Research Report

DELHI METRO

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Abstract

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 advertising 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.

Objective

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

Scope of the work

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.

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Table of Contents

About Delhi Metro .......................................................................................................................... 3

Need for Metro ................................................................................................................................ 3

SWOT Analysis .............................................................................................................................. 4

Literature Review............................................................................................................................ 5

Demand – Supply Curves ............................................................................................................... 6

Modeling of Revenue functions ...................................................................................................... 7

Break-Even Point ............................................................................................................................ 9

Using Cost-Volume Profit Analysis method ............................................................................ 10

Effect of Delhi Metro on other modes of transport ....................................................................... 11

Savings in fuel consumption ..................................................................................................... 11

Saving of Passenger time with Metro and without Metro ........................................................ 11

Effect of Commonwealth Games on MRTS ................................................................................. 12

Conclusion .................................................................................................................................... 15

References ..................................................................................................................................... 15

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About Delhi Metro

The capital city of New Delhi lies within India‘s second largest metropolitan area simply called

Delhi. Recently Delhi has become the most populous city in India according to a survey with a

population of approximately 14 million. Today, Delhi‘s extended population is approaching 22

million people, and has created crowded conditions with extremely high demands on the public

transportation element. This led to the development of the Delhi Mass Rapid Transit System, or

Delhi Metro as it is known. The success of this transport network that began operations in

December 2002 now sees it as not only the public transportation of choice, but the model itself

has become the standard for the development of other systems across India. And yet the current

metro system, known as Phase I, is itself set to grow with another three phases, scheduled for

completion in 2010, 2015 and 2020. By the time Phase IV is operational, the Delhi Metro will

have found its place ahead of the London system as the largest public metro rail network in the

world.

The construction of the first phase of DM was spread over 10 years during 1995-96 to 2004-05

while that of the second phase, which started in 2005-2006 is expected to be completed by 2010-

11. The total capital cost of DM at 2004 prices for Phase I and Phase II are estimated as Rs.

64,060 and Rs. 80,260 million, respectively. Phases III and IV of DM will cover most of the

remaining parts of Delhi and even extend its services to some areas such as NOIDA and Gurgaon

belonging to the neighboring states of Delhi and come under the National Capital Territory.

Unique feature of Delhi Metro is its integration with other modes of public transport, enabling

the commuters to conveniently interchange from one mode to another. To increase ridership of

Delhi Metro, feeder buses for metro stations are operating. In short, Delhi Metro is a trendsetter

for such systems in other cities of the country and in the South Asian region. Delhi Metro is a

world-class metro. To ensure reliability and safety in train operations, it is equipped with the

most modern communication and train control system. It has state-of-art air-conditioned coaches.

Ticketing and passenger control are through Automatic Fare Collection System, which is

introduced in the country for the first time. Travelling in Delhi Metro is a pleasure with trains

available at a frequency of 5 minutes at off-peak hours and 3 minutes at peak-hours. Entries and

exits to metro stations are controlled by flap-doors operated by 'smart-cards' and contact less

tokens. For convenience of commuters, adequate number of escalators has been installed at the

metro stations.

The Metro will totally transform our social culture giving us a sense of discipline, cleanliness

and enhance multifold development of this cosmopolitan city.

Need for Metro

Today, urban area experiences the drastic population growth. This population growth has two

components in it: 1) the normal population growth and 2) the movement of huge number of

working people from other parts of the countries. The increase in per capita income due to

healthy economy and the growing population in urban areas lead to steep increase in ridership on

the road (two-wheelers, autos, cars and public transport buses), thus in turn lead to tremendous

traffic congestions on the urban road. The growing demand for the transport in mega cities has

serious effects on urban ecosystems, especially due to the increased atmospheric pollution. An

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ecologically sustainable urban transport system could be obtained by an appropriate mix of

alternative modes of transport resulting in the use of environmentally friendly fuels and land use

patterns. The introduction of CNG in certain vehicles and switching of some portion of the

transport demand to the metro rail have resulted in a significant reduction of atmospheric

pollution in Delhi. The Delhi Metro provides multiple benefits: reduction in air pollution, time

saving to passengers, reduction in accidents, reduction in traffic congestion and fuel savings.

There are incremental benefits and costs to a number of economic agents: government, private

transporters, passengers, general public and unskilled labor.

SWOT Analysis

Strengths

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.

Weakness

Metro considerably more expensive than the bus.

Less ridership than estimated.

