What will it take for our city bus systems to keep fares low and still curtail losses?

Most public bus units in our cities have run into huge losses. Yet, fare increase would make buses unaffordable for the ones who need them the most. Can the state step in and find a way for them to be accessible as well as economically viable?

This article is supported by SVP Cities of India Fellowship

In September 2018, the Karnataka State Government announced an increase in ticket fares by 18 percent for both Bengaluru Metropolitan Transport Corporation (BMTC) and the Karnataka State Road Transport Corporation (KSRTC). The reason cited: Hikes in fuel price.

This met with strong opposition from civil society groups, with the Bengaluru Bus Prayanikare Vedike (BBVP), a coalition of organizations working for commuter rights, holding a ‘Commuter Ballot’ campaign at Kempegowda Bus station. 95 percent of the commuters voted against the fare hike. This was accompanied by the ‘Call Your MLA’ campaign, with citizens calling their respective MLAs and demanding that the fare hike be halted.

The government did not go ahead with the proposed plan eventually, with the Chief Minister H.D.Kumaraswamy stating that alternative measures should be taken up by the Transport Department to make up for the losses by the unit and to utilize the extra Rs 131 crore that had been assigned to them as part of the budget.

Incidentally, this is not an issue specific to Bengaluru. Recently, bus fare hikes have been either announced or operationalised in several other states including Orissa, Himachal PradeshWest Bengal and Maharashtra.

Declining ridership and losses

This comes at a times when public transportation, especially bus transport, is witnessing a constant dip in ridership. An analysis by environmental NGO Centre for Science and Environment in 2018 points to an 8.88% annual reduction in ridership for the Delhi Transport Corporation (DTC). Ridership of the Brihamumbai Electric Supply and Transport (BEST, Mumbai) has also hit its lowest ever, having fallen by 40 percent in the last seven years. The analysis also mentions the lack of increase in ridership of the Ahmedabad Bus Rapid Transit System even after expanding its network. Unsurprisingly, Bengaluru Metropolitan Transport Corporation (BMTC) is no exception, with ridership decreasing gradually over the past few years.

Current fare rates of most transport corporations are not affordable for a large section of the people, especially the most marginalized.  The per kilometer cost incurred by a commuter while using a two-wheeler is less compared to that of a bus. But even with the current fares BMTCBEST, DTC , Pune Mahanagar Parivahan Mahamandal Limited (PMPML) and  several other transportation units are unable to recover their operating costs and are running under heavy loses. Owing to heavy losses, the Bombay Municipal Corporation’s (BMC) Commissioner has proposed to privatize BEST by handing over operations to private bus contractors, with this demand facing heavy backlash from civil society organizations.

A recent comparative study by BBPV shows that BMTC has the highest fares rates among major cities in India. “Throughout our campaigns since 2013, we have been demanding a reduction in bus fares. But that has not happened,” says Shaheen Saha, who is with the Alternative Law Forum (a member group of BBVP). Saha mentions that the response from the government has always been that they are running on losses and as such can’t reduce the prices.

BMTC gets its revenue primarily (95 percent) from commuters. Therefore, it has cancelled certain routes that it deems as not profitable. Saha feels that BMTC should stop functioning using the profit lens, as that completely casts aside questions of accessibility — especially of the poor and marginalized. The decision to privatize BEST has also seen activists and researchers arguing that public transportation is a service and not an enterprise.

Saha mentions that it ultimately boils down to the question of financing and the government doesn’t have the political will to subsidize transportation. Perhaps, because commuters aren’t a visible constituency, she feels.

A question of priority

What, then, are the possibilities of ensuring that public transport is affordable to every section of society even without the transportation units having to suffer huge losses ?

Saha states that it is a matter of priority, and questions how the government is ready to spend tens of thousands of crores on the recent elevated corridor project in Bengaluru, but doesn’t show similar enthusiasm in supporting and strengthening BMTC.

Similarly, Amchi Mumbai Amchi Best (AMAB), a citizen’s forum, has questioned how the BMC has no issues allocating Rs 1500 crore for the coastal road project which only promotes the usage of private vehicles, while the same amount would have been enough to meet BEST’s funding needs.

While bus transportation moves more people than any other form of transportation, it hasn’t received  proportionate budgetary support.The share of the budget for Metro transportation under the Ministry of Housing and Urban Affairs has increased from 12% in 2009 to 54% in 2017, while no comparable increase for bus transportation is seen in the same period.

Public transport in India currently has to bear a high tax burden, with data for state and city wide taxation showing that buses have to pay a higher annual road tax compared to the one-time road tax that vehicles have to pay.

Revenue generation routes

Government policiesresearchers and civil society organizations have consistently advocated the strengthening of public bus transport units. But for units to ensure quality services at affordable rates to all, without having to undergo loses, revenue generation  through non-fare collection would be crucial.

In their manifesto, BBPV proposes that the state government support the BMTC financially and be exempt from paying Motor Vehicle tax, Road tax, tax on diesel, and road tolls. Measures such as high parking fees, congestion prices should be taken to increase revenue for public transportation and reduce private vehicles on the road.

Similarly AMAB in their people’s plan for BEST  demands that the BMC, the richest municipal body in the county,  subsidize BEST; it calls upon the Maharashtra government to waive off the various taxes on BEST that currently account for around 20 percent of its operational costs. They also suggest several steps to disincentivise usage of private transportation.

The 12th Five Year Plan and the National Urban Transport Policy (NUTP)2014 have laid down various steps to increase the revenue of public transportation units. These include creation of urban transport funds at the national level by levying a green cess on existing vehicles; high urban transportation tax  for both new private four and two wheeler vehicles; creation of urban transport funds at the state and city level through land monetization, land value tax, betterment levy etc; and exemption of taxes for public transportation.

Independent studies have pointed to the Traffic and Transit Management Centres (TTMC) run by BMTC which combine bus terminals with commercial space, as an example of revenue generation at the city level. In such cases, the NUTP points to the need for a fine balance between the obligations of the government and private interests. There are also risks of such models focusing on real estate development, rather than development of public transportation.

Even as several guidelines, including the NUTP 2014, suggest alternatives for revenue generation, it needs to be observed how effectively the national, state and urban local governments are able to take concrete steps in this regard.

This article is supported by SVP Cities of India Fellowship.
This is the first part of the series on Improving public transport.


  1. Raman Muthuswamy says:

    It’s UTOPIAN IDEA to make the Transport Authorities to reduce the fares .. This Sr Citizen has been appealing for the redn. of DAILY PASS RATES to an affordable rate from time to time, but they won’t do that !!==>The Karnataka Govt shd realize that the Transport service is NOT A MILCH-COW but a welfare measure for the lower & middle classes to commute to attend to their normal avocations .. Oh .. Lord Parameshwara .. Save US THE BENGALUREANS .. for, after all, don’t you need our votes to enjoy Power & Perks that go with it ??

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