Shakti scheme for free bus travel: A look at the finances of Karnataka transport bodies

An audit report released by the CAG in February 2023 revealed that the government’s failure to compensate the RTCs for concessions had “impacted the financial position of the Corporations, as the accumulated loss of all the four corporations stood at Rs 4,689.09 crore as at 31 March 2021.”

“The fact however remained that the Corporations extended the concessions as per the decisions/directions of the Government, however, the corresponding expenditure was not reimbursed,” the CAG report on state departments and PSUs said.

Traffic revenue is the main source of income for the RTCs, and revenues have been almost consistently in the red in the past five years, especially during the Covid period. All the four RTCs have incurred losses, except in 2015-16 when the BMTC registered profits and the two years of 2015-16 and 2017-18 when the KSRTC recorded profits, according to the CAG report.

How much will the Shakti scheme cost the RTCs?

With operating costs including the cost of fuel rising and bus fares not hiked for several years, the projected cost of the Shakti scheme of nearly Rs 337 crore per month (at the rate of 41.81 lakh women passengers per day, according to the transport department) and a total of Rs 4,051 crore per annum in concessions is being viewed with concern by the corporations.

The projections suggested that the scheme would result in a cut in annual revenues to the tune of Rs 1,563 crore for the KSRTC, Rs 770 crore for the BMTC, Rs 906 crore for the NWKRTC and Rs 810 crore for the KKRTC.

According to the financial status of the four RTCs for the year 2022-2023, provided by the Chief Public Relations Officer for the KSRTC on the eve of the June 11 launch of the Shakti scheme, the overall traffic revenue of the four at the end of March 2023 was Rs 8,350 crore. The four RTCs registered a combined traffic revenue loss of Rs 4,390 crore due to concessions and other factors.

How much does the government reimburse the RTCs?

The RTCs received Rs 3,606 crore in government subsidies and reimbursements for various schemes in the year 2022-23, one of the highest in recent years. In the Covid years, the state had provided Rs 1,953 crore in 2020-21 and Rs 1,208 crore in 2021-22.

However, they are still running at a loss.

According to the CAG report, the major operational costs for the RTCs are employee cost (44.81 per cent) and fuel cost (31.64 per cent) during 2015-16 to 2020-21. “These costs were recovered by the Corporations mainly through collection of bus fare from the passengers,” said the CAG report.

According to the CAG report, the unrecovered costs of the RTCs have gradually gone up between 2015-16 and 2019-20, with the unrecovered cost per kilometre soaring from Rs 0.3 per kilometre to Rs 13.52 per km for the BMTC.

Although the Karnataka government in 2020 allowed the corporations to revise their tariff in proportion to the increased cost of diesel and employee allowances through an Automatic Fare Adjustment Formula, there has been only one revision in fares affected in February 2020, the CAG report said.

“Audit observed that until 2014-15, the fare was revised annually, the last revision upto that period was made in January 2015. Subsequently, the Corporations did not revise the fare until February 2020. The reasons were not kept on record for non-revision of fare by the Corporations as per AFAF despite increase in cost of operations during five years between 2015 and 2020,” the CAG report said.

“Further, the GoK while approving revision of fare during February 2020, restricted fare increase to 12 per cent against the 15 to 20 per cent hike sought by the corporations,” it said.

What has the government said?

The RTCs have urged that compensation for the revenue losses due to the scheme be reimbursed by the state finance department under CM Siddaramaiah.

“The government is committed to financially supporting the RTCs,” state transport minister R Ramalinga Reddy said at the launch of the Shakti scheme. He said that the government’s decision to allot Shakti cards to women availing the free bus services was intended to smoothen the funds release process by the finance department.

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In the past, the Karnataka government has taken various steps to compensate the RTCs, such as exemption from motor vehicle taxes. Last year, motor vehicle taxes to the tune of Rs 1,505 crore was waived and the corporations were allowed to retain this amount by converting them into equity.