On Monday (24th March), a Comptroller and Auditor General (CAG) report on the Delhi Transport Corporation (DTC) was tabled by Delhi Chief Minister Rekha Gupta in the Assembly. The CAG report highlighted operational inefficiencies and financial losses the corporation suffered under the previous Aam Aadmi Party (AAP) government.
The report evaluates DTC’s key operational and financial aspects, pointing to inefficiencies and areas needing improvement. It examines fleet management, revenue generation, operational sustainability, and adherence to public transport policies.
AAP govt failed to fulfil 11,000 new buses promise, fleet reduced from 4344 in 2015 to 3937: CAG report
Notably, under the previous AAP government, the CAG report indicates blatant mismanagement of the public transport system. This resulted in financial losses and a decline in DTC’s bus fleet. The Aam Aadmi Party government not only failed to fulfil its promise to launching 11,000 new buses in 2013-15, but the number of DTC buses also decreased from 4,344 in 2015 to 3,937.
“During the period 2015-23, fleet of the Corporation reduced from 4,344 (2015-16) to 3,937 buses (2022-23). The Corporation could procure only 300 Electric buses (EBs) during 2021-22 and 2022-23 despite the availability of funds from GNCTD. There was a delay in addition of EBs in the fleet for which penalty amounting to ₹ 29.86 crore for delayed delivery was not imposed on the operators,” the CAG report reads.
Citing data, the CAG report stated that since 2015, the DTC has not had a sufficient number of buses and it was requisite that new buses be purchased to expand the existing fleet alongside replacing the old and unserviceable buses. Even though ₹ 236.82 crore was available for procurement of buses in 2015 and ₹ 233.06 crore was available for this purpose as of March 2022,
However, the Delhi Transport Corporation under the AAP government “failed to induct new buses (except two Electric Buses in March 20223 and 298 buses after March 2022 up to November 2022) into its fleet during the last 10 years (last bus was inducted in 2011-12). Further, number of buses remained same during the review period excluding Standard Floor Buses which were completely phased out in 2019-20.”
The report also said that the number of old buses in the fleet had risen to 44.96%, impacting vehicle productivity and increasing incidences of breakdowns. Poor route planning led to an operational loss of a whopping Rs 14,198.86 crore during the seven years audited, which was further aggravated by missed kilometres and flaws in route planning, there was a potential revenue loss of Rs 668.60 crore between 2015-22.
The CAG report also found that the Corporation was unable to achieve optimum utilisation of its fleet, which in turn, impacted its operational performance adversely. Between the years 2015-16 to 2018-19, the trend of fleet utilisation by the Delhi Transport Corporation was below All India Level.
Even on the Vehicle Productivity criteria, while the all India Average per bus per day was 343 KMs to 348 KMs during 2015-16 to 2018-19, for the Delhi Transport Corporation, it ranged from 180 KMs to 201 KMs during 2015-22.
“Vehicle Productivity of the Corporation was less than Vehicle Productivity of other Metropolitan Cities having a higher percentage of over-aged fleet viz. Metropolitan Transport Corporation (MTC) (Chennai) Limited (252 to 287 per bus/KM/day) or Bengaluru Metropolitan Transport Corporation (200.4 to 208.5 per bus/KM/day), although these Corporations were operating in similar crowded city road conditions,” the CAG report reads.
There were about 41 fire incidents during the 7-year observation period ending in March 2022, of these, 6 buses were set ablaze by mobs and records regarding 5 others were unavailable with DTC. The 30 bus fire incidents happened due to short circuits, High Tension (HT) lead burnt due to engine overheating, wheel overheating, HT cable /lead loose, wheel jam, lapse in maintenance by AMC, etc. The CAG report said that this indicates poor maintenance by contractors and the ineffectiveness of the measures undertaken by the DTC to prevent such incidents.
DTC under AAP government failed to chalk out short and long-term plans, didn’t sign the Planning Department-recommended MoU
The CAG report says that to ensure the provision of an efficient, adequate and economical transport service to the people of Delhi, DTC should have prepared Long Term and Short-Term Plans. The Corporation prepares operational plan which involves determination of routes to be operated, number of trips to be scheduled, setting of annual operational targets and preparation of schedule for off-shedding buses at different times of the day etc.
“However, it has prepared neither any Business Plan containing a formal statement of its goals and determining targets of operational and financial parameters to achieve the goals, nor a Perspective Plan i.e. a blue print regarding the objectives and targets for long term growth during the period of seven years ending March 2022,” the CAG report on DTC states adding that since there was no proper plan, the Corporation’s efforts to achieve its goals were “directionless and un-coordinated”.
Back in 2010, the Planning Department stressed that the Delhi Transport Corporation should sign a Memorandum of Understanding (MoU) with Transport Department for setting targets in respect of various physical and financial parameters to contain its working losses. The Planning Department said that doing so would help the corporation curb losses.
