DELHI METRO
Research Report
Abstract Being the capital city of India, it does not come as a shock that New Delhi is the most populated city in India in term of people and vehicles. The population of Delhi and vehicles on road are ever increasing leading to problems like traffic, pollution and high fuel consumption. Considering all this ―THE DELHI METRO‖ comes as a huge relief for the people of Delhi. There are no doubts about the social benefits of the Delhi metro. It will help in reducing traffic and pollution in the capital and more important save a lot of time for the daily commuters. As a part of this project, the Delhi Metro has been analyzed from the economic point of view. Considerable effort has been put into understanding the economic viability of the Delhi Metro. A lot of analysis is done taking into consideration past and present data, and justified future assumptions like effect of common wealth games on ridership of Delhi metro, ridership in other modes of transportation in coming years, ridership on full functioning of two phases of the metro project, revenue generation from advertising and property development, etc. The various analysis are SWOT , Demand-supply analysis, Modeling of revenue functions, Break-even point, Cost-volume profit analysis, effect of Delhi metro on other transport systems, effect of common wealth games on Delhi metro. This research paper concludes with justified results that the Delhi Metro is an economically feasible and time saving venture of DMRC (Delhi Metro Rail Corporation). The success of the Delhi Metro has already triggered similar ventures in other Indian cities like Mumbai and Bangalore.
Objective
To analyze the strength and weakness of the Delhi Metro from socio-economic perspective To model the demand-supply curve and various revenue functions To estimate the break-even for Delhi Metro To understand the effect of Delhi Metro on other modes of transportation To study the effects of common wealth games on revenues
Scope of the work This analysis will help the other metro proposals in pipe-line to streamline the process of planning and assist the Delhi Metro to improvise its revenue generation & further expansion. It also provides the assistance for Delhi government to plan for the other modes of transport like Light Rail Transit System, Mono Rail and dedicated bus corridor.
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Table of Contents About Delhi Metro .......................................................................................................................... 3 Need for Metro ................................................................................................................................ 3 SWOT Analysis .............................................................................................................................. 4 Literature Review............................................................................................................................ 5 Demand – Supply Curves ............................................................................................................... 6 Modeling of Revenue functions ...................................................................................................... 7 Break-Even Point ............................................................................................................................ 9 Using Cost-Volume Profit Analysis method ............................................................................ 10 Effect of Delhi Metro on other modes of transport....................................................................... 11 Savings in fuel consumption ..................................................................................................... 11 Saving of Passenger time with Metro and without Metro ........................................................ 11 Effect of Commonwealth Games on MRTS ................................................................................. 12 Conclusion .................................................................................................................................... 15 References ..................................................................................................................................... 15
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About Delhi Metro The capital city of New Delhi lies within India‘s second largest metropolitan area simply called Delhi. Recently Delhi has become the most populous city in India according to a survey with a population of approximately 14 million. Today, Delhi‘s extended population is approaching 22 million people, and has created crowded conditions with extremely high demands on the public transportation element. This led to the development of the Delhi Mass Rapid Transit System, or Delhi Metro as it is known. The success of this transport network that began operations in December 2002 now sees it as not only the public transportation of choice, but the model itself has become the standard for the development of other systems across India. And yet the current metro system, known as Phase I, is itself set to grow with another three phases, scheduled for completion in 2010, 2015 and 2020. By the time Phase IV is operational, the Delhi Metro will have found its place ahead of the London system as the largest public metro rail network in the world. The construction of the first phase of DM was spread over 10 years during 1995-96 to 2004-05 while that of the second phase, which started in 2005-2006 is expected to be completed by 201011. The total capital cost of DM at 2004 prices for Phase I and Phase II are estimated as Rs. 64,060 and Rs. 80,260 million, respectively. Phases III and IV of DM will cover most of the remaining parts of Delhi and even extend its services to some areas such as NOIDA and Gurgaon belonging to the neighboring states of Delhi and come under the National Capital Territory. Unique feature of Delhi Metro is its integration with other modes of public transport, enabling the commuters to conveniently interchange from one mode to another. To increase ridership of Delhi Metro, feeder buses for metro stations are operating. In short, Delhi Metro is a trendsetter for such systems in other cities of the country and in the South Asian region. Delhi Metro is a world-class metro. To ensure reliability and safety in train operations, it is equipped with the most modern communication and train control system. It has state-of-art air-conditioned coaches. Ticketing and passenger control are through Automatic Fare Collection System, which is introduced in the country for the first time. Travelling in Delhi Metro is a pleasure with trains available at a frequency of 5 minutes at off-peak hours and 3 minutes at peak-hours. Entries and exits to metro stations are controlled by flap-doors operated by 'smart-cards' and contact less tokens. For convenience of commuters, adequate number of escalators has been installed at the metro stations. The Metro will totally transform our social culture giving us a sense of discipline, cleanliness and enhance multifold development of this cosmopolitan city.
