Case Study ​ ​

Augmenting Bus Services in Delhi ​ ​ ​ ​ ​ ​ ​ ​ As officiating Commissioner (Transport), Delhi, a young officer who was posted as Special Commissioner (Transport) has to attend his first meeting at the residence of Chief Minister, Delhi along with other ministers and officials to decide about the future course of action in augmenting number of buses in Delhi. He never earlier worked in Transport department. In previous year, three different Cabinet notes have been prepared for procurement of buses. He read the last draft Cabinet note to get some idea about the issue so not to sound foolish in first meeting. He thought that he would keep silent for most of the time and listen others. But the pressure in the meeting room was palpable. A simple decision to buy additional buses seems easy from outset but no consensus evolved in previous one year and any further delay would have political cost. This meeting also failed to take final decision but after the meeting, the new officer, being neutral to previous debates, was asked to compare the efficiency of running low floor buses by DTC (Delhi Transport Corporation) and DIMTS (Delhi Integrated Multi-Modal Transit System). He was also asked to evaluate advantages of Low Floor (LF) vs. Standard Floor (SF) buses. This comparison would be the basis for putting up final Cabinet note for procurement of buses. ​ ​ ​ ​ ​ ​

1. Introduction ​ ​ Buses provide overall cost effectiveness, flexibility in route planning and space efficiency in carrying number of passengers. Private cars occupy disproportionate road space causing congestion. With less number of buses on road, cyclists and pedestrians compete with motorised traffic for their movement, risking their lives. The share of pedestrians in total fatalities is 47 % and of cyclists another 10 percent1. But bus fleet in Delhi has dwindled by 30% in last 8 years even when buses transport approximately 4.8 million passengers/day i.e. about 85% more than Delhi Metro. Thus, Delhi is in dire need of augmentation of bus services. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

1 Road Safety in India: Status Report, TRIPP IIT Delhi, 2014 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As per past experience, administrative and financial sanctions will take around 6 months and induction of around 3000 new CNG buses will take another 24 months as only Delhi runs its total bus fleet on CNG. Thus, action for procurement should begin earnestly. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2. Background ​ ​ In the last four years, attempts to acquire new buses have failed mainly due to repeated failure of tender processes to get reasonably priced buses; exaggerated expectations from proposed Metro expansion; skewed publicity of cost advantage of running hired private buses; and, financial constraints due to very high cost of low floor buses. DTC cancelled recent tenders for procurement of Low Floor buses due to very high cost of maintenance quoted by the bidders. The plausible reasons for quoting very high maintenance cost may be due to difficulties faced and experienced gained by existing suppliers in maintaining LF buses due to difficult road conditions. GNCTD (Government of National Capital Territory of Delhi) is in bind to either go back to standard floor buses or buy buses without any maintenance contract. First option (moving back from Low Floor Buses to Standard Floor buses) is looked down as a backward move for Delhi. But Low Floor buses of DTC can not go in many rural areas where habitations of poorer section (likely bus users) of society exist and are increasing. Another dilemma is related to fixing the number of buses required for Delhi and whether they should be run by the DTC or hired from the private sector on per KM basis. The number, of buses additionally required, is also to be evaluated by considering the proposed extensions of the Delhi Metro services. Buses should not compete with the Metro and routes should be rationalised to make them more direction-based and complementary to Delhi Metro. ​ ​ ​ ​ ​ ​ ​ ​ Government of NCT of Delhi (GNCTD) is the political authority to devise plans for public transport in Delhi. A new government took over in Feb 2015. Enhancing number of buses in Delhi was declared priority for the new government. Within few months, DTC moved the proposal to buy 1000 Low Floor buses on terms and condition similar to existing running fleet of DTC. But this proposal could not reach fruition. An important policy think tank of the government was of the view that DTC was not efficient vis-a-vis DIMTS and any further ​ ​ ​ expansion in DTC bus fleet should be avoided. DIMTS (Delhi Integrated Multi-Modal Transit System) is running around 1430 buses (in orange colour) on Cluster Model on behalf of Transport department. DIMTS is a company with 50:50 partnership between GNCTD and IDFC Foundation. DIMTS is a professional agency providing inputs to the Transport department, Delhi amongst others. Now, officiating Commissioner (Transport) was assigned the task of ascertaining the viability and appropriateness of buying new buses along with the type of the buses to be procured. ​ ​ ​ ​ ​ ​

