Best global practices key to solving BEST’s woes

Mumbai: The flash strike by drivers of BEST’s wet lease contractors exposes its lingering unresolved issues. The current agitation is reminiscent of a January 2019 strike by BEST drivers over salary hikes, which notably led to the decision of wet leasing, to cut operational costs and avoid such incidents in the future.

Things have come full circle with BEST buses lying un-operational, and commuters stranded on the road once again. So, what went wrong?

The problems faced by BEST are financial and administrative, and solutions need to address both these issues. BEST Mumbai has two arms: electricity and transportation. The former subsidises losses incurred by the latter, with its Transport Department Loss Recovery (TDLR) surcharge. Following a Supreme Court directive in November 2016, BEST discontinued the TDLR surcharge, after which losses snowballed, and the business model of BEST’s transport services was called into question.

A range of technological and policy solutions practiced by successful transport providers globally needs to be studied, and solutions must be tailored to serve Mumbai’s unique needs. Globally, all public transportation incurs losses, which are offset by viability gap funding.

Below are the examples of how other cities manage their shortfalls and their administration:

Financial models:

1. While taxes on income are collected by national and local governments world-wide, a few cities hypothecate a portion of these taxes to pay for their public transport systems. Louisville and Cincinnati use municipal income taxes to subsidise public transport. In France, a dedicated employment tax known as Versement (‘transport payment’) is used.

2. Funding public transport with local property taxes is common in the US and Canada - in Minneapolis, New York, Boston, Denver, Detroit, Miami, Los Angeles, San Francisco and Vancouver.

3. Many urban centres levy development charges on the residential and business districts to fund public transport. Examples include the Transport Impact Development Fund (TIDF) in San Francisco, ‘density bonusing’ in Portland, Oregon; and the development charge scheme in Hamburg, Germany.

4. All revenue earned from parking fees and traffic fines in Milton Keynes, England, are set aside to support public transport.

Administrative models:

5. Transport for London (TfL) does not call its shortfall as ‘losses’, rather places it under ‘Cost of Service’. TfL has successfully implemented wet leasing on the back of an exhaustive mechanism to evaluate contractor’s performance.

6. The Seoul Metropolitan Government (SMG), through Seoul Public Transport Reform Act 2004, increased its authority over bus service operations while retaining private bus operators. Like London’s TfL, SMG has absolute control over timetables, routes and fares while leasing out its buses on tendering basis. Operators are reimbursed on the basis of ‘total distance of service’ per vehicle. TOPIS (Transport Operation & Information Service) and other tools are used to evaluate the services annually, which forms the basis for incentives and penalties. Another factor which contributes to the success of Seoul’s public transport is the ‘Bus Reform Civic Committee’, comprising four members from civic groups, eight experts, three from bus-related businesses, and five from the city council and related organisations.

Local best practices and what we can learn from them:

1. Till the year 2019, before adopting wet leasing, BEST managed to recover around 64% of its expenditure on the transport services. On the other hand, Mumbai’s suburban rail services operated by the Western and Central Railway zones of Indian Railways recovers only around 37% of its expenses on suburban services, while the rest is cross subsidised by freight movement.

2. Surat became India’s first city to introduce a dedicated Urban Transport Fund (UTF) as recommended in the National Urban Transport Policy, 2006. The UTF recovers vehicle tax, parking charges and license fee for advertisement rights as its revenue components.

3. Tamil Nadu is the first state in the country to legislate the Chennai Unified Multimodal Transport Authority (CUMTA) Act. Designed on the lines of the National Urban Transport Policy, CUMTA will ensure that all modes of public transport in the city are operationally integrated, and commuters are able to conveniently switch between transportation modes.

These examples show the benefits of embedding transport planning in the growth curve of cities. Wet leasing in haste, without such mechanisms in place, has led to the current crisis.

The civic body and BEST over the years have taken a series of decisions reflecting administrative apathy and political myopia. The sale of a bus depot in Kurla in 2006, purchase of faulty AC buses – Cerita in 2009 - and various car-centric initiatives by MCGM have led to this crisis.

The government must urgently recognise public transport as its first priority. Sadly, unlike global cities that boast of some of the best public transport systems, urban governments in India – especially the MCGM – have always confused the issue of public transport not as smooth and speedy movement of people, but of vehicles.

For any restructuring of BEST either in terms of the undertaking’s finances, or operations and management, Mumbai can learn lessons from London and Seoul. These cities have robust and efficient public transport systems which cater to more than 60 lakh commuters daily, with a fleet double the BEST’s.

Unless BEST comes up with a holistic plan to revamp itself, handpicked ad hoc solutions like seeking financial aid from the MCGM, partial outsourcing of services or selling its old fleet will never yield results.

These operational models can be ironically put under the acronym of ‘BEST’: ‘B’ is ‘Branched’ route rationalisation; ‘E’ stands for ‘Exclusive’ bus lanes on major arterial roads in the city; ‘S’ is for the financial support of the ‘State’ or ‘Subsidy’; and ‘T’ means the use of ‘Technology’ to improve service efficiency, predictability, and user-friendliness. Some of the most efficient public transport systems have adhered to these ‘BEST’ principles.

Paresh Rawal is public policy analyst with expertise on mobility issues. He has worked as consultant with CAG - India and ORF- Mumbai.