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S. Sriraman Walchand Hirachand Professor of Transport Economics, Department of Economics, University of Mumbai. (CUTS) Crew Project Meeting on May 28,

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Presentation on theme: "S. Sriraman Walchand Hirachand Professor of Transport Economics, Department of Economics, University of Mumbai. (CUTS) Crew Project Meeting on May 28,"— Presentation transcript:

1 S. Sriraman Walchand Hirachand Professor of Transport Economics, Department of Economics, University of Mumbai. (CUTS) Crew Project Meeting on May 28, 2013.

2 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.

3 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).

4 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.

5 Evolution of the Sector in India (1 st 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.

6 Evolution of the Sector in India (2 nd 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.

7 Work Involved(regarding 1 st and 2 nd 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.

8 Evolution during the past two decades (3 rd 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 9 th 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.

9 Evolution during the past two decades (contd) 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 pro- active 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.

10 Evolution during the past two decades (contd) 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 inter- city 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).

11 Work Involved (3 rd 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 departments- these need to be looked at.

12 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.

13 States to be looked at closely (contd) 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.

14 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 organisations evolution during the past 10 years as a model to follow.

15 Cities to be looked at (contd) 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.

16 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.

17 SRTUs- Some Issues and the need to unbundle (contd) 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.

18 Are we reforming at all?

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