Withered Wheels of Progress?

MANAGEMENT & GOVERNANCE

S. Ainavolu

12/4/2021 12 min read

Withered Wheels of Progress? – State of State-owned Road Transport Corporations (RTCs)

State-owned public transport corporation’s buses were seen as espousing the cause of development and called the “wheels of progress”. Sounded apt when these wheels reached the remote villages, visiting as sign of modern progress for the first time. The buses connected remote places to the nearby towns and integrated the production centres with the economic eco-system of the neighbourhood. By 1990 we had all the major Indian states having their own “state owned” public transport corporations owning and operating buses of various hues, on the majority of roads in their states. There were only a few inter-state services that are limited in number and coverage, mostly connecting the border towns. Long-distance travel through trains and shorter journeys through bus networks became the informal norm. Thus, buses appeared as the symbols of the progress, progress and development brought on wheels and hence the euphoria around “wheels of progress”.

Train network in India began in 1853 in the Western part as Mumbai’s sub-urban network. In the next half a century, the network owned and spread by various companies like Bengal-Nagpur railway, Central Indian Peninsular railway, and Nizam State Railway connected major cities of India. However, this was more of a “crossed garland” model, appearing to be crisscrossing the country but having very little penetration into the catchment areas. Trapezium implemented a century ago! That remained the scene even after a century since the first train moved on the vast land of India. The “last mile connectivity” need was to be filled through “other means”. Bus network fulfilled this and made its presence felt by later parts of 20th century in a major way.

Routes, ownership, and convergence through nationalization – It is a century that busses have been plying in different parts of India. To begin with these started more as urban network, serving as city buses. Post-independence in the year 1947, the route penetration happened more deeply with inter-district and connecting to the capital cities of states happening. During the next couple of decades, more of intra-district services spread happened. As the hub-and-spoke model penetrated deeply, the district headquarters first and major taluka towns later, started serving as the hubs. Originally, except in a few places, the networks were “distributed” in terms of diffused ownership and lack of centralization. Often the routes were run by the private operators who owned a minimum of one bus to dozens of buses, often limiting their scope to the immediate neighbourhood and atmost the original larger district. Eco-system embeddedness, official “facilitation” and preference/comfort of the owners of the bus services often decided and dictated the zone of their operations. An example was the famous “Janga Chandraiah gari” bus service which operated in current Telangana state’s west-central parts and implemented “dynamic routing” protocol way back in 1960s.

Often it is felt that private ownership leads to over-exploitation and miserly investments for the upkeep. Rickety buses carrying the loads twice or even more of their capacity hugely posing risks to the traveling public and others on the roads were said to be the common sight. Over the years the need for organized, safe and development-boosting road transport network resulted in the state ownership of the routes and services and alignment of routes to the new development administration centres. This was the first of nationalization efforts that got started much before banking, insurance, airline and coal industries were considered for nationalization.

“Centralizing” at a state level – Most of the modern major states’ formation took final shape by 1956, and centralizing the bus services at the modern state-level begun. Road Transport Corporations Act, 1950 was the facilitator of the effort. This act was aligned to the Motor Vehicles act of 1939 for definitional purpose. RTCs were proposed to be created as stand-alone corporations that shall cater to the transport needs of the people living in different states. The intended mandate was along the lines of creating “efficient, adequate, economical and properly coordinated” RTCs in a systematic manner.

Different states formed their state transport corporations as per their convenience and pace. An example is, alphabetically first state of Andhra Pradesh was formed in November 1956 and it, in turn, formed its state RTC in January 1958. The major states of Maharashtra and Gujarat that got formed through the bifurcation of then Bombay state in 1960 had their respective RTCs in 1960. It is of general knowledge and acknowledgment that inspite of the formation of the state RTCs many privately or parallelly operated routes existed for next decade or so. Route nationalization or RTC monopoly of the state routes got highlighted when a major state chief minister chose to resign when the honourable court of law appeared to have taken a different view than the executive stand. He was late Neelam Sanjeeva Reddy, who later rose to become President of India. Thus, there appeared a concerted effort towards making the RTC act implemented, spreading the route network and making safe and economical bus travel made available to people.

