Chapter V The Comparative Cost Analysis (157) CHAPTER V Introduction : It has been already amphasized that the ’bicyclf as the most convenient and cheapest means of local transport has comparative advantage over other means of transport. In this chapter an attempt is made to show how a bicycle enjoys comparative advantage over the means of transport like (1) Scooter - a two-wheeled power driven vehicle (2 ) A. moped - (Luna) a two wheeler light vehicle (3) A Rickshaw - two seater or three seater vehicle (4) A p. M. T. BUS/ and (5) A Car. The above vehicles are chosen for the purpose of comparative cost analysis because they are the alternatives to a bicycle. The following points are taken into consideration for the purpose of comparative cost analysis (1) Initial investment made at the time of purchasing a vehicle. (2 ) The cost of maintenance and repairs* (158) (3) Depreciation of the vehicle» (4) Interest on loan if taken for the purchase of the vehicle. (5) Oil and petrol; and (6) Distance covered (average mileage run) for a particular consumption of oil and petrol. The analysis reveals that the comparative cost advantage enjoyed by a bicycle over the above mentioned means of conveyance is significant and would continue to increase in future. Thus this comparative cost advantage enjoyed by a bicycle will confer on a cycle- low owner several benefits in terms of/*nonetary costs and the convenience offered- This would go a long way in increasing the impact of a bicycle on mobility of poor population- (159) THE COMPARATIVE COST ANALYSIS 5.1. THE NATURE AND OBJECTIVE OF ANALYSIS The comparative cost analysis of the various means of transport is important for two ^reasons i (1) It is important for finding out the future trends in demand which result as a consequence of the comparative cost advantage resulting from changes in the initial cast of the vehicle, cost of maintenance, repairs, the interest paid on loan taken for the purpose of purchasing a vehicle and the cost of fuel, depreciation, wear and tear. (2) Changes in the costs depend on changes in the distance travelled. Changes in the distances travelled reveal changes in the mobility of population through the vehicle. In order to know that the comparative cost advantage from a bicycle is maximum it is necessary to compare the various types of costs,over a certain period (minimum one year ) and for a minimum distance( a Kilometer). In this case the cost of travelling by the following vehicles is relevant for our consideration. (160) (1) A Scooter(two wheeled machine driven vehicle with a capacity of carrying two persons, • (2) A moped ( a vehicle with a capacity , carrying one) (3) A Luna (4) A Rickshaw( two seater front machine driven vehicle. (5) A RickshHw ( three seater rear machine driven vehicle ) (6) A P.M.T. bus which is the comnon means of local passanger transport Since a bus has a carrying capacity of 45 persons at a time over a particular distance# it is expected that the average cost per commuter per kilometer should fall down in view of the economies of scale enjoyeed by a PMT bus operation. However, as w® shall come to know later this observation is not true. * In case of P.M.T. the impact of rising costs of operation are reflected in the revised fare rates. (161) 5.2. COST TABLES FOR RICKSHAW,P.M.T. MOPED,CAR AND A CYCLE 5.2.(a) Table showing the cost of travel by a rickshaw( per kelometer) . TABLE No. 20 ROUTE DISTANCE RICKSHAW FARE CHARGES PER KILO METER AND ABOVE (1) Sambhaji Park About 3Kms Rs 4,20 1.4 to Wadia College (2) Budhwar Chowk to Rs 2.80 0.93 Pune Station. (3) Budhwar Chowk to Rs 3.50 1.10 Nal Stop (4) Budhwar Chowk About l.SKms Rs 2.50 1.40 to Swargate (5) Budhwar Chowk Rs 2.50 1.4 to Shivaj i Nagar 5.2.(b) COST INPLICATIONS OF THE TAPERED SCALE OF P.M.T. FARE RATES Th6 tapered fare scale of the P.H.T. as it exists in 1982-83 is as follows s- (162) DISTANCE FARE RATE(PAISE) upto First Two Kilometers 40 Paise For each km after first two kms. an increase of SOP. Thus For 0-2 Kms 40 Paise 2t 3 Kms 55 Paise 3-4 km 70 Paise 4-5 km 85 Paise 5-6 Km 100 Paise 6-7 Km 115 Paise 7-8 Km 130 Paise 8-9 Km 14 5 Paise 9-10 Km 1.50 Paise After 10 kms for each k.m there is an increase of lo paise for each increment of 2 Kilometers upto 36 kms. 10-12 1-60 12-14 1-70 14-18 1-80 18-20 1-90 20-22 2-00 22-24 2-10 24-26 2-20 26-28 2-30 (163) 28-30 2-40 30-32 2-50 32-34 2-60 34-36 2-70 5.2(c) TRAVELLING COST OF GOPED The model ' Goped' is a machine driver cycle. The comparative cost is less when compared with the initial price of other vehicles. The manufacturers of Goped claimed that for one litre of petrol the Goped would run 9 0 kilometers whereas other vehicles they would run 60 kilometers. In any case, the cost of conveyance cannot exceed 10 paise a kilometer. 