S. Sriraman
Walchand Hirachand Professor of Transport Economics,
Department of Economics,
University of Mumbai.
(CUTS) Crew Project
Meeting on May 28, 2013.
Need to promote public bus
transport
 Reduce the imbalance between public and private
transport-the unique feature of public transport being
that it is in competition with private transport that it is
in the public interest to suppress.
 Promote access and provide affordable mobility.
 Reduction in negative externalities.
 Can enable strike the right balance between:
a) User satisfaction,
b) Commercial viability,
c) Social considerations.
Basic Requirements
Any sector involved in the provision of public services
such as bus transport would require:
 Facilitating Government policies- (even today we are
only discussing a draft comprehensive policy).
 Well designed regulatory framework- (to keep in mind
that historically regulations arose from the desire to
give unjustifiable protection to the railways).
 Appropriate legislative provisions and their effective
enforcement by an efficient institutional mechanism(enforcing the MV Act today is mainly for revenue
purposes).
Basic Issues
 Planning (especially in urban areas) and overall
regulation of services
 the basis for provision- competition in the market or
for the market?
 Access to infrastructure – terminals, depots, bus stops,
etc.
 Monitor provision of services
Does a system for meeting all these exist? Since bus
transport comes under the purview of the states, it is
necessary to look at these especially in the cases of
states and cities being surveyed.
Evolution of the Sector in India
(1st Phase)
Historical- between 1920 and 1950:
 Entry of buses into intra-city and inter-city routes.
 Excessive competition, wastage of capacity and safety
concerns.
 Appointment of Mitchell Kirkness Committee- 1930 to
1934.
 Recommended Motor Vehicles Act which came in to force
in 1939.
 Some attempt at safety considerations but very little
economic regulation.
 This situation continues for a decade or so.
Evolution of the Sector in India
(2nd phase)
Second phase-Between 1950 and 1990:
 Incorporation of Road Transport Corporation Act 1950.
- Nationalisation of bus services in many states under RTC Act
while in some states private sector allowed to operate alongside
departmental undertakings on both inter-city and intra-city routes.
- Special section provided on SRTUs in MV Act which provided
dominating role for the state undertakings.
- Some states like Tamil Nadu and Goa promote for SRTUs under
Companies Act.
 Over a period of time some undertakings collapsed and private
provision began though not necessarily all legal. Some others provided
efficient services but were bogged down by low fares due to political
pressure and found it difficult to even sustain themselves. Some others
were in a bad state but continued to provide service which could be
termed ‘poor’.
Work Involved(regarding 1st and 2nd
Phases)
 Obviously the first and second phases would need to
be reviewed closely to serve as a background for the
third- the current phase. There is a need to look at
studies of institutions, Governments, NGOs-all of
which can give us an idea as to the impact of these
developments on the user of the service.
 Reports from the Planning Commission, ASRTU,
Ministry of Road Transport (Transport Research
division), CIRT Pune-would need to be looked at
closely.
Evolution during the past two
decades (3rd phase)
 Since the 1990s, the Planning Commission officially
declared that the SRTUs would need to fend for themselves
based on physical and financial performance.
 The thrust of the policy as spelt out in the 9th Plan was to
enable Govt. funding for acquisition of buses for
replacement and not for fleet expansion.
 Some of them as in Orissa, M.P., have almost gone out of
existence with the SRTUs managing all the routes through
private participation.
 Some others opened limited routes for the private sector
without really providing proper guidelines or having some
useful and relevant regulation in place.
Evolution during the past two
decades (cont’d)
 Some others as in Karnataka went in for a split up in which some
constituent units are doing well such as BMTC in Bengaluru which has been attempting to raise standards of quality of
services and earn the praise of users.
 Attempts to involve the private sector at the level of cities by way
of PPPs have been made especially after 2006-07 since when
they have been encouraged with funding incentives under the
JNNURM. Some states like Gujarat which have been very proactive have done well while in Maharashtra very little success has
been noted due to lack of clarity of understanding on the roles of
the public and the private sector.
 For eg: one would expect the public sector to be involved in
planning and policy exercises and involving the private sector
(through proper processes) in implementation as per the
agreement made.
Evolution during the past two
decades (cont’d)
 It is absolutely necessary to find out what is the role of the state
today-in the provision of bus services-the official position.
 In states like Maharashtra, Gujarat, etc., nationalisation is still
the key word though ground level realities are still different.
 There is still a lot of confusion on the role of states carriages and
contract carriages and which of these are still under the state and
which are under the private sector-both inter-city as well as
intra-city.
 The presence of a huge number of private vehicles and their
provision of services in most of these bus markets in many intercity and intra-city roads also contribute to the confusion in
understanding the markets- given that there are no regulations
for them (in other words, illegal provision of public services).
Work Involved
rd
(3
phase)
 This would mean looking at the coverage of regional,
state and urban bus transport systems and the
performance of these in terms of an examination of
the quantitative and qualitative aspects of service
provision when viewed from the prospective of the
operator and the user.
 Many micro level studies have been undertaken by
institutions/organisations/Government departmentsthese need to be looked at.
States to be looked at closely
 Rajasthan- Currently both private and public-extensive
reforms in terms of depot level decentralisation of
operations undertaken a decade ago which were successful
in turning round the organisation for some time. Current
status needs to be examined and undrestood.
 Gujarat- Inter-city with GSRTC and intra-city mostly
provided by the private sector through PPPs including
BRTS. This differentiated model needs to be understood
both, from the operator as well as user perspective. Here,
the attempt to provide inter-city routes through the public
sector seems to be part of a larger developmental
perspective.
States to be looked at closely
(cont’d)
 Orissa- Mostly private operators as one model for the
entire state. The question is whether the results have
been satisfactory. It is quite possible that in major
problem would relate to availability of good data.
 Tamil Nadu- Traditionally both public and private in
almost all inter-city and intra-city operations except
Chennai. One interesting feature is public sector
competes with another public sector undertaking as
also with the private sector in provision of service.
Cities to be looked at
 BMTC Bengaluru- provides a good example of public-
private provision under public authority. Planning of
routes, additional bus services, implementation of IT
services for users as well as the organisation –all
provide a basis for understanding the organisation’s
evolution during the past 10 years as a model to follow.
Cities to be looked at (cont’d)
 Cities in Gujarat- Surat, Vadodara, Rajkot,
Ahmedabad- all under PPPs with strong and effective
participation by local level Governments and the
implementation of BRTS as a model to be followed in
other cities.
SRTUs- Some Issues and the need
to unbundle
 Steadily declining shares due to inability to keep pace
with increasing demand and the deteriorating quality
of services arising out of continued losses and thus
inadequate capital generation.
 Very little concern for consumer satisfaction-service
planning has been largely dictated by operating rather
than consumer convenience.
 Fares and tariffs not related to cost of operations-little
incentive to improve efficiency.
 Very little emphasis on business orientation (against
such a provision in the MV Act.
SRTUs- Some Issues and the need
to unbundle (cont‘d)
As a result, ridership changes and cost of operations
were hardly of concern to the management of SRTUs.
 What is required – regulatory reforms and
institutional restructuring.
 The issues are:
a)How far has this been done,
b)impacts to be understood wherever successful,
c) reasons for failure wherever little has been
achieved.
Are we reforming at all?