High development cost

Displaced many economic backward people.

Difficulties in acquiring land and

Opportunity

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.

Threats

A struggle on the part of those being displaced, and protests, petitions, hunger strikes,

negotiations and legal action have all been initiated.

Security threat.

Risk of cost overruns and ridership shortfalls.

Increase in cost of the parts.

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Literature Review

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.

Line 1 Shahdara – Rithala

Shahdara-Tis Hazari section has been completed and commissioned on 24.12.2002.

Tis Hazari – Inderlok section has been commissioned on 3.10.2003.

Inderlok – Rithala section has been commissioned on 31.3.2004.

Line 2 Vishwavidyalaya - Central Secretariat

Vishwavidyalaya – Kashmere Gate section has been commissioned on 20.12.2004.

Kashmere Gate – Central Secretariat has been commissioned on 3.7.2005.

Line 3 Barakhamba Road – Kirti Nagar – Dwarka

Barakhamba Road – Dwarka section has been commissioned on 31.12.2005.

Extension of Line 3

Extension into Dwarka sub-city commissioned on 1.4.2006.

Barakhamba Road - Indraprastha commissioned on 11.11.2006

The Phase II of the project will consist of the following:-

Vishva Vidyalaya – Jahangir Puri

Central Secretariat – Qutab Minar

Shahdara – Dilshad Garden

Indraprastha – New Ashok Nagar

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Yamuna Bank – Anand Vihar ISBT

Kirti Nagar – Mundka (along with operational link to Inderlok)

The second phase of Delhi metro will be essentially an extension of the 1st phase. For example a

person who had to commute the distance between Qutab Minar and Jahangir puri earlier when

only phase 1 was operational had to go to central secretariat using a different mode of transport

and then catch a metro till Vishwavidyalaya and then again take a different mode of transport to

reach Jahangirpuri.But the same person after the completion of phase 2 will catch the metro

directly from Qutab Minar and reach Jahangirpuri. This explains the fact that the ridership will

not go up steeply when phase 2 is operational because the people who had been using the metro

earlier would still be using it but for a longer distance now and will be paying more money for

the increased distance travelled

Demand – Supply Curves

The demand for a commodity faced by the firm depends on the size of the total market or

industry demand for the commodity, which in turn is the sum of the demands for the commodity

of the individual consumers in the market. The demand for a commodity arises from the

consumer‘s willingness and ability (i.e. from their desire or want for the commodity backed by

the income) to purchase the commodity. Also consumer demand theory postulates that the

quantity demanded of a commodity per time period increases with a reduction in its price.

In case of Delhi metro, as the services demanded per time period increases, the passengers are

willing to pay lesser amount.

Table 1: Fare Sensitivity of Ridership on the Metro (2006)

Fare Rate % Ridership

(In Rs/Passenger trip)

3 100%

4 90%

5 75%

6 50%

*source: M N Murty, Kishore Kumar Dhavala, Meenakshi Ghosh and Rashmi Singh, Social Cost-Benefit Analysis of

Delhi Metro, October 2006.

Assumption #1: Though the above Fare Rates are the base values in the year of 2002, Delhi

metro decided to keep the fare rates same till 2006.

Expected annual ridership in 2006 : 121.07 Crores

Assumption #2: The services provided by the Delhi Metro can meet this annual ridership and

Delhi Metro will not invest any further on rolling stock unless otherwise it is required.

Assumption #3: The services provided by the Delhi Metro remains same throughout the year.

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Individual demand curve can be obtained by plotting Fare Rate/Passenger trip versus the

ridership in a particular year.

Figure 1: Demand Supply curve in 2006 Figure 2: Change in Demand

In the above figures, point A, B & C indicates the fare rate/trip at 100% ridership for a particular

year. Also these points are the equilibrium points for a particular year and are the minimum fare

rate that the Delhi Metro would like to charge. With reference to the demand-supply curve in

2006, an individual will be willing to pay on an average Rs. 3/trip if the ridership is 100%. At the

same time, one will be willing to pay Rs.6/trip if the ridership is 50% and Delhi Metro also will

charge the same so as to maximize the revenue per year. Why because, as the ridership per year

comes down, advertising revenue and property development revenue per passenger also will

decrease. It implies that Delhi Metro acts like a Monopoly since there is no metro rail service

provider and it is managed by the government.

Figure 2 shows the change in demand across the year. This can be explained by the increase in

ridership (majorly due to re-distribution of ridership between various transports). It was assumed

that the change in demand is proportionate to the increase in ridership.

