Improving BEST: Making city transportation profitable –Part 1
If Indian urban transport models were considered, the BrihanMumbai Electric Supply & Transport (BEST), Mumbai's bus operator, used to be the best. But today, BEST incurs an operating loss and after-tax loss. The revenues are not enough to cover the operating costs - on every single route. The loss has been widening over the years primarily due to salary increases, fuel cost fluctuations and erratic fare strategy. 
 
Expert solutions aim to imitate strategies from apparent successes like Singapore's Mass Rapid Transit (MRT), Hong Kong's Mass Transit Railway (MTR), London or European cities. Another strategy explored is dedicated lanes or BRTS. Ideas such as congestion pricing, overhead metros, underground metros are floated around as transportation solutions. However, this will not fix Mumbai's transportation woes nor will it make BEST profitable for various reasons. For one, there is no coordination between different modes of transport in Mumbai. Second, the star performing cities are well-planned cities, their transportation systems are coherently designed and translating these learnings to Mumbai may not be easy. Third, despite a lot of innovation none of the public bus systems generate net profits. But a profitable urban bus transport is possible and necessary. So, we need to fix BEST. And as a first step we must understand the realities facing BEST. 
 
What ails BEST?
Firstly, BEST is burdened with diverse and conflicting expectations. We need BEST to be low-cost carrier of masses. At the same time, BEST must help reduce the automobile congestion in Mumbai. It translates into a choice between cheap robustness for former v/s higher priced luxury for later. 
 
Similarly, BEST is burdened with the responsibility to correct the mistakes of planning and policy. Thus, BEST buses need to be higher off the road to survive the Mumbai water logging but also must have low-floor disabled access. The shortcomings of urban planning in Mumbai result in inadequate roads, dispersed populations, and lack of supporting infrastructure such as bus stops. Similarly, BEST acts as feeder to Mumbai suburban rail network (locals), which form the arterial connections. But at railway stations, the frequency of feeder service and frequency of arterial service is seriously mismatched.  This is because of encroachments near the railway stations. Then, BEST also has to overcome the challenges created by lack of law and order. Burning, pelting BEST buses is a regular occurrence at every riot, demonstration or protest. The enormity of the challenge facing BEST is quite unique and requires strategic ingenuity to overcome and BEST's response, to put it kindly, has been lackadaisical.
 
BEST's attempt to solve the problems
BEST has experimented with fare hikes and fare cuts and in both cases incurred losses. At policy levels, BEST is beset with glaring mistakes and half-hearted attempts at improvement. Both have hurt BEST. For example, BEST has a smart-card ticket system, which very few use. There are TV screens - two per bus in most of the buses. If you examine the response from BEST, it has been poorly thought out in some cases, and poorly executed in others. The result, not surprisingly, is that BEST continues to operate at a loss. 
 
In short, the woes of BEST arise from fundamental factors (e.g. Improper route planning), strategic mistakes, (e.g. Fleet composition, erratic deployment of ideas like smart-card solution), operational inefficiencies (e.g. Maintenance problems, revenue management, fuel cost management etc.), environmental challenges (e.g. road conditions, geography of Mumbai), policy inadequacies (e.g. Lack of coordination between railways, traffic police and BEST),  legacy issues (e.g. Manpower costs and deployment), and importantly, the bane of Indian public services - corruption. 
 
Why can't BEST fix itself?
To put it simply, BEST does not know what is going wrong. BEST does not even have a proper reporting framework in place. The standards of reporting of government and government bodies is suspect. As a principle, any entity that uses public fund and is a monopoly must disclose its performance in greater detail than public companies. When you want to hold tax-payers liable for costs, you better serve them with information. BEST must publish detailed performance parameters. Thus, BEST is ailing but there is no consistent data for diagnosis.
 
Can it turn around?
These factors individually are challenging by themselves, but taken together are a case study in complexity. Fixing it is impossible. Well, ALMOST impossible. There are strategies to fix BEST. We will detail these strategies through a RECoRFS examining Revenues, Expenditures, Coordination issues, Route Planning, Fleet composition and Strategy. The first milestone for any public transportation system is operational profitability. The state and city can finance the capital and interest expenditure initially. If these strategies are implemented, BEST can return to operating profitability in 2-3 years. In 2-3 years thereafter, fully profitability can be achieved. It needs energy and political will, but it can be done. In the next few articles we examine the issues facing BEST and the strategies how to fix BEST.
 
Note: We only focus on transportation side of BEST. BEST also has electricity distribution business which is not within the scope of this article. The analysis of BEST is based on financial and operational data from BEST website. 
 
(Rahul Prakash Deodhar is a lawyer, investor and author with experience spanning manufacturing, consulting, investment banking firms. He has advised a wide range of clients including Fortune 500 companies, public and private sector banks, hedge funds and private equity funds among others. He has developed econometric models for demand forecasting in real estate, metals, airlines, and shipping. He designed MIS and planning and budgeting systems, sales networks, and operations for large corporates. He has worked with Aditya Birla Group, CRISIL and Morgan Stanley. He is author of two books – Subverting Capitalism and Democracy and Understanding Firms. He can be reached at [email protected] or at his website www.rahuldeodhar.com.)
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    COMMENTS

    Aatush

    2 years ago

    One area where BEST could improve is by providing the commuter an estimated wait time for the bus. They can always ask Google for a solutions using their Google maps, just like Uber used it all over the world. That would be a very cost effective and quick solution with over burdening the citizens.

    S A Narayan

    2 years ago

    Good appreciation of the issues facing BEST. Looking forward to the remaining articles.

