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
No. Cost/KM​ ​for​ ​1st​​ ​​ ​year​ ​to​ ​12​th​​ ​year

I​st Non-AC​ ​Low​ ​Floor Rs.​ ​1.6​ ​to​ ​12 Accepted

I​st AC Rs.​ ​1.8​ ​to​ ​12.20 Accepted

II​nd Non​ ​AC​ ​Low​ ​Floor Rs.​ ​3.20​ ​to​ ​18.75 Accepted

II​nd AC​ ​Low​ ​Floor Rs.​ ​4.15​ ​to​ ​19.30 Accepted

III​rd Non​ ​AC​ ​Low​ ​Floor Rs.​ ​83​ ​to​ ​433 Rejected

IV​th 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:

Sr. Description Mini​ ​Buses Midi​ ​Buses Standard​ ​Buses

No. (650​ ​mm​ ​Floor (650​ ​mm​ ​Floor (900​ ​mm​ ​Floor
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?