On the other hand, change along the supply curve indicates that Delhi Metro follows the

incremental pricing strategy to overcome mainly the maintenance cost incurred. But in real time,

it may decide to change the price after a span of years. So, the excess expenses incurred due to

the increase in ridership can be overcome by the other revenues (advertising and property

development revenues).

Modeling of Revenue functions

Delhi Metro as a commercial organization operates with the objective of maximizing the profit.

So it is required to consider the above before proceeding with any financial evaluation of a

project. The financial capital cost of DM represents the time stream of investment made by it

during its lifetime. The investment expenditures made by the project in one of the years during

its life time constitutes the purchase of capital goods, cost of acquisition of land and material

inputs for project construction. The operation and maintenance (O & M) cost of the project

constitutes the annual expenditure incurred on energy, material inputs for maintenance and

payments made to skilled and unskilled labour. The financial benefits from the Metro are the

0

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3

4

5

6

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50 100 150 200

Rs.

Annual Ridership, in Crores

Change in Demand across the years

2006

2010

2014

Supply

0

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2

3

4

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50 100 150 200

Rs.

Annual Ridership, in Crores

Demand-Supply curve in 2006

Demand

Supply Supply

D2006

D2014

A B A

C

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traffic earnings and the revenues from advertisement and property development, as reported by

RITES. Revenue streams for Phases I and II, as reported by RITES (1995b, 2005b) have been

taken.

Table 2: Estimated Total Revenue Table 3: Estimated O & M cost

*source: M N Murty, Kishore Kumar Dhavala, Meenakshi Ghosh and Rashmi Singh, Social Cost-Benefit Analysis of

Delhi Metro, October 2006.

Assumption #4: Contribution from Property Development to Total Revenue is 39%.

Assumption #5: Growth rate of Property Development Revenue is ~ 10% per annum.

Assumption #6: Fare/passenger trip increase proportionately with the increase in annual

ridership.

The above data has been divided into two scenarios for the sake of analysis. That is, 2005-2010

is Pre-common wealth games and 2010-2040 is Post-common wealth games. Also, it was given

that by 2010, both the phase 1 & 2 will be fully operational.

Table 4: Estimated Total Revenue Break Up

Using the above data, by plotting Annual Ridership versus the various revenues, one can

formulate the revenue equations for the two scenarios mentioned above.

Traffic

Property

developm

nt

Advertise

mentTotal

2006 121.07 3.00 363.21 668.93 683.06 1715.20

2007 126.11 3.12 394.06 735.82 810.82 1940.70

2008 131.29 3.25 427.12 809.40 946.08 2182.60

2009 136.73 3.39 463.24 890.34 1088.52 2442.10

2010 142.39 3.53 502.37 979.38 1894.46 3376.20

2011 148.30 3.67 544.96 1077.32 2088.93 3711.20

2012 152.61 3.78 577.07 1185.05 2343.58 4105.70

2013 157.06 3.89 611.24 1303.55 2536.31 4451.10

2014 161.66 4.01 647.56 1433.91 2881.83 4963.30

2015 166.37 4.12 685.83 1577.30 2821.57 5084.70

2016 171.22 4.24 726.44 1735.03 3165.53 5627.00

2017 176.22 4.37 769.49 1908.53 3542.88 6220.90

2018 181.37 4.49 815.09 2099.38 3857.73 6772.20

2019 186.66 4.63 863.36 2309.32 4255.52 7428.20

2020 192.10 4.76 914.40 2540.25 4825.95 8280.60

2021 197.72 4.90 968.69 2794.28 5471.23 9234.20

Fare per

passenger

trip, in Rs.

