Goodbye to cooperative federalism?

The spat over the Delhi Metro fare hike shows how the Centre and the Delhi government refused to deal with the central issues of governance

An aspect that got ignored during the controversy over last week’s steep increase in Delhi Metro rail fares was the abject manner in which principles of cooperative federalism were brazenly undermined. Even as ministers of the Centre and the Delhi government were engaged in a public spat over the question of a 25-100 per cent fare increase in two phases, it became clear that they were only trying to score political points against each other. Neither of them addressed the central issues underlying what was certainly a steep increase in the fares of Delhi Metro that transported over three million passengers daily across the National Capital Region of Delhi.

The question that nobody is answering is who should be held liable for not allowing Delhi Metro(a 50:50 joint venture between the Centre and the Delhi government) to revise fares in accordance with its audited cost increases. The last fare revision of 33-36 per cent was done in 2009 — the third such exercise since Delhi Metro started its services in 2002. The previous fare increases were announced in 2006 (by 14 to 46 per cent) and 2004 (by 7 to 20 per cent). Why was there a long gap of eight years before the fourth revision took place?

The management of Delhi Metro has been asking for a fare revision for several years. According to a Delhi Metro official in 2015, at least three requests for setting up a fare fixing committee were made in the previous few years, but no action was taken. It was only in May 2016 that the fourth fare fixing committee was set up. The law mandates that the committee submit its recommendations within three months. But the committee was granted an extension of three months to complete its work. Then the Delhi Metro management took its own time to implement the first phase of the fare increase some months later in May 2017, followed by the second phase on October 10, 2017.

Thus, delays in announcing the fourth round of fare hike took place at all levels — the Centre, the Committee and the Delhi Metro management. Assuming that a new fare fixing committee should have been set up by 2011, two years after the previous one, the Manmohan Singh government should take the blame for not taking action on this front for about three years. The Narendra Modi government, too, sat on it for two years before setting up the committee. The committee took longer than the mandated three months to finalise its report. The Delhi Metro management took some months to enforce the fare increase.

On top of that, the Delhi government opposed the idea of the delayed fare increase. The Union government retorted with a demand that if the Delhi government wished the fare hike to be deferred, it must shell out Rs 3,000 crore annually for the next five years. The Delhi government suggested that it could provide half the amount sought, but that it be allowed to take over the management of Delhi Metro. 

There was no dialogue between the Centre and the state to understand the nature of the problem and resolve it, as would be expected of a government that swears by cooperative federalism. The latest fare increase has been enforced already and there is no immediate crisis, though there are some protests and the ridership has declined a bit. But what should be done to prevent a repeat of what happened now?

One, amend the law that allows only the Centre to set up a fare fixing committee “from time to time”. Why shouldn’t the amended law state that every two years, there should be a fare review by a committee, whose recommendations already are binding on the Delhi Metro management? Why leave it to the Centre’s volition?

Two, take a closer look at the fare increases and examine options that could be an alternative to a revision. In the last 15 years of its operations, Delhi Metro’s lowest and highest fares have risen from Rs 5 to Rs 10 and from Rs 14 to Rs 60, respectively. The lowest fare rise is below the average retail inflation in this period, while the highest fare increase is a little over the change in the consumer price index. Delhi Metro’s costs, too, have risen during this period, turning it into a loss-making enterprise. 

If fare hikes are not favoured, an alternative to delaying a decision is to ask the Centre and the Delhi government to subsidise Delhi Metro to help it recover its costs, maintain service quality and implement expansion plans. A better option is to follow the advice of the first fare fixing committee: Revise fares by five per cent every two years.