5.2(d) COST OF A BICYCLE IN INDIA A bicycle a minus accessories on the Indians market costs betv/een Rs 19 0 and Rs 300. The cheapest bicycle like the " Ambessador", is Rs 195/ while the Hind Cycle.. " Special model ” speedking,'* a light sports machine, costs Rs 310, The standard Roadstar put on the road by most of the leading manufacturers costs betvreen Rs 200 and Rs 22 5. Local (164) taxes and State duties are extra. These can be extended to 20% of the basic price. Around 19-7 a British- or Japanese made bicycle cost Rs 50/-» By 1920 the price dropped to Rs 25/--* In 19 3 5 you could get a British cycle for Rs 40/ while a Japanese one went for Rs 14. In 1960 a standard bicycle in India was worth Rs 200, In December 19 69 Government almost created a crisis in the industry by announcing, with immediate effect^ an increase in the prices of various categories of steel. The scarcity of steel was already being felt by the cycle makers but the hike in price hit them hard. During 1970 the industry groaned under the increase in excise duties, higher railway freight, electricity duties and state taxes. It waited in suspense for the next straw. Once again it put a demand for a Rs 16 increase in bicycle prices . On June 5,1970 Government permitted a rise of Rs 9.50 effective from June 1. What perhaps prompted Government to relent, though reluctantly, was that the 1969-70 profits of the > industry were a niggardly 6,8% (165) Government's short sighted approach had allowed the situation to deteriorate. Although there has been no major strike, labour upsets have become frequent both in the cycle factories and the accessory departments. The flow of raw materials even now is inadequate. What Government has failed to realise is that bicycles are essentially export items^ and more importantly l there is a large potential demand for bicycles in the domestic market. 5.2.(e) LATEST PRICE LIST FOR BICYCLES OF DIFFERENT MODELS(BRANDS) Model/Brand Initial Price * Rs 1) Hero Jet 450 2) Atlas 500 3) Herculus 580 4) Phillips 580 5).B.S.A. 700 6) Raleigh 725 7) Humber 750 8) R.M. I. 450 9) A. I 450 10) Hamilton 500 11) Bajaj(83) 575 These prices are for 1980-81. * Price for all the standard accessories taxes etc Average Price of a bicycle^etween Rs 500 and 560 (166) 5.3. THE COMPARATIVE COST ANALYSIS The vehicles included in the tables are following^the near substitutes to a bicycle. Travelling by a PMT bus is also a substitute for a cycle. However there is no individual owing of a not bus and therefore it has^been ihcluded in the above table. However/ as the reports of the P.M.T. undertakings indicate the cost of maintenance and repairs, depreciation, interest on loans taken for the purchase of a bus, cost of oil and deesel, the labour costs have gone up excessively high. As a result of high costs of operation the P.M.T, Undertaking has been compelled to revise the fare upwards. Thus for an individual commuter the cost implication is that the fares have doubled over a period of 5 years . For example fare for travelling a distance of about 4 Kilometers ( Sambhaji Park to Poona Railway Station) a passenger used to pay 35 paise in 1977 whereas in 1981-82 for the same distance an individual commute^has^pay 0.7 5 paise. thus implying an increase in the cost of P.M.T, travel by 2.1. times. This point is relevant for our study because it is going to affect individual (167) nommiatar's choice as to the means of local conveyance. As a dependable vehicle^ bicycle then happens to be the best choice(alternative to any other vehicle which has been included in the above table. l^et us now consider the cost implications of each type of vehicle for a common commiater, as revealed in the tables following ; CO (168) E o w n : o o r\) o Q) CM >1 a, H O' i n W >1 (T' CQ (P c W e O fO (-1 : e O >1 c o £ +J ^ 0) -P (0 o_ w 0) O "0 > u T3 C n t7 i 0 ) o o o (fl o (U o (U I (0 m M ro >1 VO 00 a ro ^ a 1-1 0) 0) (0 CO CO I <y -H > > i M E i-t <~i > -H o O <0 a' 3 (U 0 I <C e u 0) i n T3 -P (XI e -p §:S o .