 "FinMin announced the govt will open road transport in passenger segment to private sector")
Finance Minister Arun Jaitley in the Union Budget 2016-17, announced the government will open the road transport in passenger segment to the private sector. The minister said that that the Motor vehicle will be amended to enable entrepreneurship in the transport sector.
The proposed move will not only help in facilitating better commuting for the masses but also give a tough challenge to the State Transport Undertakings(STUs), incurring huge losses and need to be more efficient.For the majority of the STUs it would be question of their their survival considering their poor financial health and for bearing the burden of popular political moves by states.
The Finance Minister did a commendable job, by opening up for the private sector, as in order to survive the STUs have to focus on operational efficiency to survive. . The STUs suffered combined loss of Rs. 7395 crore in 2012-13. In 2012-13, none of the state road transport undertakings (SRTUs) out of the total 55 made profit.
The undertakings time to time demanded that they were in dire needs of funds and expecting financial support by way of grant. According to the sources, they don’t have resources for capital investment which includes increasing the fleet size, modernizing the workshop, deployment of Information Technology in operations etc. As a result operating costs is high. So, opening up it for private sector makes a sense.
Currently, the total number of STUs stands at 55 across the country with a total fleet size of around 1.48 lakh buses. The STUs carries about 70 million passengers daily.
Also, in the last five years the population has grown so the commuters. But, if we compare the overall fleet of STUs its more or less same in the last five years. Since the STUs are incurring losses, the STUs are not in possession to add the fleet.
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Corporations in Madhya Pradesh, Chhattisgarh and Jharkhand have already wound up its transport corporation because of financial stress.
Sources added that majority of the SRTUs are worried about their survival considering their poor financial health and for bearing the burden of popular political moves by states.