Tambe's case indicates the general shift in public choice. While the consumer is getting better value for money, the old state carriers are being cut out of the market. The Maharashtra State Road Transport Corporation (MSRTC) is losing revenue heavily: an estimated 30 per cent in the last two years alone. Maharashtra's is not an isolated case. All the state transport undertakings (STUs) in the country today are gasping for breath. All report stiff competition from private bus operators, declining passenger traffic, fall in revenue and accumulating losses.

According to the statisticsfor 1998, there are 71 STUs in the country, which own 115,157 buses. The total capital investment is Rs 8193.68 crore, of which the government (both central and state) contributes Rs 3125.17 crore. In the year 1997-98, the STUs netted a loss of Rs 1282.36 crore against a total revenue of Rs 11,556.08 crore. But what is wrong with STUs? Government indifference and breach of operation norms by the private operators comes -- so runs the commonest reply. The STUs are saddled with a heavy tax charged by the states but for the private operators, it's a cakewalk.

The STUs are issued stage carriage permit. They can pick up passengers at every stop on their routes. Private operators are given contract carriage permits. They are suppose to pick up passengers at one fixed point and drop them off at another. But private operators use the stage carriage modus blatantly. Naturally, they are supported by a carefully-nurtured nexus in the regulatory agencies of the government.

``Besides, while STUs are charged heavypassenger tax (17.5 per cent in Maharashtra), private operators are levied a paltry fixed amount charged annually,'' says P.L.Rathod, Pune divisional controller of the MSRTC. Thus the private operators pay little and make the most of passenger traffic at the cost of STUs, he adds. Better service and lower ticket rates follow naturally.

Along with this problem, the burden of social responsibility is taking a heavy toll on STUs. Part of their work is plain welfare: operating uneconomical routes, offering concessions to various categories of passengers and providing mobility in remote areas.

The Central Institute of Road Transport (CIRT) in Pune draws attention to this problem in its performance overview of all the STUs in the country for 1997-98: ``Financial burden, due to concessional and free passes as announced by government, becomes inevitable for STUs. Though they deserve complete reimbursement of such burden, only few state governments grant subsidies to compensate STUs in this regard.'' The overallfinancial position of STUs is very gloomy and they are headed for a severe financial crisis, the report adds.

The total burden of students' concessions was reported to be Rs 328.81 crore, that of free passes to the blind was Rs 32.09 crore, freedom fighters and MLAs took care of Rs 24.82 crore, journalists Rs 6.44 crore and others Rs 38.86 crore. The total financial burden to STUs due to concessions was Rs 450.71 crore and the total subsidy received from government was only Rs 129.63 crore. The financial viability of STUs is threatened by the rising cost of operation. ``Urban and hill region STUs are not meeting even operating cost,'' the report observes.

STUs are also forced to depend heavily on loan capital from the open market since government has withdrawn capital funding gradually. Says Arup Khan, a faculty member at CIRT, ``The STUs pay heavy taxes, besides interest on borrowed capital. If one takes these two as components of the net profit, the rate of (net) profit would be as high as 20 per centper annum.'' Thus, the undertakings are not making losses and no actual subsidy is required for their functioning. This is sought to be achieved either by converting the loans to equity capital or by reducing the rate of taxation or interest.

The study of the STUs also reveals that of all the three services - urban, rural, and hilly regions, the urban sector is incurring the highest losses. The Delhi Transport Corporation (DTC) posted a financial deficit of Rs 49.54 crore, excluding Rs 6.15 crore as total tax for the quarter ending December 1998. For BEST (Brihan Mumbai Electric Supply and Transport Undertaking), the figures stood at Rs 28.40 crore and Rs 8.53 crore respectively. Given the fact that urban areas are the tax reservoirs of the central, state and local governments, the losses are glaring.

Khan says,``the 74th Constitutional Amendment (1992) on municipal finances is a landmark in fiscal decentralisation in India. It envisages widened municipal jurisdiction and revenue collection authority. Itmakes the Nagar Palikas directly responsible for urban development, which includes urban transport.''

However, a city's tax base is limited to property tax, development charges, professional taxes, octroi and entry tax. The last two are under dispute and are levied only in a few cities. The states look to the central government for a share from income tax, customs, excise etc. On their own, urban and state governments cannot foot the entire bill for public transport. the only way out is to ensure that fare-box revenue meets operating costs, says Khan. And all three governments -- Centre, state and local -- have to share the cost of urban transport.