Tamil Nadu launches free bus travel for women’s empowerment

Tamil Nadu’s scheme facilitating free bus travel for women is laudable as it will boost their work participation rate, but the government must evaluate the actual demand and provide transport undertakings with adequate subsidy as compensation.

Free travel for women in the State’s ordinary bus services began on May 8.

After swearing in as Tamil Nadu Chief Minister on May 7, 2021, M.K. Stalin announced a scheme that enables all working women in the State to travel free of cost in government-owned city and town buses with immediate effect. Since a concrete definition has not been given for the term ‘working women’, every woman would qualify as a beneficiary in this scheme. The main intention behind this scheme is to increase the work participation rate of women and to promote public transportation. Since there is no restriction on the number of trips a day or month, it appears to be a simple and straightforward scheme of open-ended subsidies for travel by women.

The State government has announced an annual subsidy grant of Rs.1,200 crore to State transport corporations, assuming that women contribute 40 per cent of the Rs.3,000-crore annual ticket revenue of city and town buses.

The previous All India Anna Dravida Munnetra Kazhagam (AIADMK) government implemented a scheme aimed at women’s empowerment by providing direct subsidies to buy two-wheelers to working women whose annual income was below a certain level. However, the main criticism of the scheme was that the women who would otherwise use public transport were incentivised to use two-wheelers, creating the possibility of increasing traffic congestion on the roads and polluting the air by burning fossil fuels.

Thus, while the previous government intended to empower women with personal mobility and associated externalities, the new government is doing it through public mobility and accompanying social costs.

The author assesses the scheme from the financial sustainability and effectiveness perspective and provides some alternatives to achieve the intended effects.

Experience of some precedents

Providing fare-free public transport (FFPT) is not a new idea; it has precedents. The FFPT debate started several decades ago and some of the developed nations have been experimenting with it either fully or partially for quite some time now. It is partial in some countries for specific groups like students and senior citizens or during specific periods like off-peak time and weekends. Luxembourg was the first nation to make its entire public transportation free to all.

The primary intention of the nations implementing FFPT is to reduce traffic congestion and pollution, in the belief that people would prefer public transport over private transportation. But the experiences from these nations suggest otherwise. Interestingly, people who used to walk and cycle to workplaces availed themselves of this concession more than others.

The secondary intention is on the lines of social inclusion, ensuring that everyone gets free mobility. From a social point of view this is fair and suggests that free mobility is a right. In addition, there are other fringe intentions like promoting tourism.

Two interesting points have been observed from these varied experiences of implementing FFPT in many countries, both developed and developing. First, the full FFPT is universal and all availed themselves of it; second, it is implemented in a monopoly market where the state owns the bus transport service and there are no private players. Other mobility services such as taxis are considered as forming a different market with different pricing. The main criticism against FFPT is from the economic point of view that nothing is free, and that the taxpayer is paying for it. The other criticism is that it encourages too much useless mobility.

FFPT is not new to India. Several States, including Tamil Nadu, have been providing partial FFPT for students, senior citizens, and the differently-abled for quite some time. Extending these benefits to women in all age groups in city and town buses is also not without precedence. The governments of Delhi and Punjab introduced it before Tamil Nadu did it. In both these States, the primary intention was to increase the mobility of women. Further, it was also intended to provide some savings to women who commute for work or business. There are two big differences between the schemes in developed nations and those in India. First, the FFPT is not universal, and second, the transportation market is not a monopoly market of state transport corporations but a competitive market with private players.

Subsidy conundrum

Government subsidy programmes must be efficient in design and implementation so that they reach the intended beneficiaries and create the intended effect. For example, in the case of scholarships to students, which reach the intended beneficiaries, that is the students, the desired effect is achieved only when the scholarship money is used strictly for education-related expenses. Unfortunately, we often come across government subsidy schemes that are not designed properly to reach the intended beneficiaries and create the intended benefits, which might be true in this case too.

In Delhi, subsidised bus travel is provided to all women in Delhi Transport Corporation (DTC) buses and private buses. Women can travel on any bus, free of cost, and the bus operator can get reimbursed for the amount from the government by demitting the zero tickets/pass. In this way, the government gets an estimate of the number of women making use of this scheme, but there is the possibility of women who do not use all the zero tickets a month ending up selling them at a lower price to the private transport firms, which can later get reimbursement for passengers who had not travelled. This leakage can be plugged only through a real-time check, which will be prohibitively expensive.

