROAD TRANSPORT IN INDIA

2.2.1 Accessibility:

The road transport sector in India has expanded manifold in more than fifty years after independence, both in terms of spread ( total road length & road density) and capacity (No. of registered vehicles on road and the volume of passenger and freight traffic handled). The total road length has increased from 4.0 lakh km. as on 31.03.1951 to about 42.4 lakh km as on 31.03.2008, an increase of more than 10 times. The total length of National highways has increased from 22.2 Th. Km to 66.8 Th. km, an increase of about 3 times only, during this period. (Table X.1).

Table - X.1: Trends in road characteristics in India (Thousand km)

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Sources: (i) Economic Survey, 2009-10 for the data from 1951 to 1991

The road density, defined as the average road length per 1000 population, has increased from 3.28 km as on 31.03.2001 to 3.70 km as on 31.03.2008, registering a CAGR of 3.3%. The rural road density per 1000 population increased from 4.20 km to 4.86 km, whereas urban road density increased from 0.88km to 0.91km during this period. The road density per 1000 population appears to be higher in rural areas because of lower population density in rural areas compared to urban areas. In terms of availability of roads per unit area, the road density (per 1000 km) at all- India level increased from 1026.24 km to 1288.74 km.

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The number of registered motor vehicles per thousand persons increased from 53 in 2001 to 81 in 2006 indicating improvement in accessibility of means of transport for the people.

Buses including omnibuses , which are the main mass transport vehicles on the roads, show a growth rate of 9.37% during 2001-2006. But they account for only 1% of the registered traffic on the roads(Table 1A.13). Actually non transport vehicles are 90% of the registered motor vehicles (Table 1A.16) and thereby real culprits for increase in road congestion. Out of the non transport vehicles, two wheelers alone account for about 70% share in registered motor vehicles in the country (Table 1A.13).

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The fleet strength of SRTU buses increased only nominally from 114970 to 118629 during 2001-2008. But notable feature is that private sector participation in bus fleet increased from approximately 82% in the year 2001 to 89 % in 2006. The number of private buses increased from 519 thousand in 2001 to 880 thousand in 2006. Breakdowns in SRTU buse s per lakh kilometer decreased from 5.3 in 2000 to 2.1 in 2008, indicating improvement in quality of buses. The general trend of reduction in staff strength is visible in SRTU's also. Total number of SRTU employees decreased from 7.4 lakh in 2001 to 6.6 lakh employees in 2008.

During the 10th plan central budgetary support to the sector was '210 crore, showing a large increase over 9th plan outlay of '60 crore. State budgetary support to the sector increased from '7355 crore during the 9th plan to '9207 crore, during the 10th plan, showing an increase of '1852 crore over the ninth plan outlay. State plan outlay forms about 99% of the total plan outlay for the sector. Utilization of funds under central plan increased from 71% in the IX plan to 85% in the X plan. Utilization of funds under state plan decreased from 81% in the IX plan to 60% in the X plan (Table 1C.1). The total capital invested for SRTU's increased from '8200 crore to '13821 crore, at a CAGR of 7.7% during 2001- 2008. Total cost of operation of SRTU's is higher than total revenue during 2001-2008.

Both passenger and freight tone kilometer performed by road transport show significant growth during 2001-2007. Passenger km performed increased from 2075.5 billion to 4251.7 billion during 2001-2006, showing a CAGR of 15%. Freight tone km performed increased from 494 billion to 766 billion during 2001-2007, showing a CAGR of 7.6%. Utilization per SRTU bus on road per day increased from 313 km in 2001 to 344 km in 2008.

Performance of SRTU's

Effective km Operated (in crore)

Utilisation per bus on road per day (in km)

2.3 PUBLIC (BUS) TRANSPORT

The dominant mode of public transport in developing countries in road based transport is the ‘conventional' bus. It has wider social and environmental benefits. It is the only one affordable to the urban poor (Armstrong-Wright et. al. 1987). It is the most flexible as it satisfies high short distance mobility demands. It needs less investment on infrastructure. It is feasible economically to all groups and environment friendly system. Vikash (2003) reckons how people can trade off between owning a vehicle and good quality public transport as: “Most people in a city are better off if they access vehicles rather than own them.” However, in line with the general discussion above, the demand of this service (particularly during peak hours) is beyond its capacity and the quality of service is poor. Moreover, the general prevailing traffic congestion and inadequate street networks constrain the level of service. To illustrate how severe the problem of traffic congestions is in some cities Vikash (2003) reckons that: the traffic speed in most urban areas has been dramatically similar to what existed at the times when horse and carriage was the fastest means of travel (Vikash 2003)”. Armstrong-Wright et. al. (1987) describes the poor performances of existing bus service in many developing countries by saying [public bus service] in many places fall short of demand; systems are frequently severely overstretched, uncomfortable, and unreliable (Armstrong-Wright et. al. 1987).” Only 52.25% of the total population gets suitable service in South East Queensland's, despite the policy goal for public transport in the region of at least 90% total population coverage within 400 meters of a bus stop(Murray et. al. 1998). In Dar Es Salaam 94% of the roof area are within a walking distance of 1km (Girmay 1998).