Annual

Ridership,

in Crores

Year

Revenue, in Crores

Year Revenue Year Revenue Year Revenue

2005 1505.2 2018 6772.2 2031 12868.7

2006 1715.2 2019 7428.2 2032 13330.7

2007 1940.7 2020 8280.6 2033 13417.7

2008 2182.6 2021 9234.2 2034 13947.7

2009 2442.1 2022 9912.6 2035 14047.7

2010 3376.2 2023 10624.2 2036 14654.7

2011 3711.2 2024 11555.7 2037 14768.7

2012 4105.7 2025 11606.7 2038 15465.7

2013 4451.1 2026 11912.7 2039 15594.7

2014 4963.3 2027 11971.7 2040 16394.7

2015 5084.7 2028 12322.7 2041 16543.7

2016 5627 2029 12389.7

2017 6220.9 2030 12792.7

Year O & M cost Year O & M cost Year O & M cost

2005 312.3 2017 1048.4 2029 2014.9

2006 325.3 2018 1098.1 2030 2125.5

2007 338.7 2019 1150.7 2031 2462.8

2008 352.7 2020 1212.7 2032 2604.2

2009 367.4 2021 1376.3 2033 2756.2

2010 782.2 2022 1437.4 2034 2919.8

2011 800.6 2023 1503.2 2035 3095.8

2012 836.6 2024 1573.8 2036 3285.2

2013 874.5 2025 1649.8 2037 3489.1

2014 914.5 2026 1731.6 2038 3708.6

2015 956.8 2027 1819.5 2039 3944.9

2016 1001.3 2028 1914.1 2040 4199.3

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Scenario 1: (Pre-Common Wealth Games)

Revenue from the traffic : 2092 NERT

Revenue from Property & Development : 352.2

& *123 NER DP

Revenue from Advertisement : 831.3*251 NERAdvt

Scenario 2: (Post-Common Wealth Games)

Revenue from the traffic : 2092 NERT

Revenue from Property & Development : 258.3

& *201 NER DP

Revenue from Advertisement : 133.3*194 NERAdvt

Where, N: Annual Ridership

*All revenues are in rupees.

Total Revenue : AdvtDPT RRRTR &

Break-Even Point

In economics, specifically cost accounting, the break-even point (BEP) is the point at which cost

or expenses and revenue are equal: there is no net loss or gain, and one has "broken even".

Therefore has not made an economic profit or a loss. The break-even point is one of the simplest

yet least used analytical tools in management. It helps to provide a dynamic view of the

relationships between sales, costs and profits. A better understanding of break-even—for

example in this case, expressing break-even ridership as a percentage of actual revenues—can

give us a chance to understand when to expect to break even.

Total Cost = Fixed Cost + Variable Cost

Fixed Cost: Capital Cost (land cost, construction cost, rolling stock, etc)

Variable Cost: Operation & Maintenance cost

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Table 5: Break Even Point Calculation

Figure 3: Break Even Point

Economic Profit: The profit earned after the adjustments made towards all the costs (Explicit

Costs & Implicit Costs) or simply total revenue minus total costs.

Explicit Costs: Fixed Cost & Variable Cost

Implicit Costs: Opportunity cost (in this case opportunity cost is considered to be zero)

Normal Profit: The yearly profit earned after the adjustment made towards the variable costs.

Though Delhi Metro makes the profit every year, it will break-even in the year of 2028.

Using Cost-Volume Profit Analysis method

The basic limitation when we do a cost-volume profit analysis, the fare rate per passenger trip

should remain constant.

Let us assume, the fare rate per passenger trip is to be Rs. PT

Total Revenue : Traffic Earnings + Advt. Revenue + Property & Development Revenue

