How Tech Startups can help Bangalore Metro?

Sometime in January, I read a news item which sounded quite weird to me. Bangalore Metro has decided to increase the prices of its monthly pass. Just a few weeks later, Bangalore received the coveted award of having the worst traffic congestion in the world. Anybody with an IQ higher than 60 would know that we need more and more multi -modal public transport to be deployed rapidly and their use encouraged to manage the traffic situation. But than comes the news of Bangalore Metro increasing its prices.

Why is it so? Why did this happen?

Bangalore Metro officials did a simple calculation and claimed that their operating expenditures have increased and the paybacks at the current fares are not happening. Therefore, they are left with no option but to increase the rates. Their maths seems to include the simple excel sheet-based calculations which any of us can do.

But, I think time has come to completely dump the existing financial model evaluation to value Public goods and come up with creative and new Economic Framework to evaluate Public goods.

What is missing in the current and existing frameworks to value Public Goods?

Let us take an example of the Bangalore Metro. What happens if we increase the Metro fares?

1.      Some people will decide to start using the two or four wheelers on the road. This would result in incremental traffic on the road. The incremental traffic on the road will slow down the traffic and loss of time on the road will mean loss of economic activity. This loss of economic activity will be for the entire population on the road at the moment. We do not measure this loss of economic activity and include it in our payback calculations for the Metro.

2.      The incrementally slow traffic would mean that more people will get more exposed to the polluted air and extra noise generated on the road. This would have an incremental health cost on the entire population on the road. We do not measure the cost to health and include it in our payback calculations for the Metro.

3.      The incrementally slow traffic will also mean that the fuel consumption of the extra traffic on the road will increase for the same distance due to poorer mileage. This will mean higher pollution and increased fuel import costs for India. We do not measure either the cost of extra pollution or the cost of extra fuel import cost and include it in our payback calculations for the Metro.

4.      The extra two wheelers and four wheelers that will come on the road would have been manufactured at an extra cost to the environment. Not only that, they would need to be dumped or recycled at a cost. The impact of this would not only be on the extra two wheelers, it will be on all the two wheelers who would than go through increased bumper to bumper traffic and need more maintenance costs and earlier than expected dumping. We do not measure either the cost of extra manufacturing, recycling or maintenance and include it in our payback calculations for the Metro.

5.      The extra vehicles on the road would mean extra parking area requirement. This will mean reduction in common areas like parks or congestion on road side. This reduction in social goods needs to be calculated and included in our payback calculations for the Metro.

Not to forget extra wear and tear of the roads. All of this can go on and on.

But the moot point is that there was a time when a lot of these economic costs were cumbersome to measure. Today massive computing power allows us to simulate all kinds of scenarios and their impact to be calculated. Indeed, it is time to use the latest technology to build in completely new economic frameworks to measure economic impact of our actions and on Social Goods.

Let’s hope that the next Nobel Prize in Economics comes for utilizing Technology for making significantly better economic decisions. Hopefully, 20 years later, Bangalore Metro officials would read about that and include them in their return calculations. But I really hope, some Tech start-ups come across and try to develop at least a few measurable components that start being used as inputs in such economic decisions.