The Indian Economy Blog

April 27, 2007

Don’t Make It Affordable

Filed under: Infrastructure — Karthik @ 10:28 pm

The Bangalore Metropolitan Transport Corporation (BMTC), in a recent move, has slashed the fares of the super luxury air-conditioned Volvo buses. The minimum fare, which had been raised to Rs. 12, has now been moved back to Rs. 10. It has been mentioned that the reduction in fares is in order to make high quality transport more accessible to the common man.

My argument here is that the Volvo fares should be kept high, and out of reach of the “common man”. While this sounds extremely elitist and snobbish, I believe that high fares are essential for the Volvos to serve their purpose.

Let us start by looking at the Pushpak, the BMTC’s previous attempt at premium transportation. Semi-luxury Pushpak services were introduced more than a decade ago, with fares being double the “ordinary” fares. However, what followed was a number of attempts to make it more “affordable”, and currently they are only marginally more expensive. And they are as crowded, if not more, than ordinary buses.

Next, let us look at the Mumbai local trains. There are a couple of first class compartments in each train, and it is not tough to notice that they are almost always as crowded as the general class. A closer look reveals it’s a mostly middle class crowd, who can’t really afford to travel by cab. First class is quite “affordable” (around Rs. 1000 a month). Accessible to the common man? Yes. Taking cars off the road? Sorry.

The main aim for the Volvos, I believe, must be to take cars off the road, and thus free up valuable space on congested peak hour roads. In other words, they should target people who otherwise travel to work by car, and offer good enough service for them to make the switch. And for this to happen, I believe there are a few things that need to be ensured – frequency, efficiency, cleanliness, comfort, speed and – most importantly – exclusivity.

I know this sounds politically incorrect, but the bare fact is that the upper middle class doesn’t want to rub shoulders (both figuratively and literally) with the great Indian unwashed. She doesn’t mind public transport as long as she is traveling with people similar to her; and she is willing to pay a premium for it. She may not mind standing in a crowded bus full of people like her. However, sitting next to a laborer is not done. In other words, she is willing to pay more to keep out the common man. What the BMTC needs to do is to charge enough to enable this.

Making comfortable travel accessible to public is a noble intention. However, the Volvos should be kept out of that business. Have a premium ordinary class by all means, maybe by fitting some Pushpaks with ACs. Price it low enough to make it accessible. However, please have a “first class” that is exclusive. Else the roads will remain congested.


  1. The main aim for the Volvos, I believe, must be to take cars off the road,

    Though this is a nice politically stirring reasoning, I think Metros Rails would be able to do this better. And yes, this is some time in the long future, but I guess that will the more suitable solution for taking cars off the road.

    And more importantly, I think Volvos are becoming popular due to the ads on those buses and hence the cost cutting and I won’t be surprised if this perspective wouldn’t have even occurred to the govt.

    Comment by Rohith V — April 27, 2007 @ 11:47 pm

  2. A very honest point of view!

    But who decides the cut-off affordability level? The level of exclusivity?

    Comment by Perakath — April 28, 2007 @ 1:05 am

  3. Rates should be as high as possible, so long as maximum utilization of capacity is ensured (were it another country I would say safe utilization). This will maximize profits, allowing more buses to be on the road.

    The primary purpose of the buses is to provide low cost transportation of labor. That they reduce the number of cars on the road, is an important but secondary benefit.

    Besides, taking 3 or 4 scooters off the road is probably the equivalent of removing 1 car. Its also probably more environmentally friendly.

    Comment by Patel — April 28, 2007 @ 1:49 am

  4. Great post and good logic Karthik.
    - If the purpose of the Volvo buses is for environmental and maximizing road efficiency reasons: yes, give the motorist a good reason/value to ride the Volvo buses and he/she will be willing to pay a premium. Analyzing price elasticity will help figure out the premium-ticket price.

    - If the purpose of the Volvo buses to just to enhance the travel experience for the “ordinary” traveler, who would take the bus irrespective of the added comforts then it makes no economic sense, only because there is difference between nice-to-haves and must-haves. Must-have examples: laying better roads, fixing the drainage system, etc.

    Comment by Divya — April 28, 2007 @ 3:23 am

  5. I dont go with this idea. The price must be set economically and if Rs.10 can get the government enough profits, then get a boat load of them and make enormous profits and use them for bettering infrastructure.

    Fundamentally, the problem is there are not enough buses and trains. HEnce, people are shellig so much money. So, what is needed is more buses and not more fares.

    Comment by Balaji Viswanathan — April 28, 2007 @ 4:26 am

  6. There are two conflicting conditions here. For a Volvo service to take cars off the roads, it should be frequent and have a big network. However, a big network does not lend itself to higher fares. To have a big network, fares must be lower.

