Delhi Metro's missing Fare Fixation Committee report: DMRC's fare hike is opaque, undemocratic
The central problem of DMRC's Delhi Metro fare hike is not just bad economics but also the lack of public accountability and transparency.
Diwali has gone by. As the dust continues to settle, the nation's Delhi media now shepherds our collective consciousness to debate whether crackers working on the principle of combustion cause air pollution or not. However, what is seemingly forgotten in the media is the unprecedented double DMRC fare hike within a year, which is now in effect. Delhi chief minister Arvind Kejriwal, however, clearly has no intention of letting this issue die. And for good reason. In his weekly Google Hangout on Sunday, he had two disarmingly simple questions about the DMRC fare hike:
"Was the Metro built for profits?"
"If there is a deficit, why is it being funded by fare hikes when the Center and State can split it?"
The BJP-led Union government propagates the idea that people need to pay for good services whilst the Aam Aadmi Party (AAP) protests the hike, calling it a false binary created out of poor governance. AAP has faced some criticism to its opposition in the media but most contain more ad hominem and straw men than fact and opinion. Further, none of the debate or discussion is informed by the reports of Fare Fixation Committee (FFC), which form the basis for DMRC fare hikes.
Committees in Indian governance, based on experience and anecdotal evidence, are either the resting place for the best ideas and programmes or the perfect tool to push insidious ideas and practices stemming from poor governance. Which makes an investigation necessary.
The Delhi Metro Railway (Operation and Maintenance) Act, 2002 under Section 33 and Section 34 paved the way for a Fare Fixation Committee to be constituted to recommend fares for the Delhi Metro. The first FFC was constituted on 5 December, 2003. It was chaired by Justice JK Mehra and asked to recommend fares for the Phase I of the Delhi Metro within three months.
Its report stated that revenue optimisation, affordability and long-term sustainability are the three principles guiding fare fixation for the metro. Delving into the financing of metro operations in multiple countries, it emphatically states the value of social benefits and prudence in planning to cover operating costs.
The NCAER (National Council for Applied Economic Research) was tasked with calculating the effect of fare changes on ridership and the financial health of the DMRC. Multiple cases are considered with specific emphasis on zone-wise trip distribution, all of which was built into the final recommended fare chart.
The second FFC chaired by Justice CK Mahajan in 2005 adds the principle of accounting for environmental costs and social benefits into fare fixation. It analyses metro systems based on revenue, cost and operating costs per passenger as the key metrics. The second FFC notes that operating revenues should cover operating costs instead of total project costs, and states that while DPR (Detailed Project Report) estimates were lower than actual costs in the underground phase, it noted that future costs would be cheaper by virtue of it being above ground.
The third FFC chaired by Justice Padmanabhan in 2009 abandons some rigour with a five-week deadline in the lead up to the Commonwealth Games but ensures that a large majority of rides (which had a modal trip distance of 9-15 kilometres) didn’t see a fare increase of more than Rs five. The committee also considered it prudent that the fare increase as proposed by DMRC may be recommended by placing a cap on the increase of fare at Rs eight, with a view to encourage long-distance metro travel and ensure price competitiveness with other modes of public transport.
Based on these commuter-friendly precedents and principles, the fourth "double" fare hike of the Delhi Metro is problematic on multiple levels.
First, the BJP-led Government of India or its appointed L-G have not made the report of the Fourth Fare Fixation Committee Report public, which is unprecedented, irregular and a travesty of public accountability. All we get is a press release – rhetoric but not for debate or discussion.
Second, the recommendations of the fourth FFC were submitted in September 2016 and not placed before the DMRC Board till May 2017. Glaring procedural violations and delays lead us to believe that there is something rotten in the state of the Delhi Metro. Third, the latest fare hike violates the precedent (from the third FFC) of not making any slab-hike greater than Rs eight, with many slabs even seeing a greater than 100 percent increase.
Fourth, recommendations of previous FFCs like fare fixation every two years with increases of five percent have been ignored which makes sudden double fare hikes unsustainable for the commuter's pocket. Fifth, the three FFCs and annual reports of the DMRC note that land transfers have been expensive which is not the case in Hong Kong, the only profitable metro. This is an issue that has plagued the Delhi government as it attempts to set up public schools and hospitals, as "land" is a Union subject for Delhi.
Finally, in the absence of the latest report, it is unclear whether the common citizen's necessity is being priced as a luxury service with price discrimination. This fare hike has already affected the monthly budgets of lakhs of households, and has increased the usage of buses and shared taxis for certain distances, which is an undesirable shift in solving the problem of shared mobility.
Kejriwal has opposed an opaque hike, sought meetings to discuss DMRC's financial health and even offered a middle path to fund half the supposed deficit for Delhi Metro's financial health with a request to the Center to do the same. This would ensure that the citizens don't have to pay for the inability of the past and current central government to heed the Delhi Metro's request for the influx of new capital in 2011 and 2021.
The central problem of the DMRC fare hike is not just bad economics but also the lack of public accountability and transparency. Its devil lies in its details. And we, the people, don't have access to it.
The author is an advisor to the Government of NCT of Delhi. He holds a double Masters degree in Engineering and Public Policy from Stanford University and can be reached on Twitter @roshankar.
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