In Punjab and Tamil Nadu, women can travel for free only in government-owned public buses and not in private buses. While Punjab has extended this scheme for all types of government-owned intra-State buses, in Tamil Nadu the scheme is restricted to travel in government-owned ordinary city and town buses. In a fairly competitive market, if a firm attracts customers with differential pricing, such as zero-cost travel for women, it is a pure antitrust activity that draws the Competition Commission’s wrath.

The loss for private operators of city and town buses owing to the reduced number of women passengers would be minimised if there is an increase in the number of male passengers.

Market size

A look at some data gives an idea of the size of the market.

Tamil Nadu has eight State transport undertakings, including the Metropolitan Transport Corporation (MTC) which operates buses only in Chennai. The State Express Transport Corporation (SETC) operates only mofussil and long-distance bus services and there are six Tamil Nadu State Transport Corporation (TNSTC) divisions that operate both town and mofussil buses across Tamil Nadu.

A total of 19,073 stage carrier buses are operated by them (Table 1), including 3,233 and 1,082 buses operated by the MTC and the SETC, respectively. Since the SETC operates only mofussil and long-distance buses, it is not subsidised by the scheme. Among the others, 6,339 buses are classified as ordinary city and town buses, accounting for 35 per cent of the total number of buses being operated.

There are 7,602 private stage carrier buses operating in Tamil Nadu; if we assume that 20 per cent of them are running as town buses, that accounts for 1,520 buses. Further, we use a simple calculation to approximate the number of women beneficiaries (Table 2).

The total number of daily bus passengers is around 1.6 crore in Tamil Nadu, which implies that there are 839 daily passengers for every bus. An estimated 53 lakh passengers travel every day in city and town buses in Tamil Nadu. Already, students and senior citizens are given travel concessions in government buses. Hence, excluding such passengers, an estimated 45 lakh passengers are travelling every day paying full ticket price.

According to the government assumption, 40 per cent of the passengers, or 18 lakh, could be women. The government has decided to allocate a subsidy of Rs.1,200 crore a year to State bus transport corporations to compensate for the loss caused by free travel by 18 lakh women every day. It is the best guesstimate without actual data on the demand for free travel.

After the government’s announcement of free bus travel for all women, most of the women passengers are likely to shift from private to government buses. Women who were travelling through other modes of transport may also prefer to travel by government buses. Moreover, women might travel by government buses for other purposes as well, not necessarily for work. Hence, the demand for these government buses is likely to increase among women. Although this is the real intention behind the scheme, it has to be appropriately evaluated to decide the quantum of the subsidy amount. Otherwise, the State transport corporations might end up getting inadequate compensation for this loss, and they may get into a vicious cycle of debt.

Now, coming to the private stage carrier buses operating in Tamil Nadu, even assuming a significantly lower average number of 600 daily passengers a bus, it works out to 9 lakh passengers commuting in these buses every day. If we assume that one-third of these passengers shift to government buses, it leads to a loss of revenue to private bus operators. Assuming that some more men might prefer to travel in less crowded private buses, the private bus operators may face a loss of around Rs.120 crore annually.

Apart from this, other private transport such as mini-buses, vans, and share-autos might also get affected by this scheme, as more women might prefer government buses.

Suggestions to redesign scheme

The government can consider extending the subsidy scheme to private bus operators, but the chance of subsidy leakage is high.

From a social perspective, this scheme has good intentions to empower women by increasing their mobility and savings. Therefore, it should be a fair scheme by design and implementation if the subsidy has to deliver to the intended beneficiaries and create the intended effects. However, the present form of open-ended subsidy of fare-free bus travel for women in the existing road transport market structure is not good by design. The government can consider three issues to redesign the scheme.

First, it can run a pilot programme for three to six months and issue free bus passes to women for all bus travel. This will provide information on how the free bus passes are distributed between government-owned and private buses. Then, on the basis of this data, the government can decide on the subsidy to both government-owned and private buses to maintain a level playing field in the marketplace. (A leakage in subsidy for travel in private buses is inevitable.)

Second, the leakage in subsidising private transport companies can be plugged, possibly through direct cash transfer to women as a travel grant. But the government cannot ensure that the grant is used only for travel.

Three, in order to stop all forms of leakages in the system, all ordinary city and town bus routes can be taken over by the government, and all deserving groups of passengers can be given travel concessions of varying amounts. Of course, the higher cost of bus operation in the government sector will be be borne by the taxpayers.

S. Raja Sethu Durai is a Professor of Economics, University of Hyderabad.