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Thursday, October 19, 2017

Fare hike by DMRC

First, a caveat. I am just a railfan who wants rail based transportation to do well. I am not an economist or a sociologist or a ... So take everything below with a pinch of salt.

Delhi Metro fares were hiked last week, a second hike after 5 months. But let us remember that this was because there was no hike since 2009, and the Fare Fixation Committee decided that a very large fare increase be done but split into two phases. Naturally, there are people supporting fare hike and others opposing fare hike. Those who support will argue that if passengers want good service, they must be willing to pay for the cost of that service. Those who oppose fare hike point out that society benefits a lot in terms of reduced traffic, pollution, etc., and hence society should have to pay too (through a subsidy by the government from your tax rupees).

Pro-hike people would want to point out that society has already paid and continue to pay somewhat. The land was given cheaper, the right of way, certain tax benefits, and some land specifically for development and earning money were all given by the government. And anti-hike people will say that that was too little. The benefit to society was lot more and continues to be lot more. Everyone would agree that DMRC should try to generate more non-ticket revenue - advertisements, shops on stations, etc.

I see this debate as problematic, since the beneficiaries are either passengers who can be identified and asked to pay for their specific journeys, and society-at-large which means government must subsidize through taxes since individual beneficiaries cannot be identified. The debate would be very different if we can identify other beneficiaries of Metro and ask them to pay.

Are there such identifiable classes of beneficiaries. Indeed, there are, and they were identified even before the first KM of track was laid. Somewhere down the line, they were forgotten or lumped into society-at-large.

First, the property owners. The value of properties near Metro stations have gone up. Also, there was plan of allowing higher FAR to residential buildings near Metro stations. If property owners have benefited from Metro, they should pay for it. The property tax collection should go up, and a part of the increase should be shared with DMRC.

Another category of users who have benefited from Metro are users of private vehicles. While it may sound strange that because of Metro, vehicle owners are able to drive faster, but imagine what would have been the traffic like if an additional 30 lakh people were on the road in a day. So people who are driving are a significant beneficiary of Metro and must be asked to pay. One way to do so would be to levy an appropriate Metro cess on every litre of petrol/diesel sold in NCR and that money shall come to DMRC. (Government may decide to not increase the cess but give the same amount of money from the significant amount of taxes that it already is collecting.)

I am sure one can identify other beneficiaries of Metro and find a way to charge them. If Delhi Metro is paid for by all its beneficiaries instead of mainly passengers, the fare would be less than what is being charged, and DMRC would not be in financial stress.

Of course, I have no idea on how to apportion costs to different beneficiaries and hence I am refraining from giving any numbers.

1 comment:

Musashi Miyamoto said...
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