Need for Metro Today, urban area experiences the drastic population growth. This population growth has two components in it: 1) the normal population growth and 2) the movement of huge number of working people from other parts of the countries. The increase in per capita income due to healthy economy and the growing population in urban areas lead to steep increase in ridership on the road (two-wheelers, autos, cars and public transport buses), thus in turn lead to tremendous traffic congestions on the urban road. The growing demand for the transport in mega cities has serious effects on urban ecosystems, especially due to the increased atmospheric pollution. An Page | 3
ecologically sustainable urban transport system could be obtained by an appropriate mix of alternative modes of transport resulting in the use of environmentally friendly fuels and land use patterns. The introduction of CNG in certain vehicles and switching of some portion of the transport demand to the metro rail have resulted in a significant reduction of atmospheric pollution in Delhi. The Delhi Metro provides multiple benefits: reduction in air pollution, time saving to passengers, reduction in accidents, reduction in traffic congestion and fuel savings. There are incremental benefits and costs to a number of economic agents: government, private transporters, passengers, general public and unskilled labor.
SWOT Analysis Strengths
Cost-effective mode of transport for the general public of Delhi. Reduce congestion on roads making movement easier. Reduce atmospheric pollution to a great level making the environment healthy. Ultra-modern technology and visually striking design, dynamic and modern, competitive and ‗World Class‘. Reduce travel time: One hundred per cent punctual operations. Safer Mode of transport for Women. The voluntary International Standardization Organization (ISO) 14,000 certification.
Weakness
Metro considerably more expensive than the bus. Less ridership than estimated. High development cost Displaced many economic backward people. Difficulties in acquiring land and
Opportunity
Revenue from property development and advertisements. Potential to achieve higher ridership. Tax rebate given to the DMRC because of the 2010 Commonwealth Games in Delhi. The success of the Delhi Metro has encouraged other Indian cities to seriously attempt to introduce Metro systems. The next Metro line in the city will be 10-15 per cent cheaper than the previous phases based on the learning curve theory.
Threats
A struggle on the part of those being displaced, and protests, petitions, hunger strikes, negotiations and legal action have all been initiated. Security threat. Risk of cost overruns and ridership shortfalls. Increase in cost of the parts. Page | 4
Literature Review The social cost-benefit analysis of Delhi Metro has been already done by the people of institute of economic growth. They tried to measure all the benefits provided by Delhi Metro such as reduction in air pollution, time saving to passengers, reduction in accidents, reduction in traffic congestion and fuel savings in terms of monetary term. Also they made an attempt to measure the costs from Phase I and Phase II projects covering a total distance of 108 kms in Delhi. Estimates of the social benefits and costs of the projects were obtained using the recently estimated shadow prices of investment, foreign exchange and unskilled labor as well as the social time preference rate for the Indian economy for a study commissioned by the Planning Commission, Government of India and done at the Institute of Economic growth. The findings were:
The financial cost-benefit ratio of the Metro was estimated at 2.30 and 1.92 at 8% and 10% discount rates respectively. Its financial internal rate of return was estimated as 17% while the economic rate of return is 24%. The estimated net present social benefit (NPSB) of the Metro at 2004-05 prices and the 8 percent social time preference rate for the Indian economy was Rs. 419979.6 million. The social rate of return on investment in the Metro was calculated as 22.7 percent. This could be explained by the provision of incremental income to the Delhi public by Delhi Metro.