“However, neither the Corporation signed any MoU with the Department nor did the Department pursue the matter. This was especially important as the Corporation was consistently suffering losses over the years. In the absence of targets, GNCTD was deprived of the parameters for evaluation of performance of the Corporation,” the CAG report reads.
The report mentions that the Corporation made no efforts to conduct any study on profitability/sustainability to make necessary improvements in its operations to increase economy and efficiency even though it was incurring continuous losses over the years.
The CAG report further states that DTC failed to utilise the expertise of Delhi Integrated Multi-Modal Transit System Ltd. (DIMTS) which also operates Cluster buses, to enhance its financial and operational performances. DTC’s nonchalance came despite the fact that DIMTS performed way better than the DTC on the basis of certain performance indicators such as fleet utilisation, vehicle productivity, load factor and reduced breakdown. The DTC also failed to conduct a comparative analysis.
In response to CAG’s query, the Corporation said that financial performance of DTC and DIMTS was not comparable in May 2023 due to huge Permanent and Contractual staff and payment of Ground Rent and Property Tax of the Depots which were used by DIMTS as well for its Cluster buses without any cost.
The CAG report, however, pointed out that the DTC management failed to justify poor operational performance despite having huge permanent and contractual staff at its disposal.
The report reiterated its DTC-GNCTD MoU recommendation and emphasised that the Corporation must chalk out short and long-term plans.
The CAG report also observed that the Delhi Transport Corporation did not benchmark its performance with parameters of other State Road Transport Undertakings (SRTUs) to determine areas which call for improvements. It also did not follow the best practices of other SRTUs like Call Centres for obtaining Passenger Feedback like other states.
From a profitable entity to perpetual loss maker: The fall and the fall of DTC under AAP government
Data indicates that the DTC was profitable, but under AAP, the corporation’s overall losses surged to ₹ 8,498.33 crore, increasing by ₹5,000 crore during AAP’s tenure. A closer look at the revenue decline indicates that DTC’s operating income dropped from ₹ 914 crore when AAP took power to ₹ 558 crore.
The CAG audit found that revenue from operations had slumped over the years even if the Covid years are overlooked, an increasing trend of operating loss as operating expenditure was always on the higher side corresponding to operating revenue which made the Corporation dependent heavily upon the financial support—revenue grant— from GNCTD.
Moreover, during the period 2015-22, the total operating revenue of ₹ 5147.15 crore was less than total operating expenditure of ₹19345.93 crore. “However, revenue grant received by the Corporation from GNCTD during the above period was only ₹ 13,381 crore, thereby revenue gap was accumulated to ₹ 817.78 crore,” the report reads.
Detailing the financial ratios, the CAG report said that 43.36 per cent of Debtors were more than three years old and their realisation was “doubtful”.
“Although, prima-facie, the Current Assets of the Corporation seems to comfortably cover the Short-Term Liabilities (as the Current Ratio has improved to 2.92 in 2020-21), however, Current Assets include Debtors and Advances (54.40 per cent in 2021-22) which were blocked up (mainly because of deposit with court and unrealised debtors),” the report reads.
It further stated that from the years 2015-16 to 2021-22, the DTC’s net worth was negative and increased from (-) ₹23,316.02 crore (2015-16) to (-) ₹58,757.18 crore (2021-22) due to huge accumulated losses. Thus, as on 31st March 2022, the DTC was not able to pay off its huge liabilities amounting to ₹60,483.69 crore.
Highlighting the reason behind this erosion, the CAG report said the Corporation’s revenues were not sufficient to service its operational expenditure. This resulted in an accumulation of losses to ₹60,741.03 crore as of 31st March 2022.
Even if the accrued interest on the unpaid (since 2011-12) GNCTD loans is excluded from accumulated losses, the DTC’s net worth stayed s constant with minor change from (-) ₹ 10,816 crore (2015-16) to (-) ₹ 10,956.75 crore (2021-22) mainly due to old accumulated losses.
“Thus, overall financial position and working results of the Corporation raise a serious concern about its Long-Term Solvency and Fiscal sustainability due to persistent Operational Losses and old accumulated losses,” the CAG report states.
In an apparent case of financial irregularities, the AAP government allotted 3.18 lakh square meters of DTC land to private cluster buses without collecting ₹ 225.31 crore in rent.
The AAP government failed to procure new buses despite having ₹223 crore in 2022 for the Delhi Transport Department.
“Neither the amount was realized nor of any assurance was obtained from the Department. It is pertinent to mention that Department had realised rent for these spaces from Concessionaires of Cluster buses as per the agreement between Concessionaires and the Department but did not pass on it to the Corporation,” the CAG report states.
The CAG report also mentions that back in 2012, the Delhi government directed the DTC that the construction and maintenance of all Bus Queue Shelters (BQSs) in NCT of Delhi would be carried out by Delhi Transport Infrastructure Development Corporation Limited (DTIDCL).
Consequently, the DTC transferred 884 BQSs to DTIDCL by 2015-16. However, the order was made no mention regarding payment to be made by DTIDCL against the cost of these BQS.
