The 1989 Mohanlal-starrer Varavelpu captured the sorry plight of a wannabe bus owner in Kerala. Fourteen years later, in 2003, then Prime Minister Atal Bihari Vajpayee spoke of how the film highlighted why Kerala "in spite of its exemplary record in social development, has lagged behind in economic development?".
Fast forward another twenty two years and the situation is no different. The going is indeed hard for the Muralis (the name of Mohanlal's bus owner character in the film) of the world.
Rising operational costs and restrictive state policies, including nationalisation of routes and a 140-kilometre trip limit, have made running a private bus service difficult.
Between 2013 and 2023, 11700 private buses and 1300 KSRTC (Kerala State Transport Corporation) buses disappeared from the roads, resulting in the loss of at least 68 lakh passengers a day as per Motor Vehicles Department data.
According to studies, at least 550 passengers in the state are affected whenever a bus grinds to a halt. Despite these restrictions, private buses still cater to the demands of Keralites efficiently, serving around 40 lakh passengers daily compared to the KSRTC's total of 24 lakh. However, stringent regulations on private operators have drastically reduced public choice, pushing Kerala's transport sector into crisis, with commuters left to struggle with fewer, inefficient, and unreliable options.
This year's Kerala budget came up with what it termed was finally a solution -- a reduction of the quarterly road tax by 10%.
Apparently, to vindicate the government’s commitment, 10 per cent of stage carriage vehicle tax was reduced, while the contract carriage taxes were rationalised against different types and numbers of seats. In a state where the registration of private vehicles is significantly higher than the national average of 7.5% at 24.2%, will these concessions and rationalisation be sufficient to augment and promote public transport?
Kerala has a unique public transport system where both private and State Transport Undertakings (STUs) operate, with the former accounting for more than 80 per cent of the total bus operations in the state in the early 2000s. However, the number of stage carriages went down considerably from 34000 in 2010 to 7300 in 2023.
Policies that disproportionately benefit KSRTC buses as mentioned already have significantly contributed to the downturn of private bus operations in the state.
Additionally, the rise in per capita income and the availability of fuel-efficient cars enhanced both the affordability and convenience of owning more private vehicles. This has further worsened the congestion on city roads raising concerns about urban mobility and sustainability.
The public transport sector is plagued with regulatory cholesterol. While the operator invests a hefty sum in purchasing the vehicle, the freedom to navigate on the road is highly detrimental.
On average, private bus operators in Kerala incur an initial expenditure of Rs. 35.5 lakh - excluding road tax - before starting a service that includes the cost of the bus, permit fees, mandatory installation of GPS, CCTV, and speed governor.
Apart from the permit fees, the sector is plagued by rent-seeking behaviour as seen in the arrest of Ernakulam RTO and two others for taking bribes from a private bus operator seeking to transfer his permit to another operator. Such behaviour imposes additional costs on operators, potentially discouraging new private operators from entering the sector.
With regard to the application for permits, the bus operator has to provide details of the route and schedule and getting approval is challenging as it requires consensus from existing operators and final approval from RTA (Regional Transport Authority), which may reject the proposed route.
Moreover, the authorities decide the operations time, schedule etc., whereas the fare structure is decided at the state level. In most cases, the routes have not been rationalised for many decades, resulting in long delays and travel time for the commuters and curtailing the freedom to start new routes and the timing by the operators.
The rising number of private vehicles causing congestion has further exacerbated the travel time for buses and prevented them in many instances from adhering to the time schedules allotted in permits, thus causing a reduced number of daily trips.
The rising operational costs, including fuel costs, employee salaries, insurance, yearly taxes, and other maintenance expenditures, contribute significantly to the mounting financial burden of private operators. Before the announcement of the tax revision, private bus operators paid an annual sum of Rs.10.8 lakhs as stage carriage tax to the state. Therefore, the 10% (Rs.10800 annually) reduction is too minimal to create any significant financial relief or operational impact.
While the government forecasts a loss of Rs. 9 crore due to tax revision, the real burden on private operators has not eased since they still pay a considerable amount as road tax and an additional social security cess of Rs 2 on petrol and diesel. Thus, if the ultimate goal of the state government is to bring in more private players and increase the adoption of public transportation, there is a need for more structural reforms.
Likewise, on the monetary front, in most cases, private operators demand fare revisions in response to the rising fuel costs, which directly increase their operating costs. However, the fare revisions fail to take note of the demand and supply in the local regions. The peak and the off-peak demands cannot be optimally adjusted for the benefit of the commuters and the operators.
Even the salary of the employees in a bus service is highly regulated. Additionally, the failure of the state to reimburse the student concessions exerts a heavy toll on the private operators. Though the sector generated employment for thousands, the ease of doing business is very low.
With the changes in the settings, reforms are warranted to meet the expectations of operators regarding ‘ease of doing business’ and those of commuters concerning ‘accessibility, affordability, availability, quality and safety’. This shall be a win-win situation for the state, operators and commuters generating positive externalities in terms of reduced traffic congestion, lower demand for flyovers and road widening, thus preventing land acquisitions and reducing deplorable damage to the roadside small and medium businesses and decreased air and noise pollution.
In a nutshell then, meaningful reforms in Kerala must go beyond symbolic tax reduction to establish public transport as a driver of equitable development in society, leading to improvement in productivity and accelerated economic growth.
