1. Destination Red?

Destination Red?

Without an urgent fare revision, Delhi Metro could go the Railways way—slide into losses

By: | Published: July 30, 2015 3:11 AM

Few would disagree that Delhi Metro is the bellwether for modern urban rapid transit in India. But, even as work under Phase III of its network-laying is on, the iconic transport system could slip into the red if fares are not hiked urgently, as per a report by The Economic Times. The Union urban development ministry, the line ministry dealing with the the Delhi Metro Rail Corporation (DMRC), has been sitting on, since 2012, DMRC’s repeated requests to form the fourth fare-fixation committee urgently. As a result, the Metro is stuck with fares set in 2009 even as costs have increased since—power tariffs alone have shot up by 94% since the 2009 revision.

Increasing fares shouldn’t be too difficult, because the increase being proposed is not very steep. Unlike the Mumbai Metro where, in the latest revision, the maximum theoretical fare shot up to R110 from the existing R40—the fare has not been raised, but the Mumbai Metro can raise it when it wants to—the DMRC has told the urban development ministry that hiking the maximum fare to just R50 from the current R30 would lead to a 38% increase in revenue. But even this moderate increase would need some political will. As per DMRC’s FY14 annual report, Delhi Metro had an annual ridership of nearly 800 million. It had an outstanding debt of R21,900 crore while its ebitda stood at R1,062 crore. If the 13-year old Metro has to keep up service and safety standards and expand its network, it has to remain profitable—and that can only happen if the fares are revised upwards at the earliest. To be sure, public transport fare revisions are not received well by the public, but the government will do well not to give in to populist forces. Given that the Centre is an equal partner in DMRC, along with the Delhi government, and the fact that ridership numbers can ensure that the fare hikes can be kept moderate, the government has enough incentive to revise fares. The need is to act urgently, before Delhi Metro goes down the Railways track.

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Tags: Delhi Metro

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