MSRTC in for a Rs 250 cr overhaul

The transport division of the state home department is finalising a restructuring plan for the Maharashtra State Road Transport Corporation (MSRTC) that seeks to replace the existing fleet of 2,500 buses with new buses within a year. The cost is expected to be Rs 250 crore.

The state government is considering two options to raise the funds, it is learnt. The first option is that MSRTC would be exempted from sales tax on purchasing high-speed diesel oil for one fiscal.

In 2001-02, MSRTC had purchased diesel for Rs 765 crore that included a sales tax component of Rs 18 crore. The exempted sum may then be used to finance the purchase of new buses after being converted into equity.

The second option is to reduce sales tax rate from the existing 40 per cent to around 20 per cent. The amount thus saved may be used to fund the acquisition of the new fleet. Each bus is expected to cost Rs 10 lakh.

A senior government official said: "The proposal currently being considered was the recast plan chalked out by the Sharad Upasani-headed Maharashtra Board for Restructuring State Enterprises (MBRSE) over a year back. Unfortunately, even though the MBRSE recommendations on closure, disinvestment and restructuring are binding upon the state, its orders have been kept pending by various state departments that have so far failed to forward the proposals before the state cabinet."

He added that a recent letter setting a deadline for all the concerned departments to finalise their proposals and submit them for cabinet sanction seemed to be having the desired result, with MSRTC being the first to come out with a restructuring proposal.

The reluctance on the part of most of these departments to submit their restructuring proposals stems from the fact that a large number of jobs may be lost upon closure, as has been ordered in some cases by MBRSE.

The restructuring of MSRTC will also include the pruning of its 11,200 strong workforce.

Over 62 lakh passengers travel daily utilising the services of MSRTC buses most of which have operated beyond the prescribed years of operational capabilities.

In recent years the number of passengers using the state transport services has come down from 272 crore in 1996-97 to 227 crore in 2001-02 (decline of 16.5 per cent over the period).

Between 1995-96 and 2001-02 the number of buses increased by 6.12 per cent, schedules increased by 10.74 per cent and bus kilometers increased by 12.18 per cent.However, passengers decreased by 14.27 per cent and the load factor declined by 17.84 per cent.

FUND RAISING OPTIONS

• MSRTC would be exempted from sales tax on purchasing high-speed diesel oil for one year. The exempted sum may be used to finance the new buses
• Reduce sales tax rate from 40 per cent to around 20 per cent. The amount saved may be used to fund the acquisition