BMTC merely wants to break even: Anjum Parwez

 

On April 25th 2014, BMTC announced a 15% hike in its bus fares. This announcement was the fifth of its kind in the past three years and for obvious reasons has generated public outrage. Several citizen groups across the city and commuters are up in arms, asking the BMTC to roll-back the fares, and in some cases, even asking the state government to step in. Some sections of society in Bengaluru would now have to spend around 15 to 20% of their incomes on commuting alone, implying that other necessary expenses such as health and education might have to be compromised on.

In a telephonic conversation with Anjum Parwez, MD of BMTC, Citizen Matters tried to understand the reasons behind the hike and what plans the BMTC has up its sleeve for the coming year.

BMTC has cited staff expenses and diesel prices as the reasons for the hike in bus fares..

Primarily…

The BMTC vision according to its website is to ‘Make BMTC sustainable, people-centered and choice mode of travel for everyone’. With the increase in fares, BMTC may be sustainable, but will it remain ‘people-centered’ and a ‘choice mode of travel for everyone’?

I agree with you. Because of the fare hike, affordability will be an issue for the people whose income is not much. But BMTC is public transport – decisions that are taken will be beneficial for some and not so beneficial for others.

If we price the monthly passes lower today, then everybody is going to get some benefit out of that. For example, for construction workers, the current rates at which public transport is available will cause some discomfort. Perhaps in the organised sector, where people from low-income backgrounds are working, the sector itself should come up with schemes for its employees. But if BMTC gives subsidies, we’re bound to be doomed in some time. We can probably sustain for two or three years.

The  point is that we have to sustain BMTC, but at the same time, the welfare of the people is important. And everybody has to contribute to it. I personally feel that a focussed subsidy is better, rather than a blanket subsidy for everybody.

Right now, we are giving subsidies to students, senior citizens, physically handicapped that are reimbursed by the government. The police department has a tie-up with us. In case of students, the BMTC is absorbing 30% of the cost. A huge sum comes from the government for compensating that. So if you see the student passes – for every Rs 100, we collect Rs 15 or 16 from the student, the government of Karnataka gives Rs 50, and we absorb the balance Rs 32 or so. This is available to the student, because it’s a policy of the government. In general it becomes very difficult if we reduce prices across the board… it’s a question of our survival.

It is not as if the BMTC is not performing well. On any parameter, we are the best in the country. We have improved a lot since 1997. But now that the costs have become so high – diesel prices and salaries, these kinds of tough decisions have to be taken, if you see from the broader perspective of the health of an organisation.

Considering that BMTC is the only public service organisation in the transport sector, should you be profit oriented or should you be focussing on the need of the people?

At every forum, I ensure that I make it clear that BMTC is not interested in making a single rupee as profit. That is not the motto or the purpose of BMTC. But at the same time, I need to ensure that we don’t run into losses year after year.

So that you can sustain yourselves…

We should break even at least. If there is a little surplus, we can expand operations, take on new infrastructure work etc. In 2012-2013, we had a loss of Rs 147 crore. And now we’re getting ready for 2014-2015 with a loss of Rs 140 crore. If this continues to be the case, the corporation will be closed in no time.

From the management angle, I should see to it that the best kind of service is provided to the citizens, that there are no compromises, and at the same time, BMTC sustains itself.

BMTC made an average profit of around Rs 5 crore over the period 2008 to 2012, before you ran into losses.

BMTC has made profits of Rs 50 – 60 crores also in the past. The cost of operation was not so much back then, but in the last two to three years, things have changed. You have seen the condition of the economy; that is the main reason.

In 2014-2015, we will come back to the break even point and from thereon, we will not bother people on this tariff issue. This is a one-time cooperation that we are asking from them. At least for the next three to four years, we will not cause any discomfort to the people.

Does this mean that if the BMTC recovers and starts doing well from the next year onwards, we could see a rollback in fares?

A rollback is never going to happen because cost is always on the higher side. But it will not be an increase of 15%, there may be an increase of say 5 to 6%, a nominal increase.

We have to cover the losses that have been already incurred and we have to see to it that there are no further losses. Once we reach break even point, we will not need to worry about the baggage of losses. What we will need to focus on then is the futuristic growth and based on that, we will take decisions regarding fares, but there there won’t be a steep hike.  

When BMTC started acquiring land and building Traffic Transit Management Centres (TTMC), the plan was to rent them out to businesses. How is that working out?