Line 1 Shahdara – Rithala
Shahdara-Tis Hazari section has been completed and commissioned on 24.12.2002. Tis Hazari – Inderlok section has been commissioned on 3.10.2003. Inderlok – Rithala section has been commissioned on 31.3.2004.
Line 2 Vishwavidyalaya - Central Secretariat
Vishwavidyalaya – Kashmere Gate section has been commissioned on 20.12.2004. Kashmere Gate – Central Secretariat has been commissioned on 3.7.2005.
Line 3 Barakhamba Road – Kirti Nagar – Dwarka
Barakhamba Road – Dwarka section has been commissioned on 31.12.2005.
Extension of Line 3
Extension into Dwarka sub-city commissioned on 1.4.2006. Barakhamba Road - Indraprastha commissioned on 11.11.2006
The Phase II of the project will consist of the following:
Vishva Vidyalaya – Jahangir Puri Central Secretariat – Qutab Minar Shahdara – Dilshad Garden Indraprastha – New Ashok Nagar Page | 5
Yamuna Bank – Anand Vihar ISBT Kirti Nagar – Mundka (along with operational link to Inderlok)
The second phase of Delhi metro will be essentially an extension of the 1st phase. For example a person who had to commute the distance between Qutab Minar and Jahangir puri earlier when only phase 1 was operational had to go to central secretariat using a different mode of transport and then catch a metro till Vishwavidyalaya and then again take a different mode of transport to reach Jahangirpuri.But the same person after the completion of phase 2 will catch the metro directly from Qutab Minar and reach Jahangirpuri. This explains the fact that the ridership will not go up steeply when phase 2 is operational because the people who had been using the metro earlier would still be using it but for a longer distance now and will be paying more money for the increased distance travelled
Demand – Supply Curves The demand for a commodity faced by the firm depends on the size of the total market or industry demand for the commodity, which in turn is the sum of the demands for the commodity of the individual consumers in the market. The demand for a commodity arises from the consumer‘s willingness and ability (i.e. from their desire or want for the commodity backed by the income) to purchase the commodity. Also consumer demand theory postulates that the quantity demanded of a commodity per time period increases with a reduction in its price. In case of Delhi metro, as the services demanded per time period increases, the passengers are willing to pay lesser amount. Table 1: Fare Sensitivity of Ridership on the Metro (2006) Fare Rate
% Ridership
(In Rs/Passenger trip) 3
100%
4
90%
5
75%
6
50%
*source: M N Murty, Kishore Kumar Dhavala, Meenakshi Ghosh and Rashmi Singh, Social Cost-Benefit Analysis of Delhi Metro, October 2006.
Assumption #1: Though the above Fare Rates are the base values in the year of 2002, Delhi metro decided to keep the fare rates same till 2006. Expected annual ridership in 2006
:
121.07 Crores
Assumption #2: The services provided by the Delhi Metro can meet this annual ridership and Delhi Metro will not invest any further on rolling stock unless otherwise it is required. Assumption #3: The services provided by the Delhi Metro remains same throughout the year. Page | 6
Individual demand curve can be obtained by plotting Fare Rate/Passenger trip versus the ridership in a particular year. Rs.
Demand-Supply curve in 2006
Rs.
Change in Demand across the years
9
7
8 6
7
Demand
5
5
4 3
A
2
2010
D2006
4
Supply
3
Supply
A
2 1
2006
D2014
6
2014
C
B
Supply
1
0
0 50
100
150
200
Annual Ridership, in Crores
Figure 1: Demand Supply curve in 2006
50
100
150
200
Annual Ridership, in Crores
Figure 2: Change in Demand
In the above figures, point A, B & C indicates the fare rate/trip at 100% ridership for a particular year. Also these points are the equilibrium points for a particular year and are the minimum fare rate that the Delhi Metro would like to charge. With reference to the demand-supply curve in 2006, an individual will be willing to pay on an average Rs. 3/trip if the ridership is 100%. At the same time, one will be willing to pay Rs.6/trip if the ridership is 50% and Delhi Metro also will charge the same so as to maximize the revenue per year. Why because, as the ridership per year comes down, advertising revenue and property development revenue per passenger also will decrease. It implies that Delhi Metro acts like a Monopoly since there is no metro rail service provider and it is managed by the government. Figure 2 shows the change in demand across the year. This can be explained by the increase in ridership (majorly due to re-distribution of ridership between various transports). It was assumed that the change in demand is proportionate to the increase in ridership. On the other hand, change along the supply curve indicates that Delhi Metro follows the incremental pricing strategy to overcome mainly the maintenance cost incurred. But in real time, it may decide to change the price after a span of years. So, the excess expenses incurred due to the increase in ridership can be overcome by the other revenues (advertising and property development revenues).
