India’s metro rail systems should become financially sustainable

livemint.com:

₹90,000 crore has been released by the government for these projects. While metro rail systems have raised the bar for public transport quality, they are expensive and their financial performance and patronage are not impressive. The existing revenue streams of most, including large and mature ones, are unable to meet their total expenses.

The large financial losses incurred by metro systems may soon start to outweigh their environmental and social benefits. A research paper by The Infravision Foundation (TIF) and IIM-Ahmedabad recommends a comprehensive institutional and policy framework to ensure financial sustainability that can guarantee continued political and social support, and help make sure these systems can effectively deliver on their goals. While the selection of an appropriate transport system for a city is a separate issue, and metro projects must stand up to far more scrutiny, as TIF’s earlier research has highlighted, ensuring the satisfactory financial performance of existing systems is essential.

The key is to regularly set appropriate fares, boost non-fare revenues and promote ridership. Non-fare revenue is the revenue generated by any means other than inflows from travel tickets (like parking charges, advertisements and levies). Indian metro rail systems suffer from a lack of periodic fare updates, leading to gradual erosion of the real value of fares, plummeting real revenues, increasing subsidy requirements and sudden large fare hikes after long gaps.