: PTN + )*194( 133.3NE + )*201( 258.3NE

Year

Annual

Ridership,

in Crores

TR,

in Crores

O & M

cost,

in Crores

TC,

in Crores

Economic

Profit,

in Crores

Normal

Profit,

in Crores

2011 152.63 3666.40 701.84 15133.84 -11467.44 2964.56

2012 157.09 3999.30 743.43 15175.43 -11176.13 3255.87

2013 161.67 4362.97 787.49 15219.49 -10856.52 3575.48

2014 166.39 4760.28 834.15 15266.15 -10505.87 3926.13

2015 171.25 5194.39 883.58 15315.58 -10121.20 4310.80

2016 176.25 5668.73 935.94 15367.94 -9699.21 4732.79

2017 181.40 6187.09 991.41 15423.41 -9236.32 5195.68

2018 186.70 6753.58 1050.16 15482.16 -8728.57 5703.43

2019 192.15 7372.73 1112.39 15544.39 -8171.66 6260.34

2020 197.76 8049.47 1178.31 15610.31 -7560.83 6871.17

2021 203.53 8789.23 1248.13 15680.13 -6890.91 7541.09

2022 209.48 9597.91 1322.09 15754.09 -6156.19 8275.81

2023 215.59 10482.00 1400.44 15832.44 -5350.44 9081.56

2024 221.89 11448.60 1483.43 15915.43 -4466.83 9965.17

2025 228.37 12505.47 1571.33 16003.33 -3497.87 10934.13

2026 235.04 13661.11 1664.45 16096.45 -2435.34 11996.66

2027 241.90 14924.84 1763.08 16195.08 -1270.24 13161.76

2028 248.96 16306.83 1867.56 16299.56 7.27 14439.27

2029 256.23 17818.25 1978.23 16410.23 1408.02 15840.02

2030 263.72 19471.30 2095.46 16527.46 2943.84 17375.84

2031 271.42 21279.35 2219.63 16651.63 4627.72 19059.72

2032 279.34 23257.04 2351.16 16783.16 6473.88 20905.88

2033 287.50 25420.40 2490.49 16922.49 8497.91 22929.91

2034 295.89 27786.96 2638.07 17070.07 10716.89 25148.89

2035 304.53 30375.94 2794.40 17226.40 13149.54 27581.54

2036 313.43 33208.38 2960.00 17392.00 15816.38 30248.38

2037 322.58 36307.30 3135.40 17567.40 18739.90 33171.90

2038 332.00 39697.92 3321.20 17753.20 21944.72 36376.72

2039 341.69 43407.86 3518.01 17950.01 25457.85 39889.85

2040 351.67 47467.37 3726.49 18158.49 29308.88 43740.88

2041 361.94 51909.54 3947.31 18379.31 33530.22 47962.22

0

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20000

30000

40000

50000

60000

2000 2010 2020 2030 2040 2050

Break Even Point

Total Revenue, in Crores Total Cost, in Crores.

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Total Cost : Total Fixed Cost + Total Variable Cost

: )0714432( E + )*093( 002.2NE

Setting N = 248.96 Crores, the calculated fare rate per passenger trip to achieve the break-even

(where, Total Revenue = Total Cost) would be ~ Rs. 5.2. If Delhi Metro decides to maintain its

fare rate per passenger trip till it is broken even, then it should charge Rs. 5.2/passenger trip.

On the other hand, if Delhi Metro decides to charge Rs. 3/passenger trip till break-even, then it

breaks even in the year of 2029 instead of 2028. And break-even annual ridership would be 252

Crores.

Effect of Delhi Metro on other modes of transport

Buses constitute for about 1.2% of vehicles on road in Delhi. The number of buses running on

Delhi roads was 42639 as on 31st march 2007. The number of buses increases by 8% every year.

Buses currently meet the mass transport needs of Delhi. The ridership by Buses is 60% of the

total ridership. Overall about 5 million people travel by bus each day in Delhi. The average trip

length, which is about 14 kms takes about 55-60 minutes, and these figures are increasing every

year because of increase in traffic. The bus service is hence unreliable, over-crowded and also

time consuming with long waiting periods at bus stops. This has lead to increase in number of

personal vehicles, hence adding to the traffic and this cycle continues.

Delhi is predominantly dependent on road transport, with the railways catering to only about1%

of the local traffic. The ring rail network in Delhi is grossly underutilized. Buses cater to about

60% of the total demand while personal vehicles account for 30%. Buses constitute only 1.2% of

the total number of vehicles, but cater to 60% of the total traffic load. Among personalized

vehicles, motor cycles and scooters comprise about 64.5% of the total number of vehicles in

Delhi, while cars and jeeps account for 26.6% of the total vehicles.

Savings in fuel consumption

The savings in fuel consumption is due to the diversion of a part of the Delhi road traffic to

Metro and reduced congestion to vehicles on the roads. Use of electricity for the Metro will

reduce the petrol and CNG consumption that could result in savings of foreign exchange and will

also reduce air pollution. Fuel savings arising out of the Metro could result in the savings of

foreign exchange for the Indian economy given that a very large proportion of domestic demand

for petroleum products in India is met out of imports.

Saving of Passenger time with Metro and without Metro

Sc = Average Speed in congestion situation

Sd = Average Speed in decongested situation

D = Daily Run of Vehicles (in km)

Time taken in congested situation (Without Metro) = D/Sc,

Time taken in decongested situation (With Metro) = D/Sd

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Table 6: Daily Time Taken by a bus

Figure 4

Table 7: Daily Time Taken by a bus

Figure 5

The above chart shows the comparison for time saved for the bus and auto travel. D/Sc shows

time saved in case of congestion i.e. without Metro and D/Sd shows time saved in case of Metro.

The time saved in the later case in more because of reduced congestion on the roads. Also as the

no of vehicles on the road reduces the average speed will also increase. The difference between

the D/Sd and D/Sc curve shows the time saved because of introduction of MRTS. Overall this

shows that one of the main objectives of MRTS to decongest the Delhi roads will be achieved in

the due course of time.