Modeling of Revenue functions Delhi Metro as a commercial organization operates with the objective of maximizing the profit. So it is required to consider the above before proceeding with any financial evaluation of a project. The financial capital cost of DM represents the time stream of investment made by it during its lifetime. The investment expenditures made by the project in one of the years during its life time constitutes the purchase of capital goods, cost of acquisition of land and material inputs for project construction. The operation and maintenance (O & M) cost of the project constitutes the annual expenditure incurred on energy, material inputs for maintenance and payments made to skilled and unskilled labour. The financial benefits from the Metro are the Page | 7
traffic earnings and the revenues from advertisement and property development, as reported by RITES. Revenue streams for Phases I and II, as reported by RITES (1995b, 2005b) have been taken. Table 2: Estimated Total Revenue Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Revenue 1505.2 1715.2 1940.7 2182.6 2442.1 3376.2 3711.2 4105.7 4451.1 4963.3 5084.7 5627 6220.9
Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Revenue 6772.2 7428.2 8280.6 9234.2 9912.6 10624.2 11555.7 11606.7 11912.7 11971.7 12322.7 12389.7 12792.7
Table 3: Estimated O & M cost
Year 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
Revenue 12868.7 13330.7 13417.7 13947.7 14047.7 14654.7 14768.7 15465.7 15594.7 16394.7 16543.7
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
O & M cost 312.3 325.3 338.7 352.7 367.4 782.2 800.6 836.6 874.5 914.5 956.8 1001.3
Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
O & M cost 1048.4 1098.1 1150.7 1212.7 1376.3 1437.4 1503.2 1573.8 1649.8 1731.6 1819.5 1914.1
Year 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
O & M cost 2014.9 2125.5 2462.8 2604.2 2756.2 2919.8 3095.8 3285.2 3489.1 3708.6 3944.9 4199.3
*source: M N Murty, Kishore Kumar Dhavala, Meenakshi Ghosh and Rashmi Singh, Social Cost-Benefit Analysis of Delhi Metro, October 2006.
Assumption #4: Contribution from Property Development to Total Revenue is 39%. Assumption #5: Growth rate of Property Development Revenue is ~ 10% per annum. Assumption #6: Fare/passenger trip increase proportionately with the increase in annual ridership. The above data has been divided into two scenarios for the sake of analysis. That is, 2005-2010 is Pre-common wealth games and 2010-2040 is Post-common wealth games. Also, it was given that by 2010, both the phase 1 & 2 will be fully operational. Table 4: Estimated Total Revenue Break Up Revenue, in Crores Year
Annual Ridership, in Crores
Fare per passenger trip, in Rs.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
121.07 126.11 131.29 136.73 142.39 148.30 152.61 157.06 161.66 166.37 171.22 176.22 181.37 186.66 192.10 197.72
3.00 3.12 3.25 3.39 3.53 3.67 3.78 3.89 4.01 4.12 4.24 4.37 4.49 4.63 4.76 4.90
Traffic 363.21 394.06 427.12 463.24 502.37 544.96 577.07 611.24 647.56 685.83 726.44 769.49 815.09 863.36 914.40 968.69
Property Advertise developm ment nt 668.93 735.82 809.40 890.34 979.38 1077.32 1185.05 1303.55 1433.91 1577.30 1735.03 1908.53 2099.38 2309.32 2540.25 2794.28
683.06 810.82 946.08 1088.52 1894.46 2088.93 2343.58 2536.31 2881.83 2821.57 3165.53 3542.88 3857.73 4255.52 4825.95 5471.23
