Delhi Metro, transit lifeline of India's capital, struggles to survive as high fares lighten commuter wallets

Recently, the Outcome Budget of Delhi stated that Delhi Metro’s target ridership was 30 lakh per day in 2017-18, but it came down to 25.7 lakh after the dual and consecutive 100 percent fare hikes affected by the Fare Fixation Committee of the Delhi Metro Rail Corporation (DMRC) in May and October last year.

Before that, in a reply to a question in the Parliament, Union Minister for Housing and Urban Affairs, Hardeep Puri, also accepted that the monthly ridership figures of the Delhi Metro had witnessed a significant climb-down after the hike but defended it as essential to meet the increasing operational expenses of running a ‘world-class’ Metro rail.

So, the question to ask is: Was the fare hike inevitable and necessary or could it have been avoided?

Let us take a step back and understand the issue in its entirety.

Through the lens of history 

It was 2005. I was still in my teens and studying at school. One day, in the sweltering Delhi summer, I found myself without my daily mode of transport to go back home from school - the ubiquitous school bus which had conveniently broken down in the heat. I had very little canteen money leftover with me and the prospect of taking an auto was daunting for the sheer cost of fare over a long distance. With not many options left and with equal amounts trepidation and excitement, I decided to board the newly inaugurated Delhi Metro. What followed was a transformative experience that has stayed with me all these years: Extremely low ticket fare; air-conditioning; distinctive comfort of travel without the added pain of traversing the potholes of Delhi’s roads; and last but not the least, short travel time.

Before the metro, it was no mean feat to traverse the haphazardly planned urban agglomeration that is Delhi.  Hundreds of thousands of migrants from states both near and far were arriving at Delhi’s doorstep, every year, escaping poverty and persecution back home and in search of jobs and a better life. But most of them were cast aside by aloof ivory-tower regimes, which have reigned in Delhi for the past 15-20 years, into squalid Unauthorised Colonies and Slums.

Delhi faced an important existential question: Would it be able to manage a seamless transition from a state of Lutyens’ insularity to a fast-growing and inclusive modern city?

Could it adapt in what was perhaps its greatest test in a century since its existence?

Then came the Metro - India’s home-grown version of the subway and an audacious feat of engineering born out of an ambitious vision in 1995. Thousands of kilometres of railway track sprouting out as far as you could see and beyond, ferrying millions of daily-wage labourers, fund-starved school and college students and the blue-collar working class - criss-crossing across Delhi, tying it together in an invisible yet indivisible bond, and making it a city where anything was possible. It was magical.

It was Delhi Metro that aided the transformation of places like Shahpur Jat and Hauz Khas Village into hubs bursting with culture; that connected places as far-flung as Shahdara and Dwarka; and that aided the economic growth of the city by acting like its beating heart — bringing people together and spreading them out.

Over the years, the Delhi Metro evolved as the ride of the underclass of the city primarily due to the fare subsidies which were provided by the government.

Why are fare subsidies important?

Mass-transit systems came into being in the late 19th century and at that time were classified as an economic activity in no need of subsidies. In fact, in most countries around the world, the issue of fare subsidy emerged notably only during the latter half of the 20th century, when the possession and usage of private vehicles increased rapidly and the related costs of public transport evolved adversely. Governments decided to incentivise the masses to use public transport by offering, in full or partially, fare subsidies.

Currently, world over, mass-transit systems are struggling financially due to poor fiscal management and operationally due to under-investment in capital infrastructure. But few, if none, have resorted to measures as extreme as 100% fare hikes.

Subsidies on fare are not financial profligacy but serve important economic and social functions:

1. The under-privileged and vulnerable classes of the society like low income households, the unemployed, students, senior citizens, need cheap public transport to avoid social exclusion.
2. Fare subsidies are an excellent instrument to analyse and solve the problem of urban transportation and preservation of public commons: Traffic congestion on roads, air and noise pollution, negative externalities associated with parking, among other such things. Subsidising the fare of the metro is a significant incentive to create a modal shift from the usage of cars and scooters.

Fare hikes are bleeding Delhi Metro by a thousand cuts

A report by the Boston Consulting Group states that since its inception, the Delhi Metro has succeeded in reducing the amount of road traffic and congestion in the city. In 2014, 12 years after the first line was opened, it was estimated that the Delhi Metro had kept 2,30,000 vehicles off the road, resulting in the saving of roughly Rs 104 billion worth of fuel. Delhi has also reported a lower number in road accidents overall, which is directly correlated with the metro. The Delhi Police stated that fatal traffic accidents in 2016 amounted to 1548, a reduction of 23 percent when compared to the 2,015 fatal accidents that had occurred in 2008.

Clearly, fixing the Metro cannot mean a fare hike. That would destroy the very sui-generis of the Metro’s existence — an affordable and comfortable ride for the city’s working class — already evidenced by the continuously reducing ridership numbers. Metro is also the city’s best answer to the growing urban problem of air pollution and traffic congestion.

The primary arguments put forth, by the powers to be, for withdrawing subsidies on Metro fare are two-fold:

1. Delhi Metro would be fully subjected to market forces and assuming zero market distortions, Adam Smith’s invisible hand of the market would give rise to optimal public transport supply.

2. Fare Hike(s) would help the DMRC in raising significant amount of capital which can be re-invested in capital and operational assets in order to provide better service.

Both fail the test of common sense. First off, markets are never perfect and imperfections have a way of playing havoc with public goods to the extent that soon enough people are disabused of the notion to use them. Secondly, over the past few years, Delhi Metro has witnessed poor fiscal prudence by way of adventurism at the cost of public money as seen when a recent report by a government think-tank shows that DMRC “wilfully distorted” its concession agreement relating to the Airport Express Line to favour a subsidiary of the private operator, thus “bleeding” the public exchequer, when the contract was terminated by the private firm; and by way of failing to invest in ‘creative’ management techniques to increase its fiscal output manifested by the measly year-on-year increases in its advertising revenue.

The steep increase in fares of the Delhi Metro has left the lifeline of Delhi bleeding to a slow and untimely death. It is a unique Indian tragedy.

Pranav Jain works with the AAP and Delhi Government on key issues. He tweets @pranavj142.