The hike in Delhi Metro fares looks inevitable. The Centre on Saturday told Delhi Chief Minister Arvind Kejriwal that his Government would need to pay Rs 3,000 crore annually for five years if it wants to stop the proposed increase in metro fares from October 10, that has been recommended by the Fourth Fare Fixation Committee (FFC).
Responding to Kejriwal’s letter of September 29, requesting the Central Government to put the metro fare hike on hold, Union Housing and Urban Affairs Minister Hardeep Singh Puri also said that the provisions of the Metro Railways (Operations and Maintenance) Act, 2002, do not allow the Centre to stop any fare hike.
Puri noted that the alternative to stopping the fare hike was to provide to the DMRC grants-in-aid every year over the next five years, starting from 2017-18 till 2021-22, which would be Rs 3,040 crore, Rs 3,616 crore, Rs 3,318 crore, Rs 3,150 crore and Rs 2,980 crore, respectively.
“In case the Delhi Government agrees to provide the grants-in-aid to Delhi Metro, then another Fare Fixation Committee may be constituted which may also examine the financial viability of Delhi Metro,” Puri said in his note to Kejriwal.
“The committee’s recommendations are binding on the Metro Rail Administration as per the provisions of Section-37 of this Act. Neither the Central Government nor the State Government or even the Board of the company has legal power to change the recommendations made by the FFC,” Puri clarified.
The grants-in-aid would be needed to pay off the loan taken from the Japan International Cooperation Agency (JICA), and also towards depreciation for replacements and operational expenses with no savings to Delhi Metro. Puri pointed out that as per the Metro Guidelines, the operational loss is the responsibility of the State Government.
Puri said, “Your suggestion that this Ministry direct that the fare increase be kept on hold overlooks the fact the Central Government does not have any such authority. Tampering with the recommendations of FFC is legally untenable. Your suggestions and assertions contained therein (in the letter) in respect of the recommendations of the Fourth FFC were found to be both misleading and factually incorrect.”
Referring to the last metro fare hike suggested by the Third FFC that came into effect in 2009, Puri clarified that the Fourth FFC recommended the fare hike, coming after an extended gap of seven-and-a-half years, to be staggered into two instalments, of which the first one came into force immediately in May 2017 and the second increase would come into force from this month. “Hence, it would be wrong to claim that there were two increases in fares in a short period of five months,” Puri stressed.
Regarding the cap on fare hike, Puri said, “FFC has recommended a cap of 7 percent for annual fare rise commencing from January, 2019 and t is incorrect to apply this yardstick for fare hike under consideration seven and a half years since last fare revision.”
Based on the factual information furnished by Delhi Metro regarding fare hikes in the past, Puri said the fare hike over the seven years between 2002 and 2009 was of the order of 112 percent while the revision recommended by the fourth FFC for the seven and a half years between 2009 and 2017 comes to only 91 percent.
Regarding Kejriwal’s suggestion that Delhi Metro needs to improve its productivity, Delhi Metro in their written response forwarded to the Chief Minister stated that the Fourth FFC recommended the Productivity Factor (PF) as 0 percent for the present and the next FFC may consider a suitable percentage of PF on the line of Hong Kong Metro. In respect of Hong Kong Metro also, the PF was kept at 0 per cent initially and the new formula came into force from 2013 onwards, it said.
Delhi Metro also furnished the details of efforts for non-fare revenue mobilisation and said the FFC report factored in such mobilisation of the order of Rs 340 cr to Rs 636 cr per year during 2017-18 to 2021-22, which comes to about 20 percent of the total revenue of the company.
Puri expressed concern over a 15-month delay in the completion of Phase-III of Delhi Metro and the Phase-IV running behind schedule by two and a half years on account of inaction by the Delhi Government. He said the delay in respect of Phase-IV is depriving about 40 lakh people of Delhi of the benefits of metro services besides denting the much needed efforts to reduce congestion and pollution in the national Capital.