Is Metro fare hike unfair?

After eight years, the BMRCL increased fares. Was it the best way to deal with the self-managed public transport?

The Bangalore Metro Rail Corporation Limited (BMRCL) stirred a hornet’s nest by announcing revised ticket fares last week. According to many users who protested at the Mahalakshmi Metro station on Wednesday, the fare sometimes amounted to a 100% hike. This was mainly due to a contentious slab-based calculation system.

Following protests, the officials swung into action to “recalibrate” the price, mainly by calculating actual kilometres instead of slabs. As a result, the fares were reduced a bit, taking the total hike up to 71.43%.

Officials say this revision, which came after eight years, was overdue and justified. They have shared many data points to prove their point.

Data shared by the BMRCL shows that the BMRCL has significant loan repayment obligations. The document details the loan repayment schedule for the next six years, starting from 2024-25. 

The loan repayment amount increases significantly over the years, starting at Rs. 647.66 crore in 2024-25 and reaching Rs 1457.25 crore in 2029-30. Interest payments also increase, starting at Rs 122.94 crore in 2024-25 and reaching Rs 1319.33 crore in 2029-30.

The total repayment amount, including loan repayment and interest, increases significantly over the years, starting at Rs. 770.60 crore in 2024-25 and reaching Rs 2776.58 crore in 2029-30.

The data also shows how increasing inflation, energy costs, and operational expenditure have increased the need to generate extra revenue. BMRCL is way behind its potential to generate non-fare revenue using the assets and real estate it has created. Hence, a significant portion of its revenue comes only from the ticket price.

The Fare Fixation Committee recommended a 105.15% fare increase, translating to an average 51.55% increase (or 6.87% YoY) before discounts. This fare revision was implemented by the Bangalore Metro Rail Corporation Limited on February 9, 2025. This fare revision took place after 7.5 years.

Status of other metro rail corporations

The status of metro rail corporations across the country is similar. Delhi Metro Rail Corporation’s current fare ranges from Rs 10 to Rs 60; Like Bengaluru, this was also revised in 2017. Even Delhi Metro has its loan repayment schedules, and a fare hike is imminent unless the state steps in and subsidises it, say experts.

The Chennai Metro fare was last revised on February 22, 2021, when the maximum fare was reduced from Rs 70 to Rs 50 to encourage more commuters to use the service. The Chennai Metro Rail project also has loans to repay. This was funded through a combination of equity contributions from the Government of India and the Government of Tamil Nadu and loans from international agencies such as The Japan International Cooperation Agency (JICA).

The Mumbai Metro has not revised its fare structure since its inception in June 2014. The initial fare slabs ranged from Rs 10 to Rs 40, and despite discussions and proposals for fare hikes over the years, the structure has remained unchanged.

The funding for the Mumbai Metro project is sourced from a combination of equity contributions, loans, and grants. The Japan International Cooperation Agency (JICA) has provided approximately 57.2% of the total project cost. The Union government and the Maharashtra government have contributed 10.4% in equity. Additional funding has been secured through subordinate debt from central and state governments, property development, impact fees, stakeholder contributions, and grants. The Asian Development Bank (ADB) has extended a loan of $926 million. The repayment burden looms large for any metro rail corporation whenever there are loans.

When non-fare revenues don’t help

The Hyderabad Metro is a study case for non-fare revenue. It was developed through a Public-Private Partnership (PPP) model, with the majority of funding provided by Larsen & Toubro (L&T) and a smaller contribution from the government. 

The Telangana government contributed 10%, and L&T covered 90% of the project’s cost by securing a significant loan from a consortium of 10 banks led by the State Bank of India.

The Hyderabad Metro has implemented various strategies to generate non-fare revenue, including developing retail spaces and malls and introducing shops and ‘Office Bubbles’—remote co-working spaces within metro stations.

Despite all these, the Hyderabad Metro has faced financial challenges, with accumulated losses of about Rs 6,000 crore over the past few years. The state government has now decided to undertake the project’s second phase independently, without the PPP model.

The current fare structure ranges from a minimum of Rs 10 to a maximum of Rs 60 for distances beyond 26 kms. This translates to an average cost of approximately Rs 2.30 per km for longer journeys. However, there has been no fare hike for the Hyderabad Metro since 2017. The last discussion for fare revision occurred in October 2022, but this revision did not occur.

What’s a better solution?

Ravi Gadepalli, Head of Transit Intelligence LLP—a public transport advisory firm, feels the fare discussion in India is “polarised between people who think everything should be free and people who believe it should be market responsive”. He says the reality is somewhere in between.

“The typical way of approaching public transport fare policy is that when the political fare people pay does not match the technical fare, the rest gets covered by other sources to recover costs. While it is understood that the government needs to pay for some public transport subsidy, what amount is appropriate is the real question,” he adds.

Currently, governments just subsidise all the losses. He opines that a better approach would be to link the public transport funding to performance in addition to the just fare gap.

“In London, Hong Kong, etc., public transport agencies prepare five-year business plans that predict ridership and performance targets. The fares are also included in the plan and agreed upon by the agency and government. Subject to the agency meeting performance targets, the government subsidises the losses,” Ravi explains.

“Then, it becomes the government’s call to define the fares as a tradeoff with losses to be made and ridership to be achieved,” he says.

Vinay Baindur, a citizen activist, says instead of delivering a fare hike shocker after eight long years, the BMRCL should have hiked the fare once every two years or periodically. “The cost of building metro tracks will keep going up. Funding needs to be done strategically. BMRCL does not pay any attention to passenger safety facilities; they are not added to the initial project cost,” he adds.