Total 1715.20 1940.70 2182.60 2442.10 3376.20 3711.20 4105.70 4451.10 4963.30 5084.70 5627.00 6220.90 6772.20 7428.20 8280.60 9234.20
Using the above data, by plotting Annual Ridership versus the various revenues, one can formulate the revenue equations for the two scenarios mentioned above. Page | 8
Scenario 1: (Pre-Common Wealth Games) Revenue from the traffic
:
RT 2E 09 N 2
Revenue from Property & Development
:
RP&D 3E 12 * N 2.352
Revenue from Advertisement
:
R Advt 1E 25 * N 3.831
Revenue from the traffic
:
RT 2E 09 N 2
Revenue from Property & Development
:
RP&D 1E 20 * N 3.258
Revenue from Advertisement
:
R Advt 4E 19 * N 3.133
:
TR RT RP&D R Advt
Scenario 2: (Post-Common Wealth Games)
Where, N: Annual Ridership *All revenues are in rupees. Total Revenue
Break-Even Point In economics, specifically cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". Therefore has not made an economic profit or a loss. The break-even point is one of the simplest yet least used analytical tools in management. It helps to provide a dynamic view of the relationships between sales, costs and profits. A better understanding of break-even—for example in this case, expressing break-even ridership as a percentage of actual revenues—can give us a chance to understand when to expect to break even. Total Cost = Fixed Cost + Variable Cost Fixed Cost: Capital Cost (land cost, construction cost, rolling stock, etc) Variable Cost: Operation & Maintenance cost
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Table 5: Break Even Point Calculation Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
Annual Ridership, in Crores 152.63 157.09 161.67 166.39 171.25 176.25 181.40 186.70 192.15 197.76 203.53 209.48 215.59 221.89 228.37 235.04 241.90 248.96 256.23 263.72 271.42 279.34 287.50 295.89 304.53 313.43 322.58 332.00 341.69 351.67 361.94
TR, in Crores 3666.40 3999.30 4362.97 4760.28 5194.39 5668.73 6187.09 6753.58 7372.73 8049.47 8789.23 9597.91 10482.00 11448.60 12505.47 13661.11 14924.84 16306.83 17818.25 19471.30 21279.35 23257.04 25420.40 27786.96 30375.94 33208.38 36307.30 39697.92 43407.86 47467.37 51909.54
O&M cost, in Crores 701.84 743.43 787.49 834.15 883.58 935.94 991.41 1050.16 1112.39 1178.31 1248.13 1322.09 1400.44 1483.43 1571.33 1664.45 1763.08 1867.56 1978.23 2095.46 2219.63 2351.16 2490.49 2638.07 2794.40 2960.00 3135.40 3321.20 3518.01 3726.49 3947.31
TC, in Crores 15133.84 15175.43 15219.49 15266.15 15315.58 15367.94 15423.41 15482.16 15544.39 15610.31 15680.13 15754.09 15832.44 15915.43 16003.33 16096.45 16195.08 16299.56 16410.23 16527.46 16651.63 16783.16 16922.49 17070.07 17226.40 17392.00 17567.40 17753.20 17950.01 18158.49 18379.31
Economic Profit, in Crores -11467.44 -11176.13 -10856.52 -10505.87 -10121.20 -9699.21 -9236.32 -8728.57 -8171.66 -7560.83 -6890.91 -6156.19 -5350.44 -4466.83 -3497.87 -2435.34 -1270.24 7.27 1408.02 2943.84 4627.72 6473.88 8497.91 10716.89 13149.54 15816.38 18739.90 21944.72 25457.85 29308.88 33530.22
Normal Profit, in Crores 2964.56 3255.87 3575.48 3926.13 4310.80 4732.79 5195.68 5703.43 6260.34 6871.17 7541.09 8275.81 9081.56 9965.17 10934.13 11996.66 13161.76 14439.27 15840.02 17375.84 19059.72 20905.88 22929.91 25148.89 27581.54 30248.38 33171.90 36376.72 39889.85 43740.88 47962.22
60000
Break Even Point
50000 40000 30000 20000
10000 0 2000
2010
2020
Total Revenue, in Crores
2030
2040
2050
Total Cost, in Crores.
