Is subsidising metro travel a wrong policy?

By: Ashraf Mumtaz      Published: 05:18 PM, 19 Feb, 2020
Is subsidising metro travel a wrong policy?

The Orange Line Metro Train (OLMT), set up with a soft loan of $1.5 billion from a Chinese bank plus $300 million contributed by the Pakistan government, is expected to be operational during the next few weeks, providing the people of Lahore a new means of communications on a 27-kilometre route between Dera Gujran to Ali Town.

But the ride will add to the burden of people of Punjab, who will have to afford billions in subsidy every year.

The OLMT is estimated to handle quarter of a million passengers every day.

The project is ostensibly a headache for the PTI-led coalition in Punjab as on its operationalization its political dividends will go to the rival PML-N that had conceived and completed most part of it before the July 2018 elections that threw it out of power by a small margin of seats after a continuous rule for a decade.

On the other hand, the project cannot be shelved because tons of money have been spent on it and repayment of the Chinese loan is also due to start.

In a way the situation is like: “Damned if you do, damned if you don’t”.

The OLMT came under discussion at a Punjab cabinet meeting in Lahore on Tuesday.

There are reports that all ministers were opposed to the idea of subsidizing the OLMT fare. And without subsidy the travel will not be affordable for the passengers. If the number of passengers is less than certain level, the quantum of subsidy required to keep the project functional would go up further.

The chief minister is reported to have suggested that the fare be fixed at Rs40.

However, he was told that the government would have to pay a subsidy of Rs10 billion a year even if fare was set at Rs50.

At the end, the cabinet decided to refer the matter to the Punjab Assembly for a final decision.

Since the PML-N has a large number of MPAs in the house, they are expected to make a good contribution on the issue of fixing the fare.

It may be recalled that there was a time when the Punjab government gave a subsidy of Rs5 million per day for passengers of the Lahore, Rawalpindi-Islamabad and Multan metros.

A passenger paid Rs20 for one-way ticket while the government paid Rs40 in subsidy.

In total, the Punjab government paid Rs12 billion per year to subsidise the metro travel in three cities.

Recently, the government raised the metro fare to Rs30.

It is estimated that more than 300,000 people travel by metros in the three cities.

Whatever the ultimate Punjab Assembly decision on fares, the elected representatives should also see whether it is advisable to spend billions in subsidies on commutation in certain cities ignoring the 70 percent of the population living in rural areas.

Another factor which should not be forgotten is the rising food prices which have become unaffordable for the common man. While not everybody travels by metro bus or metro train, everybody can’t survive without food.

It’s encouraging that the prime minister has ordered action against hoarders and profiteers, and also wants to bring down by 20 percent the prices of eatables, this will be a great challenge for him. Because of the subsidy he has announced for this sector, the situation will remain under control for some time. But to keep the prices under control for a long time to come will need constant surveillance.

Categories : Opinion