Efficient and affordable public transport systems are vital for a nation’s social and economic development. State Road Transport Undertakings (SRTUs) in India have played a pivotal role in connecting rural, urban, and intercity regions, making transportation accessible for millions. However, the financial performance of these institutions paints a grim picture. Over the years, SRTUs have been plagued with inefficiencies, leading to massive financial losses and declining service quality. The challenge now is to evolve these organizations into sustainable, customer-centric, and technologically advanced mobility providers.
The persistent challenge
Despite their critical role in India’s public transport ecosystem, SRTUs are grappling with significant issues. According to data from 2018-19, 49 out of 56 SRTUs reported losses, with a combined net loss of INR 17,924.92 crore. Delhi transport corporation alone accounted for INR 5,259 crore in losses, underlining systemic inefficiencies in large metropolitan regions.
One of the primary drivers of these losses is the high-cost structure. Staff salaries account for over 40% of expenses, followed by fuel and lubricant costs at 26%. In contrast, revenue generation has been lackluster, with passenger fares comprising nearly 78% of total revenue, a decrease from 80.82% in 2016-17. Additionally, fare structures have not kept pace with inflation and operational costs, compounding the financial burden.
Operational inefficiencies are another pain point. With an aging fleet, averaging nearly 7 years in 2018-19, maintenance costs are rising while vehicle productivity has declined. On average, buses covered 298.1 km per day in 2018-19, down from 305.62 km in 2016-17. SRTUs are also losing ground to other private operators, whose modern fleets, premium services, and competitive pricing are increasingly preferred by commuters.
Case for reinvention
To remain relevant and financially sustainable, SRTUs must rethink their operating models. The data clearly indicates that traditional approaches are no longer sufficient to address rising costs and changing consumer expectations. A transition to a hybrid model by leveraging public-private partnerships (PPPs) could unlock new opportunities. By focusing on premium offerings and operational efficiency, SRTUs can carve out a competitive advantage while continuing to fulfill their social mandate.
Several examples from the private sector highlight how premium services can be a game changer. Luxury buses offering amenities like Wi-Fi, reclining seats, and seamless booking have gained traction among urban and intercity travellers. SRTUs can replicate this model by collaborating with private players to co-manage premium routes, splitting investments and sharing revenues.
Furthermore, the integration of technology is non-negotiable. SRTUs lag in deploying Intelligent Transport Systems (ITS), which include GPS tracking, electronic ticketing, and online reservation systems. These technologies not only improve passenger convenience but also enhance fleet management and operational efficiency.
Recommendations
To achieve long-term sustainability, SRTUs need to focus on fleet modernization by transitioning to electric and CNG buses, which can lower operational costs and reduce environmental impact. Public private partnerships should be leveraged to introduce premium services on long-distance and high-demand routes, creating value for both commuters and operators. Additionally, SRTUs should implement dynamic fare structures to reflect demand patterns and offset rising operational costs. The adoption of Intelligent Transport Systems (ITS), including real-time tracking and electronic ticketing, will enhance operational efficiency and passenger satisfaction. Finally, regular route rationalization should be undertaken to eliminate loss making operations and ensure optimal resource allocation across high-demand areas.
Conclusion
SRTUs stand at a critical juncture, where inaction will only deepen their financial woes, while proactive reforms can lead them to a path of sustainability. By embracing innovation, adopting technology, and forming strategic partnerships, SRTUs can transform into financially viable organizations that deliver superior services. The opportunity to redefine public transport in India is immense, but it demands bold decisions and a clear vision for the future.
Surya Khurana
Managing Director
FlixBus India