2.1 Ideal number of buses in Delhi ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2.1.2 In 1998, hon’ble Supreme Court had directed Delhi to have a fleet of 10,000 buses by the year 2001. Later by Delhi High Court, this number was raised to 11,000. However, even in Sep 2016, Delhi has only 5,340 buses (2,500 Non-AC Low Floor, 1,200 AC Low Floor, about 300 old Standard floor, and 1,430 standard floor private buses hired on km basis). To meet the Govt of India norms of minimum 500 buses/million of population set for megacities, additional number of buses to be procured comes around 3000 (as about 300 old standard floor buses will be phased out by Dec 2016). Final size of bus fleet should also be linked to benefits accruing after completion of Phase III (2017) and Phase IV (2021) expansion of Delhi Metro. Thus, initially target should be to have a total of at least 8,000 i.e. addition of 3000 buses by 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.1.3 Presently, DTC is catering to largest number of passengers compared to any other mode or provider of public transport. But, getting the budgetary grant of around Rs. 15 billion for procurement of 3000 buses for DTC is a challenge considering opinion in government about the future of DTC. Also, addition of new buses may not bring commensurate growth in number of passengers or revenue as more of existing passengers will be better distributed rather than proportionate increase in number of incremental passengers due to addition of new buses. Therefore, average revenue earned per km will reduce for the DTC and will require additional annual budgetary grants. ​ ​ ​ ​

2.2 Bus service versus Delhi Metro ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.2.1 Presently, Metro carries on an average 2.6 mmpd compared to 4.8 mmpd by buses (3.8 mmpd by the DTC and 1 mmpd by Cluster buses, DIMTS). Delhi Metro is already overcrowded. Phase III of Metro will be functional by Apr 2017 and Phase IV is planned to be over by 2021. As per RFP, Phase IV of Metro (108 km) will cost $ 8 billion dollars for creating of additional passenger carrying capacity of 0.8 million/day. After completion, Metro carries only around half of its estimated (or promised) ridership for Phase I and II2. Thus, expansion of Delhi Metro is extremely costly compared to introduction of additional buses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.2.2 In buses, 70% of passengers buy Rs. 5 & 10 tickets i.e. travel less than 10 km. In Metro, 70% passengers travel beyond 9 km. Therefore, the nature of ridership is different in buses and Metro. Expectedly, additional buses can be used to further improve last mile connectivity to Metro especially to upcoming Phase III & IV lines. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.2.3 Even after Phase IV extension(2021), expectedly Metro would carry about the same number of passengers as DTC does today. Unlike Metro, running additional bus service is cheaper and provide flexibility in route planning. Bus services and Metro are complementary in nature. Route planning for bus fleet should be done to avoid competition with the metro. Metro promised shifting of car users to public transport. Hence, the quality of service in metro should remain above a certain standard to attract passengers of a particular economic strata. But, Metro is already extremely overcrowded with limited scope of carrying extra passengers with its available infrastructure. Bus services are cheaper and more buses will mean more space on buses that translates into better service. This will attract some passengers from Metro to buses thus making additional space in metro to attract private car users. Bus services are complementary to the Delhi Metro. Thus, extension of Metro services should not be seen as an alternative of procurement of additional buses. ​ ​ ​ ​ ​ ​

2.3 Induction of Standard Floor (SL) Versus Low Floor (LF) Buses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.3.1 Current fleet of DTC comprises mostly of LF buses. The past two attempts to procure more LF buses have failed due to very high maintenance cost quoted by the only two suppliers in Indian market. Last tender was related to SF buses and rates received were very high but still