Public bus transport service in most developing countries is provided by the government. In most cases it is subsidized and the return is very low. This inhibits investment and expansion, resulting in reduced standards and systems fall short of demand (Armstrong-Wright et. al. 1987). However, it should be encouraged and improved to spread its wider social and environmental benefits. There are numerous details to be sorted out in providing or overseeing this form of public assistance such as the best placement of stops and routes, the frequency of operation, and the connectivity of the transport network for regional service delivery (Murray et. al. 1998). The suggested improvements to achieve the policy goals in the South East Queensland's region are: first adjust the notion of service coverage to reflect the spatial, socioeconomic, and demographic characteristics of potential patronage rather than attempting to set public transport goals for the entire region assess cost of recovery and give priority to the most disadvantaged ones. Second strengthen and extend the coverage of the transport system. This includes addition of separate bus lanes, providing new public transport corridor, improving the efficiency of transport stops and travel routes in terms of redundancy and suitability (Murray et. al. 1998). These solutions focus on improving ease of access and efficiency to overcome resistance to travel by public transport and ensure the system will get people from where they are to where they need to go in a reasonable amount of time (Murray 2001).

Gauging or measuring the effectiveness of public transportation performance is critical in assessing policy goals as well as planning for future improvements (Murray et. al. 1998). Access and accessibility can be used to measure its performance. Murray (2001) reckons; “access provision and system efficiency are both important elements of public transport service”. Access is opportunity to use system based on proximity and cost while accessibility is suitability of system to use. Access and accessibility of public transport improves accessibility of other basic services which have larger influence area due to limited finance and some other reasons. With the help of geographic information systems (GIS) better understanding on access and accessibility can be achieved however “caution should be used when employing GIS technology.” (Albert et. al. 1995) cited by (Perry et. al. 2000). Table 2 illustrates the fleet size of different States' Road Transport Corporations.

Table - 2: Fleet Size (no. of Buses) of various SRTCs in India

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2.4 PERFORMANCE OF PUBLIC TRANSPORT IN INDIA

Public transport in India can be classified into two - rail and road. Out of total passenger movement of the country, 80% is met by road transport while the remaining 20% is carried by railways at present.

2.4.1 Road transport

Road transport in India is operated partly by public sector and largely by private sector comprising about 28.7 % and 71.3 % respectively of the total buses. The participation of the state in road transport commenced in 1950 and since then State Road Transport Undertakings have been formed in every state.

At present, there are about 67 State Road Transport Undertakings (SRTUs) in the country. They operate a fleet of over 115 000 buses and employ more than a quarter of a million people (March 1999 data). Out of 59 corporations, 14 corporations operate exclusively in the urban areas, 8 operate exclusively in the mofussil (rural) areas, and 37 operate in both urban and rural areas (Table 2).. Out of the total number of buses held by the corporations, 17 455 render services in urban area and the remaining 95310 function in mofussil areas, including 2659 in hilly regions (Source. ASRTU 2000).

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Source. ASRTU 2000

The organizational form for public sector bus companies varies from state to state, the most common form being that of a Corporation constituted under the provisions of the Road Transport Corporation Act, 1950. There are 22 such corporations. 26 undertakings have been formed under Indian Companies Act, 1956.

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Management of State Road Transport Undertakings in India

(Source: ASRTU 2000)

Public transport is also operated by 11 Municipal Councils under various municipal legislations. The remaining eight undertakings function as part of government departments (Figure 1). Currently public bus transport in India is provided through a multiplicity of mechanisms. These include the following:

- Own services which are operated by the SRTU using its own fleet
- Kilometer Scheme under which, private buses are hired to run services as required by the SRTU.
- Direct permits under which permits have been given directly by the State Transport Authority (STA) to private operators for providing transport services on specified routes. The buses are owned and operated by the private permit holder who also collects the fares. The fares, routes and other aspects of service are as allowed by the STA under the Motor Vehicles Act, 1988. These operators are independent and have no relationship with the SRTU.

