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Delhi Metro; systemic losses
Pricing the Metro tickets low is ridiculous; is it a social service effort?
18 Sep-1 Oct ‘09 issue
Is Delhi Metro a costly mistake? Well, it surely will become a national heritage once it gets completed, but would it qualify on the strictest parameter of becoming a financially sound public transport model? Or has it been set up just to beautify Delhi’s landscape on taxpayers’ money? Let’s see some interesting facts.
The concept of metros has never been a profitable business proposition internationally. There are 135 metros worldwide but only four metros have been successful in making profits. These are Hong Kong, Taipei, Singapore and Tokyo. The Kolkata Metro is another example of a staid loss maker. If the financial year 2004-05 saw it incurring losses of Rs.43 crores, last year stood at Rs 48.6 crores (It earned Rs.48 crore from passenger traffic against operating costs of around Rs.91 crore in the same year). In other words, tax payers are paying for the inefficiencies of metro’s employees and processes. The Delhi Metro railway project is purportedly one of Delhi’s brightest projects. The first phase of Delhi metro is complete and the total cost stood at around Rs.10,571 crore. The estimated cost of the second phase is Rs.8,118 crore. In spite of having the lowest fares compared to other metros internationally, Delhi metro has earned operational profits of Rs.398.69 crore. Since there is hefty capital investment and certain amount of operating cost involved, it seems that it will take many years to make net profit.
Claude Jeanrenaud, Council of Europe member, writes in his report, Funding of Urban Public Transport, “Urban public transport systems are systematically loss making,” the reason clearly being pricing travel tickets lower than true cost in an ostensible effort to cater to lower income groups, a clearly misdirected strategy at the cost of other taxpayers. Delhi Metro was not and should not be considered a social service effort, especially when it is not free money that is going in. It’s time to price its tickets higher; ruthlessly!
By:- Akram Hoque
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