Public transport and its important dimensions - As was mandated in the act, the intent was to offer efficient, economical and coordinated transport option. Well-built and comfortable buses that were mostly made by either Tatas or Ashok Leyland comprised the fleet of many RTCs. Well-trained and sensitized driver & conductor duo used to be seen in the villages as the harbingers of progress. They were respected, offered hospitality in the last/terminating point of the journey and often were invited for the family/community functions for a meal. RTC buses offered a fresh breeze being safe, sturdy and “in control” compared to the earlier version of privately-owned, worn-out structures called buses. Visibly too these were unsafe and operationally as well.

Benchmarking the performance of RTCs began with number of accidents per lakh kilometers of travel, fuel efficiency measured as kilometers run per litre of diesel, network utilization in terms of % of buses on the roads (which shall be less than 100% as a few buses shall be unfit or under maintenance at a given point of time). The benchmarking and comparative exercise promoted healthy competition among various RTCs and also among various bus depots. Depot is a typical regional hub that hosts about around a hundred buses. As single authority RTC was operating the entire network of services, there was good coordination and route optimization. Route planning, fleet utilization were decentralized to the depot level and atleast in few progressive states, depot wise P&L was tracked along with above operational metrics like accidents, fuel efficiency, fleet utilization. All appeared good for a few years atleast.

Competition, personal and private transport on the rise – Post-2000s, the personal vehicles and private auto-rickshaws in the rural areas helped easily connect with the regional hub. Within cities too, the two-wheeler penetration reduced dependency on the RTC buses. Organizations that operate in big cities started their own chartered bus services. Pragmatically, RTC operations were categorized into rural, inter-district towns, city services, and fourth was connecting major cities (even of neighbouring states). Most profitable of all four categories of these RTC operations, the major cities connecting network went into private operators’ hands. City and village services were always a bleeding ground for different reasons. Village bus linkages saw reduced patronage (due to above reasons of personal vehicles and private autorickshaws) and city services hardly offered any fuel economy (due to the slowed down traffic on the jammed roads). Thus, these two don’t break even. Inter-district services offer break-even but faced competition from cars/jeeps operated by private individuals. The most profitable always were the long-distance, often over-night travel offering services that charged a premium. These suffered systematic “leakages”.

Thus, apparently looking as monopoly in their state, probably the most desired form for a participant in their industry (no competition!), RTCs face competition practically in all four segments. City local routes are catered by often pooled/shared autos, 7-seaters, Jugads and Vikrams. Village routes have multiple auto-rickshaws and jeeps taking people in the least waiting times (comparatively RTC buses have fixed timings and less frequent). Private operators using cars and vans take willing travelers on inter-district routes, thus eating into the revenue of RTCs. Most profitable, long-distance bus routes are operated by the “connected”, often unofficially than officially. This causes big dent in the potential revenue for RTCs and in the most profitable segment. This segment is allowed to be “leaked”, as most of these services are owned or sponsored by those in powerful positions.

Costing and pricing – Keeping the socio-economic considerations in view the RTCs decided the pricing. Often it is in terms of “paisa per kilometer”, and in few urban/city service cases it depended on a number of “defined bus stops”. Based on the nuance of the service the pricing moves up from “ordinary” to express/deluxe to luxury/AC services. Thus, for the same distance between two points, ticket pricing shall be different depending on the classification of service. Cushioning, leg spacing, interiors, air-conditioning (or absence of it), all are different across segments.