2 Case Study of Metro Rails in Indian Cities, UNEP, 2015 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ much less than the rates received for LF buses. In India, at least five manufacturers have the capacity to supply SF buses. Hence, the total cost of SF buses may be expected to be reasonable and competitive. But still, previous Commissioners of Transport, Delhi have seen the option of bringing back Standard Floor Buses in Delhi as a regressive policy option. Most of the modern cities have provided Low Floor Buses to its citizens. Recently, 1,200 standard floor private buses (Orange in colour) hired on km basis under Cluster Scheme and citizens have not reported any higher number of complaint against such buses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.3.2 In previous tender query, quoted price of a LF bus was Rs. 6.4 million compared to Rs. 3.15 million (as per current market rate) for a SF bus. As per existing contracts, running private buses on hiring model costs Rs 53/km for SF compared to Rs. 69/km for the LF. Thus, SF buses are more cost effective. But the main difference is in the level of convenience. Despite their high cost, LF buses were inducted for better convenience of passengers. But latest SF buses (made as per Urban Bus Standards-II) are actually semi-low floor with two steps entry unlike three steps entry in the old standard floor buses of DTC. To overcome the issue of difficult access for the passengers many other countries have introduced specially raised sections of curb wherever ​ necessary. This elevates the level of curb to the first step; it makes access in SF buses similar to the level of LF buses. But LF buses have far wider doors, more space for comfortable standing, less noise due to rear engine and better view due to large side glasses. Still, after discarding all old SF buses by Dec 2016, DTC needs around 300 new SF buses to serve rural areas of Delhi where LF buses can not go. Thus, Commissioner (Transport), Delhi has to ascertain the reasonable trade off between cost and convenience. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

2.4 Purchase of buses only with long term maintenance contract ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.4.1 Last two tender inquiries for LF buses failed because bidders had quoted extremely high maintenance cost/km (Annexure - 1). Now, Commissioner has to decide either to go with fresh tender inquiry for LF buses without maintenance contract or DTC should buy SF buses with long term maintenance contract only. Chances of getting reasonable rates for SF buses are high as around five manufacturers make SF buses. Higher maintenance quotes have deterred the administration from floating fresh tenders inclusive of maintenance cost. Separating procurement and maintenance contract was also thought off. Maintenance by other than OEM (original equipment manufacturer) may have its own issues. Also, buses have high breakdown rates and depending on inhouse maintenance would be costly and inefficient. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.4.2 Around 3,700 employees of Repair and Maintenance division will be freed after phasing out of the existing SF buses by Dec 2016 and LF buses are already on long term maintenance contract. Redeployment of this existing maintenance staff will improve bottom lines of DTC. More employees will be freed from duties of store keeping and purchases. They can be trained to perform the duty of conductors after new buses are inducted. Thus, DTC is set to gain from procuring buses with long term maintenance contract only. Still, Commissioner should decide the proper course of action to avoid failure of third tender as this may bring in question the capacity of the department and will jeopardise future follow up action to enhance public transport fleet. ​ ​