Effect of Commonwealth Games on MRTS

In 2010, four years from now, New Delhi will play host to the third largest multi-sporting event

in the world, the Commonwealth Games. Tens of thousands of visitors will descend upon the

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Daily time taken by the passenger travelled by bus, in hrs

without metro with metro

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Daily time taken by the passenger travelled by auto, in hrs

without metro with metro

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city. To prepare itself for this, the city is planning a major overhaul of its urban infrastructure as

well as its sporting facilities.

Will the event lead to rampant and unchecked development, possibly unplanned?

Is the amount spent on such events worth it?

There are very good reasons for why developing nations are more adversely impacted by such

events. They can be listed as:

1. High infrastructural development costs.

2. Under-utilization of facilities post event.

3. High opportunity cost of capital.

4. Unable to attract large numbers of spectators.

The emphasis of the present Rapid Transport system is now on the Metro. However more

importantly, Phase II, aimed at extending the network much further in the city, is already under

construction, and is set to be ready before 2010. This phase is going to require massive

investment, over Rs 8000 Crores. The second phase is going to provide a vital transport link to

East Delhi, with a dedicated Games Village station. The metro, which is already beginning to

have an impact on the city‘s congested roads, will be able to make a much larger impact as its

network and reach grows. The second phase, originally planned to be ready by 2010-2011 is now

going to be operational by 2009, due to the 2010 Games.

The Total Revenue for the metro for the year 2007-2008 and the forecasted revenue for the year

2010.

Figure 6: Total Revenue Generated

The Revenue increases at a rate of 12% from the year 2007-2009.

Revenue increases drastically at a rate of 38% from 2009 to 2010 .This increase is

because of the Commonwealth Games -The advertisement revenue and the ridership

increases drastically in year 2010.

The revenue increases is because of alone, DMRC‘s revenue generation would go beyond

Rs8.5bn from lead corporate outlets, ATMs, etc. Through sale of tickets, the DMRC is

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expected to earn nearly Rs7bn and about Rs6bn from space allocations to corporate

advertisers.

Figure 7: The Ridership impact taking the Commonwealth games into consideration.

The red line gives the ridership revenue taking the commonwealth games into account

And the blue line gives the revenue generated without taking commonwealth games in

consideration.

The revenue created in the year 2010 has increased drastically in the year 2010 as the

price of the ticket increases considerably pertaining to the commonwealth games.

Ridership increases due to the increase in the foreign tourists. But the increase is not that

drastic as not many foreign tourists turn to developing countries to watch the matches

because of the state of infrastructure.

The ridership dips in the year 2011 and the infrastructure created is underutilized.

DMRC should keep the cost of the project under control as it might not even earn the

fixed cost. Planning in future must be done keeping a realistic view.

Figure 8: Advertisement Revenue

The advertisement revenue forms the major portion of the revenue earned by the metro as

the ridership is not up to the mark.

The advertisement revenue earned increases as many corporate houses pay high prices for

the advertisements as India will be in spotlight at that point of time.

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We can infer that the DMRC would suitably allocate rental and advertisement space to

higher bidders after it has accomplished the metro projects in early 2010 especially

before the commencement of forthcoming Commonwealth Games.

The rate at which revenue increase will decrease subsequently after the commonwealth

games.

Conclusion

The Delhi Metro provides multiple benefits: reduction in air pollution, time saving to passengers,

reduction in accidents, reduction in traffic congestion and fuel savings. There are incremental

benefits and costs to a number of economic agents: government, private transporters, passengers,

general public and unskilled labor. Delhi Metro which is part of MRTS (Mass Rapid Transport

System) is an economically viable, time saving, environment friendly mode of transport for the

most populous city of India.

The demand supply analysis shows that in the future Delhi Metro will be a monopoly.

The analysis shows that the break even will be achieved in the year 2028.

The commuter travel time saved over the period will increase in comparison with other

modes of transport.

The common wealth games scheduled in 2010 will increase the ridership thus giving a

boost to the total revenue.

References

http://economictimes.indiatimes.com/articleshowarchive.cms?msid=2929040

http://delhiplanning.nic.in

http://www.delhigovt.nic.in

http://www.delhimetrorail.com

http://www.niua.org

http://web.iitd.ac.in

http://www.nctr.usf.edu

http://mpra.ub.uni-muenchen.de