Regarding the costing, biggest capital cost is ownership of the fleet and the major variable cost is fuel. Now the fuel (still mostly diesel) is benchmarked to international rates and always northward moving. Thus, perpetually the costs on its account is under stress. Ownership of the vehicles is a big drag as the maintenance and upkeep become the responsibility of the RTCs which are essential service operators than maintenance offerors. Thus, life cycle costing of the vehicle proves to be costly. Maintenance staff whose productivity may be a “?”, inventory management which is demanding, and availability of the fleet in working condition are the issues. An alternative model of leasing of the vehicles from OEMs may be a better approach in many a case with the transparent criterion for measurement of deliverable and tracking of the same through technology. Unfortunately, the leasing of the buses went into an ethical downward spiral at few places. Scrapped buses of the RTCs were sold to “outside parties” who are propped by insiders. The same buses were leased at higher charges to run in the same routes. Double hit for RTCs but private interests get served. On capex recovery terms, depreciated assets got monetized at lesser value as it was sold as “scrap”, and in opex terms, higher lease amounts eat into the bottom-line. Publicly owned companies (state governments own the RTCs fully, in few cases urban municipal bodies do) are made to bleed to serve the private interests of a few insiders. Sad reflection, but a reality.

Safekeeping RTCs, sustainability and required forward steps- Whether erstwhile applauded but now withering “wheels of progress” be allowed to continue their downslide is a loaded question. ‘Let market forces decide’ type of argument often is incomplete, allocating more weight to economic aspects and often ignoring others. The requirement of quality transport that offers safety and ecologically lesser footprint is the need of the hour. Organizationally recalibrating RTCs for survival and success in the changed era is in the best interests of sustainability at a macro level. A few big-ticket, Pareto impacting initiatives based on the reflections on the sorry state of many a state carriers are offered here. Core assumption is RTC’s importance can’t be undermined. For example, a large Western Indian state of Maharashtra has state wide districts’ operations carrying out RTC. It owns over sixteen thousand buses and employs close to lakh employees. Neighbouring Telangana has RTC with over ten thousand buses and close to half a lakh employees. Thus, RTCs are too large and impactful organizations allowed to be withered away.

Concerted efforts to bring-in the desired change along the agreed dimensions and parameters needs to be initiated by the “owners”, the political leadership. Vision that needs to drive the organization has to have sustainability-related interests as the prime trigger. Buses occupy least quantum of per-capita road space and also record the best fuel utility per-capita. There can’t be another substitute that is so omnipresent and cost-effective. Technology embedded operations shall definitely help in optimum maintenance, utilization of the fleet, and driving profitability in. Professionalizing the leadership is the first step to begin with. Often a politician provides the “Chair” leadership and may not be the right match for the demands of the position. Additionally, the CEO equivalent position is a “parking ground” for state cadre central services officials. This hardly inspires one to drive the change or even have a meaningful time horizon. Possible best efforts shall go towards “getting off the loop line”.

Establishing long term maintenance contracts with OEMs and at well-negotiated rates shall help RTCs offloading the responsibility of bus maintenance, the burden of costly inventory and the need to track the “proper” use of inventory. The asset-light model for future vehicle procurement needs to be fully explored, again with OEMs. We have successful use-cases from the Airline industry to draw upon. Currently implemented asset-light models involve entering into “select” contracts with small operators for supplying buses, either on dry lease or wet-lease basis. For the uninitiated, dry lease is about only the bus handed over for further use by RTC, and wet-lease includes providing the driver and fuelling the vehicle too! Naturally, the rates for wet leasing shall be higher, and the responsibility of the RTC in such a case is only to drive the “commercial operation” of issuing tickets. This can be as per “fixed vehicle” basis or “fixed location” basis, in the latter case “conductors” do wait at fixed, major bus stops and conduct ticketing before allowing on-boarding of the passengers. More familiar model for most of us is to have a fixed conductor in the bus who keeps issuing the tickets throughout the journey. Technology can help drive down the cost of operations. Technology use through RFID card-based ticketing helps to a great deal. The pre-paid cards get detected when passenger boards any bus and again ticked off when one de-boards. The differential is calculated and the applicable amount gets debited. The system can be designed to generate alerts for “no or less balance” cases where ticket amount can’t get charged. Commercially it helps to a great measure, arresting the leakages of ticketless travel and fake ticket scams.