In August 2015, the Corporation demanded ₹ 21.29 crore against the cost of construction and Project Management Consultancy (PMC) charges of 156 BQSs on DTIDCL which was not paid as of December 2022.
As per the CAG report, however, it was observed that the Corporation raised a claim for the original cost of construction of BQS instead of the depreciated value of ₹ 7.33 crore on the date of
transfer. The Corporation instead of escalating the matter with the Department for resolving with DTIDCL keeps on corresponding with DTIDCL. Due to this, over the years, the matter has remained unresolved.
The CAG report also mentions that the DTC made an “avoidable expenditure” of ₹16.51 as it failed to transfer an arbitration case to DTIDCL.
DTC missed opportunities to earn revenue from additional sources
Since DTC was continuously incurring losses, it should have prioritised augmenting revenues from sources other than operations, however, the Corporation failed to earn additional revenue through advertisements, and commercial utilisation of spaces at depots, among other sources.
The report mentions that the DTC failed to finalise a proposal for installation of LED screens in its buses which would have been used to display advertisements. The Corporation’s indecisiveness deprived it from tapping additional non-operational revenue. The DTC under AAP government also failed to make commercial use of bus depots.
It also mentions that the DTC missed an opportunity of availing ₹49 crore subsidy from the Central government’s Department of Heavy Industries under the FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles) Scheme launched in April 2015. In 2017, the Corporation submitted a proposal for the procurement of 100 Electric Buses to the Centre, against which the Centre approved 40 e-buses for Delhi. The DTC failed to go ahead with the 40 e-bus deal worth ₹ 88 crores of which ₹ 34 crores was to be provided by DHI as an incentive and ₹ 54 crore by GNCTD as equity to the Corporation, despite the Centre extending the FAME Scheme.
Detailing how the DTC missed the central subsidy, the CAG report states, “The Corporation intimated the Department (9 January 2018) that it would not be feasible for it to place LOI by 28 February 2018 and as per its past experience, it would be able to place order by July 2018. It also informed that project for purchasing 40 E- buses would involve estimated expenditure of ₹ 88 crore (₹ 34 crore to be provided by DHI as incentive and ₹ 54 crore by GNCTD as equity to Corporation) besides involvement of expenditure on creating charging infrastructure in Depots. The Corporation decided not to go ahead with the sanctioned project though the FAME scheme was extended by GoI from time to time up to March 2019.
“Thus, in spite of sanction of 40 E-buses for Delhi under FAME-I scheme and extension of the scheme from time to time till 31 March 2019, the Corporation did not procure 40 E-buses and lost the opportunity to avail the Central Subsidy of ₹ 49 crore under FAME scheme (₹ 34 crore towards cost of electric buses and ₹ 15 crore towards creation of charging infrastructure),” it adds.
The report also describes how the DTC failed to procure electric buses due to a delay in finalising bids for the FAME-II Scheme.
DTC wrongfully availed Input Tax Credit
In around 2017-18, the Delhi Transport Corporation availed Input Tax Credit to the tune of ₹224.34 crore on earnings of AC/Non-AC/Hiring of buses and common services against eligibility for ₹ 39.41 crore.
“Out of the total ineligible ITC claimed/availed of ₹ 184.93 crore, claims of ₹ 132.33 crore were withdrawn (₹ 55 crore on September 2021, ₹ 24.73 crore in October 2021 and ₹ 52.60 crore in August 2022) and ₹ 38.47 crore was paid in April 2022. In May 2022, GST Department directed the Corporation to pay the balance ITC availed of ₹ 14.13 crore and also levied Interest and Penalty of ₹ 82.18 crore (Interest of ₹ 56.56 crore and Penalty of ₹ 25.62 crore) for wrongly availing of ineligible ITC,” the CAG report reads.
“Thus, availing ineligible ITC by the Corporation resulted in avoidable liability of Interest and Penalty amounting to ₹ 82.18 crore which was not paid so far (December 2022) and the matter was pending with the GST Department,” it adds.
Fare freeze increased the financial burden
The CAG report states that DTC had not raised bus fares since 2009 and despite repeated requests to allow an increase in fares, the governments over the years remained reluctant. What further exacerbated the situation was the Aam Aadmi Party’s free travel for women scheme. The Delhi government provided ₹13,381 crore revenue grant to DTC, but there still remained a ₹818 crore funding gap.
The DTC also failed to modernise fare collection system. In this direction, a project was initiated 9 years ago, however, the Corporation failed to implement an automatic fare collection system. Besides, the Corporation also fell short in installing CCTV surveillance systems meant to ensure increased customer security even those installed were found not functioning.
Overall, the CAG audit found that the DTC’s Internal control mechanism was deficient and there were inefficient managerial controls in addition to a lack of accountability. “Audit noticed indecisiveness in finalising the tenders for purchase of new buses, weak operational control, lack of coordination amongst divisions, lack of follow up with debtors, delay in statutory compliances, etc., leading to losses to the Corporation,” the CAG report stated.
