Thursday, September 19, 2019

Gurugram Rapid Metro and SpiceJet Fares: Ripping Off Public Money

Nothing should surprise us anymore—not after learning from the Times of India that at least five states have been paying taxes on behalf of their wealthy elected representatives, for decades. But they are not the only ones who enjoy the benefit of State subsidies. A combination of dubious corporates, complicit bureaucrats and self-serving politicians as well as a bunch of privileged, upper middle-class Indians also enjoy the benefit of State subsidies.
Let’s look at one example—Haryana, which was saddled with the cost and obligation of running and maintenance of the Rs4,500-crore, perennially loss-making metro rail project constructed on the basis of report by the failed Infrastructure Leasing & Financial Services (IL&FS). It is well established now that costs were padded up on the basis of cooked up ridership numbers. The matter is now before the court.
When the Rapid MetroRail Gurgaon Limited (RMGL) and its twin entity, Rapid MetroRail Gurgaon South Limited (RMGSL), ran out of funds, the government partner, HUDA (Haryana Urban Development Authority, now Haryana Shehri Vikas Pradhikaran --HSVP) was ordered by the court to keep the metro running. Ironically, it is the IL&FS entities that served termination notices to HUDA for breach of contract. The litigation continues.
A key fact to remember at the moment is that the metro has a ridership of under 60,000 passengers per day (on both phases of the project) when the original project report had projected a ridership of 100,000 per day for the first phase alone and around 600,000 per day for the two phases. More about this later.
Now, let’s look at how SpiceJet comes in. On 4th September, Ashok Khemka, principal secretary in the Haryana government, wrote a note regarding subsidy to SpiceJet airlines for flying on the Hisar-Chandigarh route. He made a comparison with what the people of Haryana are paying for travelling in a non-air-conditioned (AC) bus on the same route. Mr Khemka, renowned for his integrity and ability, has been transferred over 45 times in his career for daring to shine the light on wrongdoing, but remains undeterred and unyielding.
19/09/19 Sucheta Dalal/Money Life
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