2.4.2 Operational performance

The total strength of the urban SRTUs grew from just about ten thousand vehicles in 1991 to about 13 500 in 1999, an increase of 28%. However, while the total vehicle fleet strength grew at almost 10% per annum in the 1990s, the urban SRTU fleet grew by less than 3% per annum. Given that the increase in the national bus fleet over this period has also not been spectacular, the size and spread of urban public transport has seen a decline in the last five years.

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Growth in fleet strength of SRTUs in urban India Source ASRTU 2000

The operational characteristics on the other hand do not show any distinctive trend (Figure 3). While the kilometers operated daily by each bus have shown a steady increase, the proportion of the total fleet on road has been declining.

2.4.3 Financial performance

The overall financial performance of urban SRTUs in India appears to be gloomy and they are heading towards a severe financial crisis in the very near future These corporations have incurred an accumulated loss of about 13 billion rupees by March 1999, which is nearly as large as of 14.60 billion rupees, the aggregate amount of equity of both the Union Government and the State Governments, and reserves. Further, this accumulated total debt is larger than the total assets of the SRTUs. As earnings per kilometer have grown slower than costs per kilometer, losses per kilometer have grown by nearly 7% per annum. Such a situation has arisen because of continuing inefficiency in operations, uneconomical operations to meet the universal service obligation, and universal subsidization of services. In addition, the motor vehicle taxation regime is such that it taxes buses more than personal vehicles, resulting in higher cost of operation for public transport.

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SRTU's financial performance (Rupees per kilometer) Source ASRTU 2000 A result of the continuing losses has been the inability to generate adequate funds for capital expenditure and replacement of rolling stock. There exists a vicious circle of continuous losses leading into inadequate funds for capital expenditure and poor management of the fleet, which in turn leads to poor operational performance, causing even higher losses. The mounting losses imply a substantial commitment from the Government for the provision of public transportation services in the urban India. There is thus a need to review their current operations to identify areas for reform.

2.5 RATIONALE FOR RESTRUCTURING

It has been universally recognized that improved transport systems are essential for accelerated economic growth. Transportation in the urban context assumes even greater significance. Large agglomerations are seen as the vertices of continued economic growth. The productive efficiency of urban agglomerations will be maintained only if mobility requirements in the cities are fully met. However, this productive efficiency in urban India is now threatened due to the increasing number of vehicles causing congestion, and thus slower speeds on roads. Obviously, transportation infrastructure could be the primary bottleneck for the unimpeded growth of the state. Thus, it is important that the existing transportation infrastructure be utilized optimally. Meeting mobility needs would imply a greater modal share of public transport.

Another major consideration for restructuring public transport is the continued drain on the exchequer. With greater emphasis on fiscal discipline, it is increasing becoming difficult for governments to continue funding such loss making ventures. In addition, the role of the state in provisioning these services that can be more efficiently provided by private operators is increasingly being questioned in a variety of fora.

2.5.1 Augmenting public transport

While it is recognized that the share of public transport in India is considerably higher than that in most developed countries (about 50% in most large cities), the cause for concern is the declining share. Among the major reasons has been the inability of public transport operators to keep pace with the increasing demand and the deteriorating quality of service arising out of continued losses and thus inadequate capital generation for capacity augmentation. This issue is dealt with is detail in the next section.

Another problem has been the relatively little concern for consumer satisfaction. In most cities, government-owned agencies operate and manage public transport services. Given the virtual monopoly that public sector service providers enjoy, service planning has been largely dominated by the dictates of operating convenience rather than by consumer convenience. With fares and tariffs not linked with costs of operation, there is little incentive for the service providers to improve efficiency. In addition, being public sector concerns, the emphasis on commercial orientation is limited. As a result, ridership changes and costs of operation are not concerns of the management. Thus, a change in the incentive regime is necessary to ensure attention to consumer satisfaction. This requires regulatory reforms and institutional restructuring in the urban public transport sector. Monolithic public entities need to be split up with greater induction of the private sector into services they are better placed to provide.

[...]

• Course: Department of Business Management
• Grade: 1.00
• Author: Sagar Manjare (Author)
• Publication Year: 2022
• Pages: 131
• Catalog Number: V1256966
• ISBN (PDF): 9783346728777
• ISBN (Book): 9783346728784
• Language: English
• Tags: maharashtra, state, road, transport, corporation, msrtc, competitive, life-line