2.5 Purchase of buses for DTC versus hired buses in cluster model: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.5.1 DIMTS (Delhi Integrated Multi-Modal Transit System) is running around 1430 buses (in orange colour) on Cluster Model on behalf of Transport department. DIMTS is a company with 50:50 partnership between GNCTD and IDFC Foundation. DIMTS has a corporate culture and employees are paid highly. Many of the senior officers of the DTC have joined DIMTS after resigning from DTC. DIMTS has also hired top professionals in different verticals providing consultancy to many other government organisations. It has earned a good name and achieved many first in country under one of its previous head Shri SN Sahai, IAS (1986 batch). He devised Cluster Model, where private bus operators were given cluster of routes (erstwhile more than 600 routes of DTCs were divided into 17 clusters, eight are already auctioned and being operated through DIMTS) based on the fixed payment demanded per km plus variable component. Variable component of payment is considered to be a reason for the success of the scheme as price risk of fuel, lubricants etc. was linked to indexes and taken over by the government. Transport department already has a contract with DIMTS for running 11,000 buses on cluster model. But CAG (Comptroller and Auditor General) audit report has raised question ​ on such arrangement with the DIMTS as it is not even fully a government PSU (although GST Network is also build on similar lines with 50:50 partnership between Central government and Private sector). Many Commissioners have written against favouring DIMTS though it has built very professional team and developed many competencies in transport sector. As per DIMTS report, running cost of a LF hired bus is Rs. 69.17/km compared to Rs. 75.80/km for an outright ​ ​ purchased LF bus of DTC (data on SF buses is not comparable) (Detailed Comparison is placed at Annexure - 2) (DIMTS was running only one cluster with LF buses, operator of that cluster has runaway and banks are trying to find another operator). But, DTC also has very high overhead cost and needs 11 billion rupees of annual budgetary grant for running its day to day operation. In the past, DTC ran around 6,000 buses with the present manpower and infrastructure and thus marginal overhead cost to accommodate additional 2000 buses would be nominal. Presently, each private player runs only around 200 buses (out of total 1,430 in 8 Clusters) on hire and they all need fresh infrastructure for offering additional buses. Their overhead cost is already minimal and scaling up will usher in only small cost reduction. This lowers the chances of getting lower quotes for hired buses in fresh bidding. Thus, DTC has marginal cost advantage in adding around 2000 buses than in hiring private buses under Cluster scheme. Therefore, Commissioner can decide the number of buses and operators based on the marginal cost advantage or otherwise. ​ ​ ​ ​ 2.5.2 Payment to hired buses in cluster model is based on the total kms done in a day. Private sector was involved in Cluster model (around 200 buses) to bring higher professional standard compared to single bus operators of Blue line buses. Still, slightly perceived higher accidents rate of hired buses is attributed to the pressure on drivers to maximise the daily mileage. Number of complaints have also been received on violation of speed restrictions and non-stopping at or skipping of designated bus stops. This militates against the goal of road safety thus creating adverse public opinion. Commissioner has to consider this aspect while designing the tender and contract. Otherwise, the nominal financial gain may not be able to counter this huge negative externality. 2.6 Purchase of buses of different sizes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2.6.1 Another idea floated in some circles is regarding procurement of Mini or Midi buses in place of 12 meter standard buses. It was contended that many buses runs with very few passengers most of the time especially buses originating from rural areas. But this view is countered with the fact that buses are overcrowded during peak hours. Still, a strong case is made out for such buses. No doubt, Mini buses are providing last mile solution at several Metro stations. Expansion of such routes is proposed as an incentive for increasing the utilisation of public transport. ​ ​ 2.6.2 DIMTS has carried out an internal study to understand the financial implications of introduction of Mini and Midi buses (Annexure - 3). It was felt that financial benefits are not commensurate with the loss of passengers capacity. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

3. Conclusions ​ ​ In view of the above, officiating Commissioner (Transport), Delhi has submitted the comparative statements (Annexure - 2). Even after the comparison sheet, the issue was to decide the number and type of buses to be purchased, if any. Proposal should also choose between DTC or DIMTS or any other entity to operate additional buses. Government has to balance the public convenience with the affordability while limiting the scope of effect of this decision on government exchequer. ​ ​

Annexure - 13 ​ ​ ​ ​

Tender Type of Buses Range of Quotes for Maintenance Decision ​ ​ ​ ​ ​ ​ ​ ​ st ​ ​ ​ ​ th No. Cost/KM for 1 ​ ​​ year to 12 ​ year ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ist Non-AC Low Floor Rs. 1.6 to 12 Accepted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ist AC Rs. 1.8 to 12.20 Accepted ​ ​ ​ ​ ​ ​ ​ IInd Non AC Low Floor Rs. 3.20 to 18.75 Accepted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ IInd AC Low Floor Rs. 4.15 to 19.30 Accepted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ IIIrd Non AC Low Floor Rs. 83 to 433 Rejected ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ IVth Standard Floor Rs. 38 to Rs. 124 Rejected ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

