Published on Feb 15, 2016
Being the capital city of India, it does not come as a shock that New Delhi is the most populated city in India in term of people and vehicles. The population of Delhi and vehicles on road are ever increasing leading to problems like traffic, pollution and high fuel consumption.
Considering all this ―THE DELHI METRO‖ comes as a huge relief for the people of Delhi. There are no doubts about the social benefits of the Delhi metro. It will help in reducing traffic and pollution in the capital and more important save a lot of time for the daily commuters. As a part of this project, the Delhi Metro has been analyzed from the economic point of view. Considerable effort has been put into understanding the economic viability of the Delhi Metro
A lot of analysis is done taking into consideration past and present data, and justified future assumptions like effect of common wealth games on ridership of Delhi metro, ridership in other modes of transportation in coming years, ridership on full functioning of two phases of the metro project, revenue generation from advertiing and property development, etc. The various analysis are SWOT , Demand-supply analysis, Modeling of revenue functions, Break-even point, Cost-volume profit analysis, effect of Delhi metro on other transport systems, effect of common wealth games on Delhi metro. This research paper concludes with justified results that the Delhi Metro is an economically feasible and time saving venture of DMRC (Delhi Metro Rail Corporation). The success of the Delhi Metro has already triggered similar ventures in other Indian cities like Mumbai and Bangalore.
The objective of the study is
To analyze the strength and weakness of the Delhi Metro from socio-economic perspective
To model the demand-supply curve and various revenue functions
To estimate the break-even for Delhi Metro
To understand the effect of Delhi Metro on other modes of transportation
To study the effects of common wealth games on revenues
This analysis will help the other metro proposals in pipe-line to streamline the process of planning and assist the Delhi Metro to improvise its revenue generation & further expansion. It also provides the assistance for Delhi government to plan for the other modes of transport like Light Rail Transit System, Mono Rail and dedicated bus corridor.
Cost-effective mode of transport for the general public of Delhi.
Reduce congestion on roads making movement easier.
Reduce atmospheric pollution to a great level making the environment healthy.
Ultra-modern technology and visually striking design, dynamic and modern, competitive and World Class‘.
Reduce travel time: One hundred per cent punctual operations.
Safer Mode of transport for Women.
The voluntary International Standardization Organization (ISO) 14,000 certification
Metro considerably more expensive than the bus.
Less ridership than estimated.
High development cost
Displaced many economic backward people.
Difficulties in acquiring land
Revenue from property development and advertisements.
Potential to achieve higher ridership.
Tax rebate given to the DMRC because of the 2010 Commonwealth Games in Delhi.
The success of the Delhi Metro has encouraged other Indian cities to seriously attempt to introduce Metro systems.
The next Metro line in the city will be 10-15 per cent cheaper than the previous phases based on the learning curve theory.
A struggle on the part of those being displaced, and protests, petitions, hunger strikes,
negotiations and legal action have all been initiated.
Risk of cost overruns and ridership shortfalls.
Increase in cost of the parts.
The social cost-benefit analysis of Delhi Metro has been already done by the people of institute of economic growth. They tried to measure all the benefits provided by Delhi Metro such as reduction in air pollution, time saving to passengers, reduction in accidents, reduction in traffic congestion and fuel savings in terms of monetary term. Also they made an attempt to measure the costs from Phase I and Phase II projects covering a total distance of 108 kms in Delhi. Estimates of the social benefits and costs of the projects were obtained using the recently estimated shadow prices of investment, foreign exchange and unskilled labor as well as the social time preference rate for the Indian economy for a study commissioned by the Planning Commission, Government of India and done at the Institute of Economic growth. The findings were:
The financial cost-benefit ratio of the Metro was estimated at 2.30 and 1.92 at 8% and 10% discount rates respectively.
Its financial internal rate of return was estimated as 17% while the economic rate of return is 24%.
The estimated net present social benefit (NPSB) of the Metro at 2004-05 prices and the 8 percent social time preference rate for the Indian economy was Rs. 419979.6 million.
The social rate of return on investment in the Metro was calculated as 22.7 percent. This could be explained by the provision of incremental income to the Delhi public by Delhi Metro.