Impact of Subsidies to Private Vehicles on Public Bus Transport Operation - A Case of Ahmadabad, India

A subsidy, either explicit or implicit, to different modes of transport generates inefficiency and inequity in urban transport. Both explicit and implicit subsidy doled out through indirect taxes, monetary incentives and disproportionate usage of road spaces and other transport infrastructure respectively to a particular mode often becomes detrimental to another mode of transport and are difficult to assess as there has hitherto not been any comprehensive method to evaluate it. The rationale for introducing subsidy in transport services is to offset the market failures, correct the negative externalities, and improve the ratio of benefit to cost. However, the case of Ahmedabad city in India shows evidence reverse to the norm. The objective analysis of the explicit and implicit cost of using the private car, public bus and two-wheeler establish as to how the different types of tax remissions and exemptions, policy incentives, and blatantly disproportionate usage of road and related infrastructure by private cars constitute both explicit and implicit subsidy for the private cars at the cost of a dwindling public bus transport service. It has been observed that private cars not only receive more subsidy than public buses, but also simultaneously impose multiple externalities thereby reducing the efficiency of public bus transport. It is hoped that a set of pragmatic fiscal tools can adequately neutralize the inappropriate appropriation of subsidies by private cars and hugely benefit the public bus transport thereby bringing in equity and efficiency in urban mobility.