TN transport undertakings incurred heavy losses with over 57% employee expenses, finds CAG

CHENNAI: All the eight State Transport Undertakings together incurred heavy losses of Rs 29,923 crore from 2017-18 to 2021-22 from the operation of buses with the employee cost alone constituting 57.67% of the total costs.

In the Compliance Audit Report for the year ended March 2022, the CAG has said that the employee benefit expenses ranged from Rs 8,571.72 crore to Rs 8,987.68 crore constituting 55.20% to 63.55% of total expenses.

“Though the contribution of STUs ranged between Rs 3,376 crore and Rs 6,547 crore during the audit period, fixed costs remained significantly higher than the contribution due to higher employee expenses and finance costs, which resulted in losses ranging from Rs 4,234 crore to Rs 8,329 crore during 2017-22. For break-even, the STUs have to fill the wide gap between their contribution and overheads through various measures,” the report noted.

Among the eight STUs, TN State Transport Corporation (Coimbatore), incurred the highest loss of Rs 4,819.81 crore due to the operation of Ghat services and higher employee cost. The State Express Transport Corporation incurred a loss of Rs 1,962.46 crore, which was the least among all STUs because of lower employee costs on the account of deploying driver cum conductor, the report stated.

It also observed that no analysis or study had been made to improve fuel efficiency. Even though MTC/TNSTUs performed better than neighbouring state STUs by way of higher kilometre per litre (KMPL), they earned lesser earnings per kilometre (EPKM) due to lower fares and incurred higher costs per kilometre (CPKM) on account of higher employee cost and interest burden, which resulted in higher loss per kilometre.

Pointing to the State government’s direction to the PSUs in April 1989 to prepare a long-term corporate plan setting out their goals and objectives, the CAG said that no long-term plans were prepared by the STUs during the period 2017-22 and such plans would have provided better vision and autonomy in the functioning of the STUs. However, the management responded that as per the government direction in February 2022, the STUs prepared the five-year long-term plan and placed it in the board meeting for implementation from 2022-23 which was confirmed by the government as well.

The audit also blamed the steep increase in bus fares by Rs 20 to 88.89% in January 2018 instead of periodical revision of fares as the reason for the drop in passenger patronage by 15% and 10% during 2018-19 and 2019-20 and consequential loss of revenue to the extent of Rs 4,076.62 crore. The survey revealed that the majority of passengers were dissatisfied with the public transport services and due to their responses, they were opting for privately-owned transport services.