3 Data obtained from DTC ​ ​ ​ ​ ​ ​ ​ ​

Annexure - 2 ​ ​ ​ ​ Comparing the operational expenditure and efficiency of running Low Floor Bus between ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DTC and Clusters ​ ​ ​ ​

I was directed to compare the different claims regarding efficiency and operational cost of running Low Floor Bus between DTC and Clusters. DTC runs the maximum number of low floor buses i.e. 2500 (non AC) while only Cluster 1 has Low Floor Buses i.e. 120. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

I contacted the MD, DTC and DIMTS officials for different figures (Annexure A, B, C). As expected, both the agencies claim themselves to be more efficient. Both the agencies had done their own calculations and thus presented different pictures. First, I have presented the figures provided by both the agencies and claims made by them and later on, I have given my analysis and final opinion. Conclusion suggests the possible solution to achieve greater efficiency than presently achieved. ​ ​

DTC Claims: ​ ​

DTC provided the following chart to prove its efficiency over DIMTS. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

ESTIMATED COST COMPARISON OF DTC’s EXISTING NON-AC LF BUSES & ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DIMTS CLUSTER-1 NON-AC LF BUSES ​ ​ ​ ​ ​ ​ ​ ​

Sl. Description DTC’s Existing LF DIMTS Cluster LF No. Bus Bus 1 Present Hiring Charges in Rupees -- 60.44 per km ​ ​ [as on 06.11.2015] ​ ​ ​ ​ 2 Revenue Per KM 39 29 ​ ​ ​ ​ 3 Capital cost per bus (54 lacs) 6.70 Inclusive ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4 Interest Cost in Rupees per Km 10.17 Inclusive @ 8% compounded annually for life span of 12 years ​ ​ ​ ​ ​ ​ ​ ​ 5 Present AMC Charges in Rupees 8.08 Inclusive per km ​ ​ 6 CNG Cost in Rupees per km 15.30 Inclusive ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7 Total Cost/ Charges in Rupees 73.69 80.06 per Km ​ ​ [Total of Sl. No.2 to 7] ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

DTC made various assumptions before arriving at this number. The expenditure cost of running a low floor bus has been claimed to be Rs. 73.69 by the DTC itself. We should ignore the figures provided by the DTC about the DIMTS for the time being. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

We presume that DTC has made the best claims for itself. Though, it is also interesting to note that DTC incorrectly calculated the Interest on Capital of Rs. 54 laks for a period of 12 years @ 8 percent/year much more compared to DIMTS did for the same amount for a period of 10 years @ 13 percent/year. It means the figures for the DTC would be even better if they correctly calculate the interest part. As per my calculation, their figure will improve by Rs. 6 per KM, as interest outgo will reduce from Rs. 10 per KM to Rs. 4 per KM. Hence, their claimed expenditure would be around Rs. 67 per KM. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

DIMTS Claims: ​ ​

DIMTS has made very different claims and projected itself to be far more efficient than DTC. The figures provided by the DIMTS are given below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Per Per Per Assumptio Annum Month Month Fixed Costs ns for DTC for DTC Cluster Cluster ​ ​ ​ ​ ​ ​ Included in Cost of Bus 5,400,000 540,000 45,000 CYF ​ ​ ​ ​ Life of bus 10 years ​ ​ ​ ​ ​ ​