It is working out perfectly. Whatever money we have spent on TTMCs, we are going to recover in 12 to 15 years and and after that it is only going to be earnings for the BMTC. It is not a loss-making venture, we have planned for it with a long term perspective, as something that will be beneficial to the organisation as well as commuters.

TTMCs have given huge infrastructure to BMTC, they yield almost around 35 crores of income every year for BMTC. They have provided space for a number of government department offices and commercial activity, and act as a facility for the commuters who are passing through.

This is a new concept and should not be seen as a commercial activity. It is more of a commuter-friendly initiative where we are creating a hub. In India this may be a new thing, but if you visit other parts of the world, you will find such transit centres are an important part of public transport.

The facilities that are available at these TTMCs are helping the commuters – in respect of waiting time, the types of buses they are getting, buses originating from different points. So this is an efficient part of a public transport system.

I agree that BMTC should not lose focus on its main purpose, which is providing public transport. At the same time, we are exploring avenues for non-ticketing revenue. If we are able to utilise this well, the public should not be averse to it. But BMTC will not venture into pure commercial activity.

In fact, I believe that this is a model which other states are going to follow.

Right now, BMTC has a monopoly in the city of Bangalore. There are no major private players in the public transport sector.

(Laughs) I will not comment on this.

And why is that?

You can take your own shot on this.

Why does BMTC as a public transport utility not have a regulator to approve its pricing? BESCOM prices are regulated by the KERC. Both are public utilities.

You should ask the transport department this question. I am not in a position to comment on this.

How are the Atal Sarige buses for the  EWS sections of the society working?

They are doing very well. We provide the service at 50% of the normal cost. I don’t have the exact figures, but there are a substantial number of buses operating from almost all areas, which are in the nature of slums. You see any Atal Sarige bus and it is always full. People are using it.

The Samparka Sarige buses were inaugurated in February 2014 on the Hosur Road route to connect folks in and around Chandapura, Attibele. How are they working out?

There are roughly around 16 or 17 of these midi-buses (9.5 metre length) plying on these sectors. People have to get on the feeder service and get on the main route, and from there travel on the trunk route. That calls for a change in the behavioural pattern on the people. On certain routes, it is doing very well, but not so well on certain others. We have to wait and watch to see how people are responding.

When will you be introducing it in other areas?

We have already done this in three other areas – Hoskote, Kanakapura and Attibele. In the coming days, we may introduce it in the Bannerghatta or Nelamangala side, but it will take some time.

What happened to the plans of tracking buses and bus stands with GPS devices?

That project is going on, but that too will take some more time.

And how long before it is rolled out?   

The pilot is going on in Depot no 2 (Shanti Nagar) which has non-AC operations. Once the systems stabilises here, we will be rolling it out in other depots as well. That won’t take much time because all the initial hiccups will be taken care of in the pilot itself.

How much is the BMTC spending on this?

There is no capital expenditure in this model. It’s a project based on EMIs. The net present value that we will be paying over the next five years is around 57 lakh.

Post the Nirbhaya incident, the BMTC  made an announcement stating that it would install CCTVs on every buses. Has that happened?

We have sent the proposal to the Government of India (GOI) under the Nirbhaya Scheme. We installed it in 500 buses last year and we are now waiting for the GOI’s response to our proposal.

Does it really cost Rs 70,000 to install a CCTV on one bus?

The figure was about Rs 67,000. In the future, we will see what quote comes in, we will open tenders and we will give the contract to the lowest bidder.

What happens if the BMTC does not get the money from the Nirbhaya fund?

The process will be slow then.  If we get finance from the Nirbhaya fund, we can implement it on all 6,500 buses in one go. If we don’t get it, we will have to progress in a phased manner as these cameras are very costly. We are not in a position to spend huge amounts at one go.

Ultimately it has to be done, it has to be brought into urban transport, there’s no second thought about it. It’s only a question of money. If the GOI funds come in, we will be able to finish it faster.  

What happened to the smart cards that commuters could keep? Is that still on the cards? Is that going to materialise anytime in the future?

This work is also going on. It will come along with the Intelligence Transport System.

What are the BMTCs expansion plans for this year?

Right now, it’s still undecided. We have a Board meeting on May 21st. Once the Balance Sheet is ready, all this information will be put up on the website.

Will you be adding more buses to the fleet this year?

We have to be very careful. On one side, we have to see the cost, and on the other we have to consider the population growth of Bangalore. We have to match these situations and then take a call. Expansion may be a bit slower this year, because of financial constraints. It will not be totally stagnant, but the extent will be much lesser than in previous years.

Do you have any specific plan for recovering losses this year?

