Fare panel on Metro-1: Slash rates, look at non-fare revenue
The second fare fixation committee (FFC) report on the Metro-1 (Versova-Andheri-Ghatkopar) line has recommended a tariff cut on two slabs. The committee has also rejected several of Mumbai Metro One Private Ltd (MMOPL)’s reasons to increase fares and asked it to look at innovative ways of increasing non-fare revenue.
In a March 2019 report (a copy of which HT obtained via an RTI query), the three-member committee has retained the fare of Rs. 10 for 0-2km and Rs. 20 for 2-5km. However, it has recommended reducing Rs. 5 for 5-6 km (from Rs. 30 to Rs. 25 ) and above 9 km (from Rs. 40 to Rs. 35). It has also added a new slab of 6-9km (Rs. 30). “The committee thinks it cannot be a matter of debate that the focal point for recommendation of fare structures is the rider, for whom the Metro rail service is meant, designed and constructed,” stated the report. An MMOPL spokesperson said, “The Bombay High Court has stayed the FFC report and permitted MMOPL to continue charging the existing fares till further order.”
A senior official from MMRDA said the fares were not implemented owing to the election code of conduct. The court has scheduled further hearing of the case on August 2. “Until then, the existing fares will continue,” the official said.
Under section 34 of the Central Metro Act, 2002, the recommendations made by the FFC shall be binding on the Metro administration.
In its application to revise fares, MMOPL proposed an upward revision for a period of five years with the addition of a new slab. The committee has not accepted many of MMOPL’s reasons for increasing the fares. For instance, while MMOPL has stated that Metro rail systems across the world follows the “commercial principle” for tariff determination, whereby the operational costs should be met with revenue, the committee has rejected the submission, stating that public transport serves a social purpose, where affordability is the most important factor. It has also noted that the Metro is largely used by the economically weaker sections of the society.
The committee has also rejected MMOPL’s “contention” that on an average, the transport budget of a household would work out to be Rs66,000 per annum in the state. “The contention of MMOPL on the ability of the riders to pay for higher fares based on the average per capita income of the state of Maharashtra is found by us to be too generalised and simplistic,” the report stated.
The MMOPL’s grounds on increasing fares because of another reason — reduction in the viability gap fund (accorded by the Mumbai Metropolitan Region Development Authority) from Rs1,251 crore to Rs650 crore — has also been rejected by the committee, stating that it was a commercial call taken during negotiations for procuring the contract.
The committee has asked MMOPL “to seriously consider scaling down the operating expenses by taking appropriate measures for an effective economy.”
The central government set up a three-member committee in November 2018 after the first FFC report was set aside by the Bombay high court in December 2017. The first committee fixed the fare in the range of Rs10 to Rs110. Following the report submitted by the second committee in March 2019, MMOPL challenged the panel’s report in the high court.
The committee, in its 40-page report, has compared the fares with Delhi, Chennai, Kochi and Hyderabad Metros, which follow a fare structure similar to MMOPL’s current fares. The committee has also recommended looking at innovative measures to improve non-fare revenue and possibilities of increasing revenue from commercial exploitation of space.