Operating Costs ​ ​ CYF (Cluster )- Dec'15 ​ ​ ​ ​ ​ ​ - Per Kms 60 ​ ​ ​ ​ - Per Month Per Bus 392,040 ​ ​ ​ ​ ​ ​ ​ ​ - Per Annum ​ ​ ​ ​ Add: Interest cost on capital (out of EMI) 35,628 ​ ​ CNG Cost ​ ​ - Per Kms 16.29 ​ ​ ​ ​ - Per day 3127.68 ​ ​ ​ ​ - Per Month 93,830 ​ ​ ​ ​ Included in Driver CYF - Per shift (x) 584.88 ​ ​ ​ ​ ​ ​ - Per day (x*2) 1169.76 ​ ​ ​ ​ ​ ​ - Per annum 426,962 35,580 ​ ​ ​ ​ Incentive to Driver @ 1500 per driver 3,000 Conductor - Per shift (x) 584.88 ​ ​ ​ ​ ​ ​ - Per day (x*2) 1169.76 ​ ​ ​ ​ ​ ​ - Per annum 426,962 35,580 35,580 ​ ​ ​ ​ Incentive to conductor @ 1500 per conductor 3,000 3,000 ​ ​ Maintenance (incl PUC) ​ ​ ​ ​ - Per km 9.55 ​ ​ ​ ​ - Per day 1833.6 ​ ​ ​ ​ - per annum 669,264 55,772 ​ ​ ​ ​ Included in Permit CYF - Rs 3000/5 years ​ ​ ​ ​ ​ ​ - For 5 years 3000 ​ ​ ​ ​ ​ ​ - For 1 year 600 50 ​ ​ ​ ​ ​ ​ Included in Registration CYF - Rs 1000/10 years ​ ​ ​ ​ ​ ​ - For 10 years 1000 ​ ​ ​ ​ ​ ​ - For 1 year 100 8 ​ ​ ​ ​ ​ ​ Included in Road Tax CYF ​ ​ - Per month 1000 ​ ​ ​ ​ - per annum 12,000 1,000 ​ ​ ​ ​ Included in Insurance CYF - Per annum 52000 52,000 4,333 ​ ​ ​ ​ ETM ETM-per ticket cost 0.13 ​ ​ ​ ​ No of tickets per day 600.00 ​ ​ ​ ​ ​ ​ ​ ​ Monthly cost 2,340.00 ​ ​ Per annum cost 28,080 2,340 ​ ​ ​ ​ Cost per km for cluster 0.29 ​ ​ ​ ​ ​ ​ ​ ​ Cost per day for cluster 63 ​ ​ ​ ​ ​ ​ ​ ​ Cost per month for cluster 1,895 1,895 ​ ​ ​ ​ ​ ​ ​ ​ Fare Collection Admn Chgs ​ ​ ​ ​ ​ ​ - Per bus per month 56,221 ​ ​ ​ ​ ​ ​ ​ ​ (Salary of 1 clerical & Supervisory person of DTC) ​ ​ ​ ​ - Per annum 674,652 56,221 19,537 ​ ​ ​ ​ Cost per km for cluster 2.99 ​ ​ ​ ​ ​ ​ ​ ​ Cost per day for cluster 651 ​ ​ ​ ​ ​ ​ ​ ​ Cost per month for cluster 19,537 ​ ​ ​ ​ ​ ​ ​ ​ Total operating cost excl overheads 326,343 452,052 Operational Overheads @ 20% 65,269 Nil - ​ ​ ​ ​ ​ ​ Total Opex 391,612 452,052 ​ ​ No of kms per day 192 217.80 ​ ​ ​ ​ ​ ​ ​ ​ No of kms per month 5,760 6,534 ​ ​ ​ ​ ​ ​ ​ ​

Total Capex +Opex Cost per month 436,612 452,052 Per Km cost per month 75.80 69.18 ​ ​ ​ ​ ​ ​ ​ ​

As per DIMTS, Cluster system is more efficient compared to DTC. It claims the operational cost of Rs. 69.18 per km for Low Floor Buses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

We presume that DIMTS has made the best claims for itself. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

My Analysis: ​ ​

Broad figures for the DTC for the year 2014-15 as quoted by DTC: ​ ​​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total working expenditure of DTC for the FY 2014-15 = 2130 Cr. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Earnings: 1110 Cr. ​ ​ ​ ​ ​ ​ Total Grant: 1000 Cr. ​ ​ ​ ​ ​ ​ Total KMs operated : 28.7 Cr. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Break up of Expenditure (In crore): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salary: 1330, Maintenance + CNG: 690, Tax: 12, Other Contingency: 92 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Kms operated: 2870.98 lakh ​ ​ ​ ​ ​ ​ ​ ​ Expenditure/km : Rs. 74 ​ ​ ​ ​ ​ ​ Earnings/km : Rs. 39 ​ ​ ​ ​ ​ ​

