"IT can help STCs achieve 50-60 percent operational efficiency"

Shubhendu Parth and Pragya Gupta | July 14, 2014


PS Ananda Rao, Executive director, ASRTU
Arun Kumar

Set up in 1965, the Association of State Road Transport Undertakings (ASRTU) has been working towards bringing together the state transport
corporations on a common platform to pool their resources and knowledge to help them improve their performance. In an exclusive conversation with Shubhendu Parth and Pragya Gupta, ASRTU executive director PS Ananda Rao talks about the challenges that have plagued the state road transport undertakings and how ICT intervention and policy changes can help them improve their finances and services. Excerpts:


Most state road transport corporations (STCs) in India are struggling with their finances. What ails them?
The government initiated the fuel deregulation regime in January 2013 and the STCs had to bear the brunt of the decision. The impact has been devastating since the new regime encourages use of private transport rather than playing a supportive role to the STCs. Unfortunately, the decision came when Indian public transport was already suffering due to the lack of proper infrastructure, quality vehicles, efficient management and appropriate policies.

Then we have the tax imbalance that needs to be addressed at the earliest. Maharashtra, for example, is charging a very high motor vehicle tax of 17-18 percent on revenue for public transport while Karnataka charges 4-5 percent (4 percent for city operations and 5 percent for rural operations). A lower, uniform tax on revenue for public transport vehicles across the country, or a subsidy for this, can help STCs. There is also the issue of automatic fare revision. We need to have a common fare model for all states and policies for inter-state arrangement for a uniform revenue charging model.
It is important to note that transportation is a state subject and developing public sector transport infrastructure should be part of the state’s welfare activity. The dichotomy is that while a country like India cannot afford private mode of transport, the STCs that are meeting the welfare objective do not get any financial support from the states.

 
So what is the solution for them?

The root cause of the mess that the STCs are in has been the recurring increase in fuel and the manpower costs. Even as STCs are bleeding they have to follow the pay commission matrix for their employees. The third factor is the tyre cost.
The first solution is support from the federal government because the fare box revenue can fulfill only 25 percent of the operational cost. The government of India and the states need to realise that unless a framework for financial viability is created, the STCs will either continue to suffer losses or provide inefficient service.

On their part, the STCs need to understand that they have to bring in more process efficiencies.  Two, they need to improve productivity of the vehicles. All this can be achieved with intelligent management. Third, there is a need to pay attention to planning and scheduling–how effectively men can be deployed for better management of services. Since the highest component of cost is the expenditure on manpower, if STCs can better manage their staff cost, they can make some profits or at least break even.

 
How can the STCs achieve these three objectives?
This is where technology has an important role to play. STCs have to start adopting IT to improve efficiency of operations, which is management of crew and productivity of vehicle. In fact, we already have a proof of concept with BEST in Mumbai and the transport corporation in Mysore for planning and scheduling of staff. ASRTU has worked out an arrangement with the world leaders in this space—the French company Lumiplan and the Australian company Trapeze. These companies are also operating in Los Angeles and San Francisco, and we can replicate the model instead of re-inventing the wheel. Then there is a need for effective management of the vehicles or the fleet and the rolling stock. Most of the STCs do not manage their fleet—the busses efficiently. If we can improve the productivity of vehicles, then we have done it.  This would mean we have attained almost 50-60 percent of the efficiency in the cost of transport operations.  If this is achieved, we can break even and sustain.

 
You mentioned about 50-60 percent improvement in efficiency. How much cost-cutting would it lead to?
Efficiency does not mean cutting down the cost. Instead it means streamlining the cost. About 40 percent of the transport operation cost is fuel and around 30 percent of the expenditure is the staff cost. That means 70 percent of operational cost. If we can effectively manage this 70 percent and bring it down by 15-20 percent, we have done it. Hence, these are the areas where we are pushing for the use of IT.


What are the other challenges that IT can help overcome?
Other key areas that IT can help manage better is the inventory management, fuel management, maintenance management – how effectively the maintenance have to be done, how frequently the busses need to be brought for service so that there is lesser vehicle down time. Can we manage maintenance better to increase the engine and battery life? There is the challenge of improving the life of lights in the busses. Can technology help in all these? While we are pushing for LED lights for busses to ensure longer light life, STCs can adopt intelligent wiring system – the multiplex wiring – which has single wire running across the entire bus and has an intelligent onboard display system that shows which bulb needs to be replaced.
Unlike earlier when a mechanic had to go around manually to check the bus, the system-on-chip devices can be installed to monitor bus health,
including the tyre pressure. The system can help improve bust and tyre life and thereby make the fleet more fuel efficient.

 
But implementing these smart technologies would need investment, which would be difficult for the bleeding STCs.
The state need not invest. ASRTU is the apex body and we plan to take care of it. ASRTU will invest in the capex and they can pay and utilse. We are asking STCs to pay and utilise it for initial six month to evaluate the systems. If they find it beneficial they can continue using it. The states don’t have to individually float tenders to try and experience it. We can do the hand holding and ensure that the implementation is done in a better way.


So how does it work?
It is like the service on the cloud. ASRTU will own and manage the software and states can use the services on a pay per use basis. Each STC will have their own dedicated system mapped to their processes. Their data will be segregated through a secured system. Apart from this we are also focusing solutions like real-time ticketing system, scheduling and monitoring system, fuel and inventory management system. We have been talking to state transport departments that instead of individually adopting these systems, they should go for a service-based model that ASRTU can facilitate.


What would be the cost model for these services? Will the STCs have to pay licence cost?

The cost would be on per-vehicle basis. It would vary depending on the size of the fleet and the level of customisation required. There is a basic stack of services and then there is a need to customise the software to meet specific needs of that operating zone. The basic software would be the same but the applicability would be different in terms of number of hours of work, start of work, termination of work, etc.

 
You mentioned real-time ticketing system. How will it help STCs?
The online ticketing machines can be a big tool to bring in service efficiency. Whenever a ticket will be issued, information such as its value, destination and the capacity of that bus will be sent to the central server. The information can be shared on the need-to-know basis and up to the highest level. With such a system in place, revenue loss can be tracked and leakage can be effectively managed. Around 20-30 percent leakage is due to manual handling of tickets. A pilot for proof-of-concept is being done by the Jaipur city road transport corporation and the results have been encouraging.

Besides, the technology can also be used to capture the exact number of passengers in various categories – handicapped, senior citizens, and women – for which the STCs claim subsidy on an ad hoc basis as per the respective state policies. However, Karnataka makes the subsidy payments only on the basis of proof. This has been made possible by issuing passes to those entitled to free or discounted travel. The ticketing machines can read these passes and the exact data is captured. We are advising the STCs to use passenger information system (PIS) that will have intelligent cameras that can count the number of passengers at a specific point of time and location. It has been found to be 98 percent accurate.
 

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