Figure 3: Break Even Point Economic Profit: The profit earned after the adjustments made towards all the costs (Explicit Costs & Implicit Costs) or simply total revenue minus total costs. Explicit Costs:
Fixed Cost & Variable Cost
Implicit Costs:
Opportunity cost (in this case opportunity cost is considered to be zero)
Normal Profit: The yearly profit earned after the adjustment made towards the variable costs. Though Delhi Metro makes the profit every year, it will break-even in the year of 2028. Using Cost-Volume Profit Analysis method The basic limitation when we do a cost-volume profit analysis, the fare rate per passenger trip should remain constant. Let us assume, the fare rate per passenger trip is to be Rs. PT Total Revenue : :
Traffic Earnings + Advt. Revenue + Property & Development Revenue PTN + (4E 19 * N 3.133 ) + (1E 20 * N 3.258 )
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Total Cost
:
Total Fixed Cost + Total Variable Cost
:
(14432E 07) + (3E 09 * N 2.002 )
Setting N = 248.96 Crores, the calculated fare rate per passenger trip to achieve the break-even (where, Total Revenue = Total Cost) would be ~ Rs. 5.2. If Delhi Metro decides to maintain its fare rate per passenger trip till it is broken even, then it should charge Rs. 5.2/passenger trip. On the other hand, if Delhi Metro decides to charge Rs. 3/passenger trip till break-even, then it breaks even in the year of 2029 instead of 2028. And break-even annual ridership would be 252 Crores.
Effect of Delhi Metro on other modes of transport Buses constitute for about 1.2% of vehicles on road in Delhi. The number of buses running on Delhi roads was 42639 as on 31st march 2007. The number of buses increases by 8% every year. Buses currently meet the mass transport needs of Delhi. The ridership by Buses is 60% of the total ridership. Overall about 5 million people travel by bus each day in Delhi. The average trip length, which is about 14 kms takes about 55-60 minutes, and these figures are increasing every year because of increase in traffic. The bus service is hence unreliable, over-crowded and also time consuming with long waiting periods at bus stops. This has lead to increase in number of personal vehicles, hence adding to the traffic and this cycle continues. Delhi is predominantly dependent on road transport, with the railways catering to only about1% of the local traffic. The ring rail network in Delhi is grossly underutilized. Buses cater to about 60% of the total demand while personal vehicles account for 30%. Buses constitute only 1.2% of the total number of vehicles, but cater to 60% of the total traffic load. Among personalized vehicles, motor cycles and scooters comprise about 64.5% of the total number of vehicles in Delhi, while cars and jeeps account for 26.6% of the total vehicles. Savings in fuel consumption The savings in fuel consumption is due to the diversion of a part of the Delhi road traffic to Metro and reduced congestion to vehicles on the roads. Use of electricity for the Metro will reduce the petrol and CNG consumption that could result in savings of foreign exchange and will also reduce air pollution. Fuel savings arising out of the Metro could result in the savings of foreign exchange for the Indian economy given that a very large proportion of domestic demand for petroleum products in India is met out of imports. Saving of Passenger time with Metro and without Metro Sc = Average Speed in congestion situation Sd = Average Speed in decongested situation D = Daily Run of Vehicles (in km) Time taken in congested situation (Without Metro) = D/Sc, Time taken in decongested situation (With Metro) = D/Sd Page | 11
Table 6: Daily Time Taken by a bus
without metro
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
50 45 40 35 30 25 20 15 10 5 0
Daily time taken by the passenger travelled by bus, in hrs
with metro
Figure 4 Table 7: Daily Time Taken by a bus Daily time taken by the passenger travelled by auto, in hrs 45 40 35 30 25 20 15 10 5 0
without metro
with metro
Figure 5 The above chart shows the comparison for time saved for the bus and auto travel. D/S c shows time saved in case of congestion i.e. without Metro and D/Sd shows time saved in case of Metro. The time saved in the later case in more because of reduced congestion on the roads. Also as the no of vehicles on the road reduces the average speed will also increase. The difference between the D/Sd and D/Sc curve shows the time saved because of introduction of MRTS. Overall this shows that one of the main objectives of MRTS to decongest the Delhi roads will be achieved in the due course of time.