Running Low Floor Buses is cheaper than running the old standard buses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Thus, it can be presumed that running expenditure of a low floor bus in DTC can not be more than Rs. 74 per KM. This is quite close to the claims of the DTC. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Hence, the figures presumed by the DIMTS can safely be rejected. And, this expenditure includes everything viz. capital cost, pension, repair and maintenance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

DIMTS has made an important assumption i.e. Earning Per KM (EPK). It has assumed EPK of Rs. 30.63 for the DTC and claimed EPK of 32.41 for Cluster Scheme. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

As noted above, overall EPK for DTC is Rs. 39 as compared to Rs. 29 DIMTS. DTC is earning some non-ticketed revenue. After accounting for non-ticketed revenue, EPM from Low Floor Bus is around Rs. 37 per KM and not near the EPK of Rs. 30.63 assumed by DIMTS. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

While projecting EPM of non-AC Low Floor Buses, DIMTS kept the payment to Concessionnaire at Rs. 60 per KM (based on the payment made after deducting penalty) compared to Rs. 66 now prevailing official rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​ ​ ​ ​ ​ ​

Further Analysis: ​ ​

On salary head, DTC is spending Rs. 1330 crore. The manpower details of the DTC are given below:

Total staff including Contractual: 31,043 {Month December 2015} ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Category Staff on roll ​ ​ ​ ​ Driver Permanent 7815 11651

Contract 3836

Conductor Permanent 5000 12412

Contract 7412

R & M 3722 ​ ​ ​ ​ Administrative 1879

Traffic supervisor 1379 ​ ​ Total 31043

DTC has manpower of over 31000 for around 5000 buses. It means 6 people per bus. This figure can easily be improved. 3700 staff of Repair and Maintenance can easily be deployed for conductor and other duties after phasing out the old buses as new buses have AMC built-in contracts. A saving of Rs. 250 crore is possible after redeployment of the manpower properly. Modern software tools are necessary for proper manpower management. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Let us examine the data projected by the DIMTS for the DTC. It has calculated the interest on Capital in case of DTC @ 13 percent/year for a period of 10 years. Government can easily get funding @8 percent/year and DTC has AMC for 12 years. Hence, any other assumption is preposterous.

DIMTS has calculated AMC @ 9.5 per KM while DTC claimed it to be Rs. 8 per KM. It has also added the salary of two staff daily for noting down the figures of the ticket or revenue figures. After this DIMTS has hiked the overall figures by 20 percent as administrative cost. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

For GNCTD, the most important indicator is Cost to Government (Viability Gap Funding) per KM being provided to Cluster Scheme ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cost to Government (Viability Gap Funding) = (Total Money Paid to Concessionnaire -Total Revenue Earned)/Total Km Done. ​ ​ ​ ​ ​ ​

But none of the reports of the DIMTS focus on this indicator. It also keeps these two figures very much separated. DIMTS should also focus on total number of tickets sold. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

FINAL ESTIMATED COST COMPARISON OF DTC’s EXISTING & DIMTS CLUSTER ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BUSES (2014-15) ​ ​

Description DTC DTC DTC DTC DIMTS DIMTS LF Bus LF Standar Total LF Bus Total/Exc ​ ​ AC Non- d Bus With luding ​ ​ AC /Without Reserve Dead Mileage** Total Number of Buses 1275 2500 930 4705 120/89 1490/138 ​ ​ ​ ​ ​ ​ 8 Total KM done (in 7.7 16 5 29 .71/.64 8.8 crore) Average KM/day/Bus 165 175 147 169 219/162 162/174 ​ ​ Total Revenue 282 548 154 1110# 21 259 Collected (in crore) ​ ​ ​ ​ Revenue per KM 37 34 31 38 29/32 29 ​ ​ ​ ​ Total Expenditure/Cost to Govt. (in crore) 2130* 470 ​ ​ ​ ​ ​ ​ ​ ​ Expenditure per KM 73 69^ 53 ​ ​ ​ ​ Subsidy by Govt per 36 39 42 35 40/37 24 KM

