The Hindu Business Line : Panel moots fare hikes, fiscal sops for public bus services

New Delhi, May 25 Automatic and frequent fare increases in public bus transport (PBT) operations, as also fiscal incentives to attract more investments — this is the recommendation of the recently firmed up National Road Transport Policy, which also states that the revenue foregone on account of various concessions (fares or passes) by PBT units was around Rs 1,482 crore (2004-05).

The expert committee, set up by the Road Transport Ministry, has suggested compensating bus transport operators for such social service obligations and to secure financing for PBT operations through a mix of advertising/property rentals and real-estate development.

The committee also called for a slew of fiscal incentives such as reducing incidence of indirect taxes. Currently the acquisition cost of a bus is compounded by multiple commodity taxation such as central excise and State VAT or sales tax, it said.

Tax load

Additionally, the policy points to the need to rationalise motor vehicle taxes (MVT) and the passenger taxes levied on public buses by various States. For instance, State road transport units in Maharashtra and Gujarat pay 17 per cent of their turnover towards MVT; in Rajasthan, MVT is assessed at 2.1 per cent of the current cost on bus chassis on a monthly basis.

Moreover, State road operators appear to have higher tax liabilities than their private counterparts in some States. In Uttar Pradesh, the average incidence of tax on UP State Road Transport Corporation bus was Rs 2.35 lakh, which is almost four times what private bus operators paid (Rs 85,000) in 2004-05; while in Punjab, in 2005-06 the average tax liability for each State road transport unit bus was Rs 3.93 lakh compared to Rs 2.8 lakh paid by private operators, the committee pointed out.

Private participation

Calling for increased private participation in the sector, the committee recommended more frequent fare increases. “Allow for automatic adjustment in fare increase and specify that operators may be compensated for increase in operational costs on account of fuel and manpower costs. This will help avoid steep fare increases or reductions in quality of service,” it said.

To bring in efficiencies, the committee suggested encouraging private participation through clearly defined service contracts, which incentivise quality service and higher usage. It has also suggested exploring new forms of rolling stock procurement (like leasing) and outsourcing maintenance operations.