Delhi Metro to be free for women! Does Kejriwal-led Delhi government’s of free public transport make sense?

Published: June 4, 2019 4:35:39 PM

As per the published annual report of DMRC for year 2017-18, the average farebox revenue per rider is about Rs 28. This amounts to almost one third of DMRC's total fare box revenue for year 2017-18.

This announcement leads to multiple questions related to operational model and feasibility.

By Rajaji Meshram, Partner, EY India

There has been an announcement by Delhi Government yesterday to provide free rides to all women in Delhi Metro, DTC buses and cluster buses. This announcement leads to multiple questions related to operational model and feasibility. Let us look at some of the facts and figures to be able to understand the implication of this announcement.

Bus transport and Metro transport are major lifelines of National Capital Region (NCR) commuters with daily ridership of about 25 lakhs and 43 lakhs respectively. Let us deep dive into the Delhi Metro:

If we look at the commuter’s profile travelling via Delhi Metro, women passengers account for around 25%-30%. As per the published annual report of DMRC for year 2017-18, the average farebox revenue per rider is about Rs 28. This amounts to almost one third of DMRC’s total fare box revenue for year 2017-18. Putting these facts together, it would be fair to conclude that women passengers contribute around Rs 700 crore-Rs 800 crore p.a. of DMRC’s top line. If ridership for women is made free, there would consequentially be a gap of this amount.

DMRC revenue break up

The level of expenditure of Delhi Government has increased from Rs 23,000 crore in year 2014-15 to Rs 60,000 crore in year 2019-20. The estimated loss of revenue due to free ridership of women for Delhi metro would be in the range of 1.2% – 1.3% of Delhi Government’s total expenditure per annum.

The concept of making “Public Transport Free for all” has been implemented in few countries in the world. Tallinn in Estonia was the first European city which had introduced free public transport for its residents in 2013. The decision for free transport was taken through a referendum where more than 75% citizens voted in favour. To avail free transit, a citizen was required to be registered as a resident and had to pay onetime fee of €2 for a “green card”. Dunkir in France has also made public transport free for all its citizens since 2018. To compensate for the revenue loss, the concerned authority in Dunkir introduced a transport tax of 1.5% on companies with more than 11 employees. Wales in the UK is also currently experimenting with providing free bus service over the weekend.

Delhi government budget

The percentage of working female population to total working population in Delhi is around 15%. Surprisingly, it is lower than neighbouring countries like Bangladesh, Bhutan, China and Sri Lanka. The provision of free transport to women passengers by Delhi Government might have positive influence on the female working population in the city. The availability of affordable and safe public transport from home to place of work is definitely an important factor for women passengers.

It would be interesting to see further details of the announcement. One of the details to be seen is whether the gap in revenue would be fulfilled from budget of Delhi Government or would DMRC need to cross subsidize the same by increasing fares for non-women passengers. Another aspect to be examined is whether zero fare would be applicable only in Delhi or in the entire NCR. In case the benefits are given in the NCR, would the states of Uttar Pradesh and Haryana also contribute? Zero fare might lead to increase in women passengers and would open up the possibilities of offering value added services targeted towards women.

Various innovative financial structures can also be explored to enable this initiative. It would be interesting to see the answers to these aspects as further details are shared by the Delhi Government.

(Sulabh Goel, Senior Manager, EY India also contributed to the article. Views expressed are personal)

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