    In my opinion, money would be more effectively spent on improving the current bus service. Increasing number of buses and the frequency will automatically lead to a reduction in rush and will cause the car owners to use the buses.

    Comment by rishi — April 28, 2007 @ 4:33 am

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  8. In this case, I don’t think it is accurate to assume that BMTC’s price cut could result in reduction in the quality of service or make it less premium. Any such conclusion would require more information and research. And there is nothing politically incorrect about existance of services that would cater to different classes (based on willingness to pay). What level of prices is optimum and just is a genuine concern. It certainly is wise to target personal automobile users to take mass transport system suited to their needs and affordability. If a public transport system exists, it is reasonable to expect the provider to take into account the comfort levels of the public and to provide matching services.

    Comment by Sridhar — April 28, 2007 @ 8:49 am

  9. If there is only govt buses, then there can be no change. Private
    buses must be allowed freely and private parking bays too. Govt
    monopoly should end (like in BSNL)

    Comment by K.R.Athiyaman — April 28, 2007 @ 9:47 am

  10. “..frequency, efficiency, cleanliness, comfort, speed and – most importantly – exclusivity.”

    In other countries, where people routinely use public transport and not cars, there is one other attribute that does not feature in your list – RELIABILITY i.e. the bus will turn up when it is expected to, as many times an hour as it is expected to, and it has the capacity that it should have to serve that route.

    Comment by Shefaly — April 28, 2007 @ 12:03 pm

  11. This blog post omits an important fact: The Volvo buses were making a loss of 1.89 crore. (For perspective, BMTC made a profit of 96.38 crore in FY ’06-’07. Source)

    The move to reduce fares is probably due to that. Their Chief Traffic Manager says:
    “Moreover, the response to the Volvos has not been up to the mark — mainly due to its high fare. So, we slashed the fare by around 10 per cent recently.”

    I agree with Rohit above that Metro offers real hope to get cars off the road (though it’s a long way away). BMTC should immediately add many more low cost buses to decrease 2-wheeler usage. Already a whole generation has grown up relying completely on 2-wheelers who’ll find it hard to let go. It is futile targetting the richest of them, who are the IT workers.

    At best, the Volvo can be a publicity exercise. With the Govt’s attitude like above and known execution inefficiencies, it’s bad economics to waste taxpayers money on running this service. If they persist in this loss-making venture, class rivalries will be aggravated. E.g: Read this comment in full.

    Comment by Pramod Biligiri — April 28, 2007 @ 5:39 pm

  12. A very original perspective. Such kind of organized mass transport is probably the answer for our congested cities. The next in step could be Volvo pooling, akin to car pooling. People from same locality going to work in another common one, instead of each using their personal vehicles, could use a common transport equipped with the required premium facilities.

    This could be emulated first in cities like Bangalore, Hyderabad, Kolkata where large IT companies drawing executvies from same residential complexes are commonly seen.

    Comment by Aditya — April 28, 2007 @ 8:17 pm

  13. @Rohith

    Metro Rail would do a lot of work in transporting people, no doubt about that. however, my concern is that it’ll take ages to implement. till then we need something. also, we need a first class in metro! an expensive first class


    Determination of the appropriate cutoff is an interesting problem. On one hand it should be high enough to keep out the “labourer” but low enough that enough people still travel.

    To reiterate, the Volvos shouldn’t be seen as an instrument to make money.
    Actually I’m not sure if taking scooters off will have a major impact on traffic jams, since they just fill up whatever space is left available by cars. it’s the cars which cause most damage on road.

    PS: Can some transpo engineer tell me the usual passenger car unit value for a scooter?

    Comment by Karthik — April 28, 2007 @ 10:56 pm

  14. @divya



    more buses are nice, but we need space on the roads for them. which means we need to keep the cars in the garages. yes, once we get a certain number of cars off, we can increase investment and “crowd out” a few of the rest of the cars


    more buses don’t solve the problem. still, the IT professional won’t want to sit next to a labourer. segmentation is necessary.

    Comment by Karthik — April 28, 2007 @ 11:03 pm

  15. @athiyaman
    i don’t know but i’m not a big fan of private buses. they cause much more damage to the roads than service. i’ve seen the private buses going towards hosur and also the blue line buses in delhi. they stop arbitrarily, indefinitely, all over the place. big cause of indiscipline.

    sorry i missed that out, or maybe i’ll defend myself saying “frequency” covers that. yeah, that is definitely a factor.