Route optimization and dynamic bus allocation need to be put in place so that optimum carrying and load distribution happens along with “customer” waiting time optimization. Smart bus stops can show the alerts of the incoming buses and can also be designed to be the “demand inputting” stations. Atleast one regular year’s data needs to be used for demand forecasting and from the second year onwards this can be finetuned as one moves ahead. In cities, shorter routes and feeder routes to be given importance if there is a train or metro backbone existing in the city. Mini-buses can efficiently serve this purpose. Similarly, in village/district routes too dynamic calibration needs to happen based on the real-time demand. Binding of the local bodies has to be had for bearing atleast a minimum of the costs. This, for city routes has to be a municipal body as subsidies are extended to that city dwellers. Long-distance travels of beyond two hours need to be commercially charged on a viability basis. Scope for differentiation exists here, compared to the other modes that are available like private cars/jeeps. CNG-based buses and EVs in future should occupy the fleet, so that one can showcase definite benefits on the sustainability front.

Information empowers – Smart, cause serving app and sharp dashboards for the customer and larger stakeholder purposes need to be in place and maintained to be efficient and operational. Simple GPS devices can help with the coordinates of the vehicles and updates need to be obtained every two minutes in urban cases and every ten minutes in non-urban and inter-city routes. This shall have the additional benefit of generating alerts too in case of any abnormal situations or accidents. The information and the disseminating means shall promote the visibility to the tracked metrics and raise the bar progressively for various stakeholders. Some of the useful metrics are highlighted here.

Percentage fleet utilization in terms of “vehicle-hour” shall help and boost maintenance efforts and facilitate quicker turnover. Each day needs to be benchmarked to last month average, last quarter average and last year average to help appreciate whether that day is “contributing” positively or negatively to the moving average. The unit of analysis (UoA) needs to be the depot. Occupancy in “seat-kilometre” metric on similar fashion helps improve route recalibration and dynamic routing, where required. The UoA needs to be the trip, “route-day”, and on the aggregate level, the depot. Manpower deployment models need to be relooked at and optimizing attempted from a larger perspective. Instead of fixed driver for the full trip model which is currently followed at all places, there can be the shorter assignment of duties. Operationalized, after a four-hour drive followed by a reasonable break of an hour or so, the driver can be sent back in the direction of their “base depot”, driving in the reverse direction. This improves morale and reduces absenteeism is the untested hypothesis offered here.

For commercial operational performance tracking. often the “depot” is used as the UoA. It has the advantage of fixing the administrative accountability with depot manager being the head. However, certain short-charging happens with synergy getting missed out. For instance, often the bus station which is under the control of a particular depot won’t allow the buses belonging to other depots to use the platforms. The “other depot” buses are forced parking at a less-visible place so that the primary choice available to the passengers are the buses operated by the depot. This conflict happens in urban instances too where multiple municipal operators do offer overlapping services. For instance, if Navi Mumbai municipal transport bus when enters Thane bus station, it may not be allowed to wait long as it may eat into the revenues of Thane municipal transport buses. Understandable one may say, but upon reflection what is happening is under-optimizing from a larger perspective is the clear feeling one gets. This is the shortcoming of and problem emanating from defining a “lower-level” unit of analysis. Optimization can be applied for any dimension and even in the case of UoA choice.

Deep desire or a wish against the tide? – United we stand is often quoted in a different context. But it is equally true in state-owned RTC driven transport too. Synergies exist, the efficiency of mass transport always helps the goals of ecological interest and sustainability. Road safety improves with lesser number of vehicles on road, these have greater visibility causing the lower number of accidents, and additionally, road space utilization per capita improves. Fuel used per capita of kilometer travel improves significantly. When so many benefits exist for larger causes including the planet and people, the very definition of profit for such organizations have to be more broad-based and “inclusive”. The social and ecological benefits need to be captured and factored realistically into the economic profits. The projected viability of the services vastly improves with this. Additionally, ethical frameworks need to be applied and tracked with rigour, to shield the public interested organizations from getting leeched by vested private interests. May we pray that “Asatoma Sadgamaya”.

May the benign big picture drive the agenda and professionally competent are allowed to be in the “driver’s seat” of management. It is the deep desire from a sustainability perspective and doesn’t want to brushed off as a wish that is against the tide. The recent tides are of pursuing conveniently suiting private interests and comprise of fashionable jargon given practices that are essentially bad management from a holistic perspective. May the tide change in the times to come, and turn to good.