*Expenditure of DTC is including all kind salary, pension, maintenance/electricity/water charges of Bus depots and all ancillary overhead expenditure including from where extra non-ticketed revenue is coming and not counted in the revenue given above. This does not include the budget grants of capital nature for buying new buses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

# Includes Around Rs. 123 crore non-ticketed Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

^ Figures as provided by the DIMTS based on the actual figures paid after reducing penalty (Expenditure as per Contract in case of DIMTS is 75 (66 +9) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

** The purpose of including dead mileage was because DIMTS are using both figures interchangeably. While showing KM done per day per bus, it includes dead mileage but while calculating the revenue per Km it excludes it. In case of DTC, full mileage has been used to arrive at the figures. It includes all working or unsearchable buses kept for condemnation. *** DTC cost calculations does not account for initial budgetary grant for purchase of buses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Annexure 3 ​ ​ Comparison of Performance of Buses of Different Sizes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Source DIMTS) ​ ​

Buses are classified (based on seating capacity) as per Bus Code in the following category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Mini Bus : 13 to 22 passengers; ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (2) Midi Bus : 23 to 34 passengers; and, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (3) Standard Bus : 35 to 70 passengers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

The decision of size of bus on a given route network is generally based on the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Peak Hour Per Direction Demand ( PHPDT) of a route ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (2) Route length ( up to 10 kms routes or more than 10 kms route) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (3) ROW (Right of Way) of road (single lane/ double lane) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (4) Trunk route versus feeder route ​ ​ ​ ​ ​ ​ ​ ​

The driving manoeuvring is superior in case of Mini and Midi buses in comparison to Standard ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ buses. These buses are suitable where there are limitation of ROW, single lane, congested road ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ with low PHPDT. The comparison of performance parameters is as given below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Mini Buses Midi Buses Standard Buses Sr. Description ​ ​ ​ ​ ​ ​ (650 mm Floor (650 mm Floor (900 mm Floor No. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Height CNG) Height CNG) Height CNG) ​ ​ ​ ​ ​ ​ 1 Overall length (over ≤ 7000 ≤ 9400 >= 12000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ body excluding ​ ​ bumper) in mm ​ ​ ​ ​ 2 Seating capacity 20 seats 26 seats 42 ​ ​ ​ ​ ​ ​ 4 Estimated Cost as of 22 lakh 26 lakh 31.5 lakh (non AC) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Oct-2015 (Rs) /55 lakh(AC) ​ ​ ​ ​ 5 Passenger carrying 39% 60% 100 % ​ ​ ​ ​ capacity w.r.t.12Metres Bus ​ ​ 6 O & M Cost w.r.t.12 60% 80% 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Metre Bus ​ ​

Teaching Notes: ​ ​ As a citizen, demanding more buses seems a genuine aspiration. After joining administrative service, taking or proposing the final course of action to satisfy this demand seems far more complicated and cumbersome. Such large public procurement decisions are going to benefit some private player. The person who lost out in competition complains a lot as next order would take several years. In past, such players have used every tactics to malign the image of officer and government by calling the whole tendering process into question. In government, every decision involves a trade off. Final decision of optimum balance is based on the individual preferences and biases. Successful decisions seldom face scrutiny but failed decisions, however genuine, are evaluated through jaundiced eye. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Points of Discussion ​ ​ ​ ​ 1. Should Delhi still invest in more number of buses, considering the huge expenditure going into Delhi Metro? And what should be the right number of buses Delhi needs? ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2. As per Mohring effect, subsidy on running of urban transport is considered as good. But after providing Low Floor buses to its citizen, should government choose to buy Standard Floor buses? ​ ​ 3. DIMTS provides managerial and other overhead services at much lower cost compared to DTC. Should government abandon DTC and stick to DIMTS and possibly face adverse audit reports? ​ ​