    Comment by Karthik — April 28, 2007 @ 11:06 pm

  16. Shefaly’s comment is very true.

    I think a major reason why buses are not considered a realistic option by many “upper class” users is because of the fuss and bother involved in walking to a bus stop, hanging around there, trying to find out the number of the bus that goes where you want to, not knowing whether you’ll get a bus back at the time you want to…

    There is also great wastage of time, both before boarding and during the journey – the terrible waits at major stops where the conductors try to pack in as many people as they can find, and the drivers don’t move until passengers have begun yelling “Chalo yaar bhehn****!”

    It’s SO much more convenient to use your own transport, if you have it. Apart from the pleasure of driving, of course :)

    Although I can attest first-hand that the Metro line to the University in Delhi has resulted in many many students leaving their cars at home, or at the Metro station closest to their house. In this respect, I think, as Rohith said, Metros are a more realistic option for the upper classes.

    Comment by Perakath — April 28, 2007 @ 11:13 pm

  17. What is a Passenger Car Unit value?

    Comment by Perakath — April 28, 2007 @ 11:17 pm

  18. I think we are looking at a fix. The article is talking of two things, reduction in fare in volvo’s and people switching to public transport. First of all cars are nothing exclusive to rich. Anyone with 4 to 6 thousand to spare a month owns a car today. Remember we have all the first time buyers of cars today, we still have not reached a stage where the major business cars do are from upgrades or second cars in house. So the logic of anything to reduce the cars on roads make no meaning. That will not happen. Any substitute to that will not help either. We need more roads, flyovers, parking slots. We need infrastructure, more cars is a reality.

    Quality of public transport for those who cannot afford cars should improve. So Volvos are that upgrade. In fact why not put AC in all public transport busses or make all public transport busses AC enabled. For those who dont want to ride on busses, for all reasons go buy cars. but the idea given in this article is narrow minded thinking. It is thinking for a group of people. It does no help to address the issue.

    Comment by Suresh Kumar — April 28, 2007 @ 11:34 pm

  19. Lack of sufficent and good buses forces people to use private vehicles
    and cars. if there was free competition by pvt buses and no licese
    raj. there would be a better system and less need for using pvt vehicles. Pls read about the chaos in US trucking industry until
    Reagan abolished the ICC which controlled ‘permits’ for trucks within
    US. same with airlines and airfares. Milton Freidman has written
    about this mess in his classic “Free to Choose”
    Free competition has energised BSNL and made is more efficent and
    less corrupt when compared to say 1985..

    Comment by K.R.Athiyaman — April 30, 2007 @ 8:56 am

  20. Urban City transportation has to be detailed, planned and in full co operation with other public/private organizations that have their commuter rail/bus/taxi etc in service. I see some folks raising issues about buses etc not arriving on time and or indefinite stops and or crowding of buses. These are prevailing issues in Indian cities, because there is no system in place. However, when there is a system in place, this is how it would work. I am going to use a real time example of a public transport system in place here in the Bay Area also known as the Silicon Valley in Sunny California.

    So the journey is from San Francisco to San Jose.

    My House is near San Francisco State University.

    6:40 Am – Leave home, walk 4 blocks, about 8 minute walk to the Muni Station and or take the 6:35 am bus, a block away from my house, that drops me off at the Muni station in 5 minutes.. Muni is a light rail, San Francisco Municipal Transport Agency run Light Rail/Tram service.

    6:55 Am – Board the Muni and travel to the Embarcadero Center in Downtown San Francisco. Travel time 30 mins

    7:40 Am – Board the BART [Bay Area Rapid Transport] Metro rail to San Francisco Airport. Bart is A high speed Metro, which travels from San Francisco to South and East Bay Area. Travel time to the airport 35 mins.

    8:35 Am – Board the Downtown San Jose CALTRAIN train, from the San Francisco Airport. Caltrain is another train public train service with services San Francisco to Gilroy, while having stops in multiple places, including San Jose.

    9:00 Am – Arrive in San Jose Downtown.

    Take the VTA [Valley Transport Authority] bus or light rail to your next location

    The purpose of this was to demonstrate, how an actual system which combines multiple agencies, both public and private, work in perfect symphony on a daily basis. As you can clearly see, that multiple public/private Transport authorities work together to create a route plan for any possible location in San Francisco – San Jose Area. Btway a car ride from San Francisco to San Jose during peak hours is 1 Hour drive time, a total of about 50 miles.

    The timings of these light rails, metro and bus are done accordingly and in conjunction with each other. All these public/private agencies work out a yearly schedule. They also work out special schedules for days, when there is a sporting event, a political convention, a parade or celebration. Also, the Light Rail and the Metro while cutting and or crossing through city streets have automatic green signals for them, so that they never get stuck in any kind of traffic jams, this keeps them on time all the time. On top of all this, if there is any sort of delay and or accident and or power cut on the Metro Line for example, the chain of commands and information is passed on immediately to all the agencies, including public media broadcastings, both Radio and Local news channels.