We have already increased the tariff, no? (Laughs)

Besides the tariff…

Besides tariff hike, we have to go for route assimilation, identify and cut down on redundant operations. Tariff increase will not yield the entire sum of money which needs to be generated. The fare hikes will give us around Rs 235 crore in revenue. So there is still a gap of about 60 crore which we have to cover through improvement in the efficiency parameters.

(BMTC has stated on its website, too, that it requires an additional revenue of Rs 300 crore to cover losses and meet the cost of operations. The 15% increase in fares will purportedly bring in additional revenues to the tune of 235 crores, while the balance will be raised by improving its operational efficiency.)

Any closing words?

BMTC is the best in the country, but this does not mean that there is no scope for further improvement and we will work in that direction. There are temporary failures that every organisation goes through. BMTC has seen good days and bad days as well. It will see good days again.

 

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BMTC: A saga of no profit, hiked fares and troubled commuters

About Ganga Madappa 77 Articles
Ganga Madappa is a Staff Reporter and the Community Manager at Citizen Matters. She loves cats and books and travel. She tweets at @pulicatmonster and blogs at Random Rambling.

4 Comments

  1. Forget about the hike in bus fare, more important issue is that the number of buses are VERY VERY less compared to no of travelers. Every morning when I travel in bus, either in AC or non-AC, it is always jam packed. It is a complete chaos everyday morning and evening where conductors cant even walk in the bus to ask for tickets because there is NO SPACE. Sometimes we have to stand in bus for 1 hour straight. I REALLY DOUBT IF BMTC IS NOT MAKING ANY PROFITS GIVEN THAT EACH BMTC BUS CARRIES TWICE THE NUMBER OF PEOPLE IT SHOULD. I agree with the commentor who said that these accounts of BMTC should be transperant for public. And not just BMTC, but account of every organization of Indian government this will eliminate corruption

  2. BMTC should understand the human behavior is common throughout the ages. People will be ready to pay reasonable increase in fare. How ever if it is exorbitant, the beneficiary will not be the BMTC. The annual accounts of BMTC should be made transparent and audited P& L and Balance sheets should be published in News media.The minimum fare in Chennai City transport is Rs 3/- as against Rs 6/- in Bangalore. The Government should stop experimenting with different type of Transport Vehicles paying huge amounts.This will increase the spare parts inventory. Money making should not be the sole criteria for introducing new routes. Connectivity for public should be the primary concern. For instance Kempegowda International Airport is well connected from every direction of this city. Whereas, there is no service available for connecting Koramangala to Cantonment Railway Station !
    BMTC should be split into different independent Corporations according to the different services provided and bring all of them under financial and performance audit.

  3. An indepth study of the P&L account of BMTC would have given a clear and relevant information about how BMTC manages a fleet of buses with the main objective of making travel comfortable, quick, economic and efficient. It is totally irrelevant question if BMTC is for “people” or for “making profit” as if “profit” is a dirty word. The MD talks about various subsidies, support, financial assistance, from Central and State Government. Where do the Governments get the money? From people who pay their taxes ( various direct and indirect taxes) promptly, (tax evaders are celebrities,industrialists, and politicians) and they do not travel using BMTC but have a hundred times costly mode of transport. So the common man who pays these taxes does not benefit from subsidies as his money is channeled through various “dirty” hands loosing most of it during its transit. The “Policy” seems to be to get subsidies for food, fuel, transport, and pension for not doing as little work as possible during government service. Any public service or utility service must be efficient, financially viable, and growth oriented and independent.
    When a 15% hike in fares make such a hue and cry, look at the revenue the cell phone companies make from the same “poor” people. With the modern communication tools available at affordable prices, people must learn to avoid travel from one place to other. If it is a man power oriented sector ( like some offices, factories, construction sites etc) the company must provide free transport than paying transport allowances. The cost of course is added to the final product on which the same government charges, excise duty, Sales Tax, VAT or what ever which again paid by the public.
    Efficient Management can cut down expenditure and reduce loss. Fleet utilization with out political influence can save a lot money for BMTC. But unfortunately positions like the MD or Chairman of such Public Utilities are given away on political reasons and not on efficiency or intelligent management.

  4. There is not a single word about the fare-cheating by conductors on BMTC buses. In fact, BMTC is the best in the whole country in this respect, and only in this respect. I’ve not seen this amount of siphoning off in any other city that I’ve been to. If this is stopped, BMTC will come back into profits and there would be no need to raise the fares is my opinion. I love CitizenMatters, but I’m afraid the reporter missed a trick by not asking this pointed question and relevant statistics.

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