    Infosys to expand team to fix bugs in GST Network
    Bengaluru, Goods and Services Tax Network vendor and software major Infosys would expand its team to fix bugs in the GSTN, said Group of Ministers (GoM) Chairman Sushil Kumar Modi on Saturday.
     
    "The IT services major (Infosys) told us that it would expand its 100-member team, which runs the GSTN, to fix the bugs or technical glitches in it," Modi, who is the Bihar Finance Minister, told reporters after the third meeting of the GoM here.
     
    The software major has already fixed 18 of the 27 glitches and made them operational though more bugs were cropping up due to changes the GST Council makes after it meets every time to smoothen the new tax regime.
     
    Infosys won the Rs 1,380 crore contract in 2015 to implement the world's largest digital tax system and maintain its portal for five years.
     
    "Suggestions by the member states at every meeting of the GST Council are creating new functionalities, which the vendor has to incorporate in the Network by tweaking its software platform," said Modi.
     
    Admitting that glitches would continue to crop up to incorporate suggestions or changes sought by the stakeholders, he said the challenge was to resolve the problems soon, given the scale of the GST rollout and its scale.
     
    "The next challenge for the GST Council is the review of invoice matching functionality of the GSTN. The Council has to address the issue at its next meeting in Guwahati on November 10," he added.
     
    Noting that the Council was aware of invoices not matching, he said as more such issues arise, the system would have to be fine-tuned with new functionalities.
     
    Giving an update on the indirect tax returns filed for the last three months across the country, Modi said 56 lakh traders filed for July, 53 lakh for August and 46 lakh for September, adding that though 46 lakh traders filed GSTR1 for July, only 12 lakh have filed their GSTR2 so far with three days left for its filing by October 31.
     
    About 10 lakh dealers registered on the GST network have not filed any tax returns so far due to misconception on their tax liabilities.
     
    "They (dealers) think they do not have tax liabilities to file returns. The commercial tax department in the states have to educate them to file even if they don't have tax liability as required by law," he added.
     
    Besides Modi, other GoM members are Chattisgarh Minister for Commercial Taxes Amar Agarwal, Karnataka Agriculture Minister Krishna Byregowda, Kerala Finance Minister T.M. Thomas Issac and Telengana Finance Minister Etela Rajendar.
     
    GSTN Chairman Ajay Bhushan Pandey and GSTN CEO Prakash Kumar assist the GoM in addressing the glitches, which have marred filing of returns since the new regime was rolled out on July 1.
     
    The GoM was formed on September 12 after several states complained to Union Finance Minister Arun Jaitley, who heads the Council, at its meeting in Hyderabad on September 9 that the glitches were causing severe problems for traders and dealers in filing returns and making payments.
     
    Since July 1, over 23,18,000 new traders registered for theAGST, with 11 lakh dealers under the composition scheme, taking the total number to over 85 lakh, including 62.25 lakh traders who migrated from the old VAT and service tax regime.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Over 2 crore affordable houses to be built in three years
    The government said on Tuesday that a universal affordable housing scheme will give a big boost to the construction industry as 1.2 crore dwellings will be built in three years under PMAY's urban component and another 1.02 crore units under its rural component by March 2019.
     
    "The universal affordable housing for all will give a big boost to the construction industry," Finance Secretary Ashok Lavasa told the media in the presence of Finance Minister Arun Jaitley after a Union Cabinet meeting here.
     
    Lavasa said 1.2 crore units under the Pradhan Mantri Awas Yojana or PMAY (Urban) would entail an expenditure of Rs 1,85,069 crore in three years. 
     
    He said under PMAY (Gramin) 1.02 crore units would be built at a cost of Rs 1,26,795 crore by the Centre and states by March 2019. Lavasa said 51 lakh units will be built this year. 
     
    The government last month announced a new PPP (Private Public Partnership) Policy for Affordable Housing that allows extending central assistance of up to Rs 2.50 lakh per house to be built by private builders even on private land, besides opening up immense potential for private investments in affordable housing projects on government land in urban areas. 
     
    The government had launched "Housing for All" in rural areas in November 2016 under which the government proposes to provide an environment friendly and secure house to every rural household by 2022. 
     
    The government had in June 2015 given its approval for "Housing for All by 2022" for urban areas which provided for rehabilitation of slum dwellers, promotion of affordable housing for weaker sections through credit-linked subsidy and subsidy for beneficiary-led individual house construction or enhancement. 
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    DrSatish Kumar

    2 years ago

    Improving rural infrastructure along with healthcare and education is high priority.

    Vijay Dadoo

    2 years ago

    Excellent move by Government. Are the houses being planned in single floor or multiple floors? If they all are on ground floor and single floor, the extraordinary amount of land required may taker away the land which is available for agriculture, growing vegetables, making schools, making parks, making roads or making industry etc.
    In the writer's views, the houses should be multistory, in cities 5 to 15 floors, in villages around five floors. This will save on the land. Today, in any house, whether small or big, the maximum cost is that of land. The other advantages of multiple floor houses are less cost of construction, less encroachment etc.

    REPLY

    ankit

    In Reply to Vijay Dadoo 2 years ago

    Its not a move, its an announcement.

    Vijay Dadoo

    In Reply to ankit 2 years ago

    Right Sir, but magnitude of the things should be considered right at the time of inception.

    Gopalakrishnan T V

    2 years ago

    Many things have been said but one has to wait and see for the results. Going by the fast three years , nothing good has happened to the lower and middle middle class and the way the tax policies are introduced, the people by and large are losing their incomes and hopes and their trust in Government is fading fast.

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