    This is exactly how a system would also work in any Indian city as well. A commuter network or Metro, Light Rail, Bus and private company buses. The company or “private luxury” bus in this situation can ferry employees from a big/central “Bus Stop” of that particular region, to the individual company couple miles away.

    Comment by Chronicc — April 30, 2007 @ 1:28 pm

  21. I just finish a blog post on the top three U.S. hedge fund managers making enough money a day to be able to afford a half hour Soyuz spaceflight commute to Asia instead of wasting a day on a jet…and find this post.

    Two worlds indeed.

    Comment by alphie — April 30, 2007 @ 3:21 pm

  22. the logic expressed by the “autor” parallels what happens in island of well-being amidst bengaloresque squalor, poverty and desperation..
    however, viability of this remains a question..
    Exclusive buses w/exclusive environment are out in the front in contrast to the closeted display of excesses evident in plush hotels and homes kept hidden by baniaesque zeal so as not to invite wrath from hurting Murugans…
    Of course, such hubris is often marked by peak of the cycle.

    Comment by andiron — April 30, 2007 @ 4:57 pm

  23. [...] [...]

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  24. A good transport policy is a seamless ‘multi-modal transport policy’. An ideal system is to be found in Switzerland, where time-tables for trains are coordinated with those for buses, trams, boats and 48-degree trains. Since each link in the chain is reliable – definitely arrives, runs on time – and afforable, one can plan every journey from one’s door step to the destination perfectly. The stops for the various modes of transport never require very long walks (5-10 min is deemed acceptable).

    The example of Delhi Metro cited in one comment above is great. The City is transformed by it! I was pleasantly surprised by it when I first used it in 2005. I am looking forward to its extension to the airport and using it on my future visits.

    Calcutta metro is very good too, clean, affordable, reliable. Alas it is very limited in its coverage and with no connections at either end of the metro, very inconvenient to use. The result? Crowded and unreliable buses, and many cars on the road.

    Bangalore on the other hand has got worse and worse since I lived there, about 12 years ago. Sadly.

    Comment by Shefaly — May 1, 2007 @ 1:53 am

  25. “….the upper middle class doesn’t want to rub shoulders (both figuratively and literally) with the great Indian unwashed.”
    “sitting next to a laborer is not done.” “In other words, she is willing to pay more to keep out the common man. ”

    Amazing!! Some points though.

    1. BMTC is owned by public and its aim is to be beneficial to as large number of people as possible.

    2. Roads are public. Every car that is on road is using public space for private comfort. Nothing wrong in it, but your car for 1 person is slowing down at least 50 people travelling in the bus.

    3. Why should the government reward the car owners for increasing congestion on the road? Why not increase road taxes, have a dual mechanism for pricing of petrol, remove diesel subsidy for private consumption, levy congestion charges on car owners, have dedicated corridors for buses, etcetra?

    4. Let’s assume, Iam a labourer. And I say the same thing about the IT professional, that they should be devoid of availing public services, including roads.

    5. Iam an IT professional and I travel extensively by bus and metro.

    Comment by Anoop Saha — May 1, 2007 @ 10:45 am

  26. “….the upper middle class doesn’t want to rub shoulders (both figuratively and literally) with the great Indian unwashed.”
    “sitting next to a laborer is not done.” “In other words, she is willing to pay more to keep out the common man. ”

    Seriously.. I dont think this reflects the mind of “upper middle class”!!..Its the general comfort of the journey that matters more.. Stuck hours in traffic sitting in your own car doesnt make life any simpler… As for the great indian unwashed.. Rules and monitoring methods should be in place to keep the buses clean and well maintained.. A few hours beside a labourer isnt going to hurt one much… afterall, I do believe we are decades out of the “untouchability” era… !

    Comment by Such — May 3, 2007 @ 3:00 pm

  27. That was a great piece of writing and I must I say you make a lot of sense. I recently started travelling frequently by volvos and mind you, though Im grateful for the price slashes, nowadays volvos really dont feel the same anymore…there are a lot more people who are standing and often during the rush hour, they end up becoming as crowded as any other bus. Not really worth the extra cash during those periods.

    That suggestion of yours to modify pushpaks is interesting. Ive travelled on such AC buses in Bombay and it does seem a viable option. But it might become TOO viable and volvos might end up becoming largely empty resulting in losses and volvos being taken off the road…what do you think?

    Comment by Amogh — May 10, 2007 @ 11:54 pm

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