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Delhi government fears ‘political cost’ of DTC fare hike

The planning department is still working on how to generate the funds in the first place to develop the infrastructure so that private players are attracted to set shop.

Published: 23rd September 2018 11:33 AM  |   Last Updated: 23rd September 2018 11:33 AM   |  A+A-

The Delhi Transport Corporation has 5,500 buses in its fleet, but wants to buy more buses by the year end to augment its depleting fleet | Parveen Negi

NEW DELHI: While the Delhi government announced in June-end the de-freezing of pension benefits payable to about 16,000 Delhi Transport Corporation (DTC) employees, it has been dithering on the cash-strapped public transporter’s plea to approve fare hike for the past three months, apparently due to the ‘political cost’ such a move may entail.

The decision to release the full pension, freezed since 2015, was taken at the DTC board meeting chaired by transport minister Kailash Gehlot in the last week of June. The de-freezed pensionary benefits included enhancement of dearness allowance after July 2014; increase in medical allowance from Rs 300 to Rs 400 per month after November 19, 2014; extension of the benefits on account of fixation and age factor and revision of pension as per the recommendation of the Seventh Pay Commission with effect from January 1, 2016.

The pensionary benefits alone would put an additional burden of Rs 300-Rs 400 crore every year on the public transporter. In the last four years, the grant-in-aid released by the government to the DTC has doubled, currently amounting to over Rs 1,825 crore annually. The DTC’s expense on running the buses is around Rs 2,000 crore while its annual income is approximately Rs 2,700 crore. The excess amount that the corporation is making will largely go towards giving out the enhanced dearness allowance, medical allowance and pension.

This will leave it with little resources to buy improve the infrastructure or expand the fleet.
Incidentally, the board meeting had also decided to procure 500 low-floor buses.
At the meeting, the DTC had submitted that it was necessary to increase the fares and the assured to consider the request. However, sources say the government is worried that if the proposed fare hike is allowed, it may have to pay a cost politically.

“It is very clear by many examples, the latest being of the DMRC, that a fare hike will hit the ridership. The world over, public transport is not a profit-making service but more of a social service. Providing cheap transport to the public is any populist government’s priority,” a government official said.
The DTC currently has a fleet of about 3,500 buses providing service to 40 lakh people daily.

According to the corporation, a bus used to make returns worth Rs 50-57 per day five years ago, which have now dropped to Rs 30-35. The maximum route length is 27 km while the highest fare is Rs 27. With profits shrinking and other means of raising revenues not working out, the DTC feels raising the ticket costs is the only option.

The DTC’s nine-month-old proposal of earning revenue by developing office spaces and parking lots at the spare land in 40 bus depots, too, is yet to take off. The planning department is still working on how to generate the funds in the first place to develop the infrastructure so that private players are attracted to set shop.

DTC, Delhi govt  in a bind
■ The pensionary benefits alone would put an additional burden of D300-D400 crore every year on the public transporter.
■ The excess amount that the DTC will make with fare hike will largely go towards giving out the pensionary benefits to the employees.



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