Effect of Commonwealth Games on MRTS In 2010, four years from now, New Delhi will play host to the third largest multi-sporting event in the world, the Commonwealth Games. Tens of thousands of visitors will descend upon the
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city. To prepare itself for this, the city is planning a major overhaul of its urban infrastructure as well as its sporting facilities. Will the event lead to rampant and unchecked development, possibly unplanned? Is the amount spent on such events worth it? There are very good reasons for why developing nations are more adversely impacted by such events. They can be listed as: 1. High infrastructural development costs. 2. Under-utilization of facilities post event. 3. High opportunity cost of capital. 4. Unable to attract large numbers of spectators. The emphasis of the present Rapid Transport system is now on the Metro. However more importantly, Phase II, aimed at extending the network much further in the city, is already under construction, and is set to be ready before 2010. This phase is going to require massive investment, over Rs 8000 Crores. The second phase is going to provide a vital transport link to East Delhi, with a dedicated Games Village station. The metro, which is already beginning to have an impact on the city‘s congested roads, will be able to make a much larger impact as its network and reach grows. The second phase, originally planned to be ready by 2010-2011 is now going to be operational by 2009, due to the 2010 Games. The Total Revenue for the metro for the year 2007-2008 and the forecasted revenue for the year 2010.
Figure 6: Total Revenue Generated
The Revenue increases at a rate of 12% from the year 2007-2009. Revenue increases drastically at a rate of 38% from 2009 to 2010 .This increase is because of the Commonwealth Games -The advertisement revenue and the ridership increases drastically in year 2010. The revenue increases is because of alone, DMRC‘s revenue generation would go beyond Rs8.5bn from lead corporate outlets, ATMs, etc. Through sale of tickets, the DMRC is Page | 13
expected to earn nearly Rs7bn and about Rs6bn from space allocations to corporate advertisers.
Figure 7: The Ridership impact taking the Commonwealth games into consideration. The red line gives the ridership revenue taking the commonwealth games into account And the blue line gives the revenue generated without taking commonwealth games in consideration.
The revenue created in the year 2010 has increased drastically in the year 2010 as the price of the ticket increases considerably pertaining to the commonwealth games. Ridership increases due to the increase in the foreign tourists. But the increase is not that drastic as not many foreign tourists turn to developing countries to watch the matches because of the state of infrastructure. The ridership dips in the year 2011 and the infrastructure created is underutilized. DMRC should keep the cost of the project under control as it might not even earn the fixed cost. Planning in future must be done keeping a realistic view.
Figure 8: Advertisement Revenue
The advertisement revenue forms the major portion of the revenue earned by the metro as the ridership is not up to the mark. The advertisement revenue earned increases as many corporate houses pay high prices for the advertisements as India will be in spotlight at that point of time.
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We can infer that the DMRC would suitably allocate rental and advertisement space to higher bidders after it has accomplished the metro projects in early 2010 especially before the commencement of forthcoming Commonwealth Games. The rate at which revenue increase will decrease subsequently after the commonwealth games.
Conclusion The Delhi Metro provides multiple benefits: reduction in air pollution, time saving to passengers, reduction in accidents, reduction in traffic congestion and fuel savings. There are incremental benefits and costs to a number of economic agents: government, private transporters, passengers, general public and unskilled labor. Delhi Metro which is part of MRTS (Mass Rapid Transport System) is an economically viable, time saving, environment friendly mode of transport for the most populous city of India.
The demand supply analysis shows that in the future Delhi Metro will be a monopoly. The analysis shows that the break even will be achieved in the year 2028. The commuter travel time saved over the period will increase in comparison with other modes of transport. The common wealth games scheduled in 2010 will increase the ridership thus giving a boost to the total revenue.
References http://economictimes.indiatimes.com/articleshowarchive.cms?msid=2929040 http://delhiplanning.nic.in http://www.delhigovt.nic.in http://www.delhimetrorail.com http://www.niua.org http://web.iitd.ac.in http://www.nctr.usf.edu http://mpra.ub.uni-muenchen.de
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