The Hindu : Front Page : Increase in RTC bus fares proposed by Government

Online edition of India's National Newspaper
Wednesday, Jan 11, 2006

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Increase in RTC bus fares proposed by Government

N. Rahul

Move to bail the corporation out of the red

HYDERABAD: The State Government has set the ball rolling to hike the fares of Andhra Pradesh State Road Transport Corporation (RTC) buses in a bid to bail the organisation out of the red.

A formal clearance was being sought from Chief Minister Y.S. Rajasekhara Reddy on Tuesday to permit the RTC management to fix the new fares and help it tide over the financial crisis.

A top Government official told The Hindu that the plans to restructure the fares had concretised.

Sources said the plan was to exempt ordinary services in the rural areas and distances below 35 km from the fare hike. The fares would be increased in respect of all other services.

Government initiative

The RTC management was pleasantly surprised at the initiative taken by the Government without its asking for it.

Another senior official said this was in sharp contrast earlier to several proposals made by the management only to be turned down by the Government.

He, however, could not comprehend the logic in exempting ordinary services in the rural areas from the fare hike as it was this sector which contributed almost 60 per cent to the revenue of the organisation.

Of a total fleet of 19,600, the RTC runs 12,000 ordinary buses-- nearly half of them in the rural areas -- ferrying 75 lakh passengers daily.

It was in February 2003 that the RTC last effected a fare hike which was 6 to 7 per cent across the board on all services.

Justified

The proposed increase in fares is sought to be justified on the ground that the price of diesel had increased from Rs. 21 to Rs. 34 a litre during these three years. The additional burden on the corporation due to the last two hikes alone (in June and September 2005) was Rs. 164 crores.

Debt trap

In addition, the cost of tyres and spare parts had gone up. Above all, the APSRTC stands in the highest tax bracket under Value Added Tax.

For 30 years, it has paid 7 per cent sales tax but it is now shelling down 12.5 per cent.

Moreover, it is caught in a debt trap and is resorting to huge borrowings to repay debts,which stand at Rs. 1,200 crores now.

"We will again be borrowing for meeting salary bill and clearing dues," an official said.

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