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LATEST NEWS UPDATES | Puri defies economists, says Delhi metro woes not due to fares -Jasmine Shah

Puri defies economists, says Delhi metro woes not due to fares -Jasmine Shah

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published Published on Nov 29, 2017   modified Modified on Nov 29, 2017
-The Indian Express

DMRC and Union minister for urban development Hardeep Singh Puri are right that the daily ridership of Delhi metro hasn’t declined by 3 lakhs due to fare hike. It has declined by 4.8 lakhs.

Economists are frequent targets of ridicule by politicians for failing to predict crises or having vastly differing opinions of major economic events (e.g. demonetisation). But all economists agree on one fundamental tenet — demand reduces as prices increase. At the moment, the only politician in India ridiculing even this is the Union minister for urban development, Hardeep Singh Puri.

In his defense of the 100% fare hike in Delhi metro over the past 6 months, Mr Puri categorically states that “Drop in metro ridership can’t be linked to fare hike”. His statement followed ridership figures recently released by DMRC that revealed that daily ridership of Delhi metro has dropped by 3 lakhs between September and October 2017, and currently stands at 24.2 lakhs. In his defense, Mr Puri reiterated the DMRC’s stance that metro ridership figures aren’t comparable month-to-month since there are seasonal variations.

Mr Puri and DMRC are partially correct. The above calculation of drop in ridership is too simplistic and doesn’t account for two important factors. First, metro ridership patterns aren’t exactly comparable from one month to the next since seasonal and weather fluctuations affect travel demand (e.g. college admissions, summer temperatures etc.). A better way therefore to calculate the change in ridership of Delhi Metro in October 2017 is to compare it with the daily ridership of October 2016, which is 27.2 lakhs.

A second factor which seems to be getting entirely ignored in the din, is that average mass transit ridership sees a predictable year-on-year rise in demand due to factors such as increase in economic activity, wages, population etc. In the case of Delhi metro, there was a 6.6% increase in the average daily ridership from 2015-16 to 2016-17 even though the fares and total network length of DMRC remained the same. By this yardstick, if the fares of DMRC hadn’t increased in 2017, the expected daily ridership figure for October 2017 would have surged to 29 lakhs.
The cumulative decline in daily ridership therefore between October 2016 and October 2017 is 29 lakhs to 24.2 lakhs, a difference of 4.8 lakhs or a 17% decline. By any measure, this is a shocking decline and calls into question the entire operational model of DMRC.

I have argued earlier that the chief cause behind this drastic drop in ridership of Delhi Metro is unaffordability, and how the recent fare hike has made it perhaps the most unaffordable metro rail system in the world. Metro rail authorities of most global cities work closely with economists to model the sensitivity of fare changes on travel demand, and determine the impact of any fare change on different profiles of commuters. It is such scientific analyses that informs decisions of fare changes.

Please click here to read more.

The Indian Express, 29 November, 2017, http://indianexpress.com/article/opinion/puri-defies-economists-says-delhi-metro-woes-not-due-to-fares-4959722/


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