1.1 INTRODUCTION

Transport system is the barometer of economic, social, and commercial

progress. It has transformed the entire world into one organization. Transportation

assumes strategic importance in the development process of an economy. An efficient

transport system stimulates the process of economic development. Economic

development in turn itself creates activity patterns which generate further demand for

transportation. Thus transportation can aptly be considered both a cause as well as a

consequence of economic development.1

The transport system provides one single mean for the opening up the country

for the upliftment of the economic level of a vast rural population. It provides

essential ingredients in extending the money economy to the agriculture sector. An

improvement in the transportation system may lower the input price and hence the

production cost. Transport development reduces seasonal price fluctuation and

facilitates technological diffusion. Transport sector bears a close and complex

relationship with all other sectors of an economy. Efficient Administration, Military,

defense, famine relief, growth of Agriculture Industry trade, effective movement of

food and other necessities of life. The even distribution of population and growth of

towns and ports, all depends on the efficiency and sufficiency of transport system.

Besides these economic benefits, transport provides non economic benefits

also. It promotes political cohesion, reinforcement of natural security and

encouragement to socially desirable settlement patterns.2

1.1.2 History and Development of State Road Transport Corporation in India

Road transport has played a vital role in the development of rural area. No

other means of transport except road are able to serve these regions. Development of

road transport is not of recent origin but as old as human civilization.

In the year 1898 the first motor vehicle was driven on the Indian roads. The

recommendation made by Jayakar Committee in November, 1927 where regulating

periodical road conferences and creation of road development fund. As a result, the

first road conferences were devised for uniform motor vehicle regulations. The Indian

Road congress was founded in 1934 as a permanent organization in place of

periodical road conferences. The importance of road came into focus during the

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Second World War because railways alone were not adequate to fulfill the

requirement of transport.

In the year 1939 the motor vehicle act was passed for regulating motor

vehicles all over the country. In December 1943 a conference of chief engineers was

held at Nagpur under the Chairman of Mr. J.V.Sugar to prepare road development

programme at National level. It was popularly known as Nagpur Plan. This Plan

divided the roads in four parts via; (1) National Highways (2) Provincial Highways

(3) District roads and (4) Village roads. The National Highways were further divided

into five categories under Road Development Plan as National Highways, State

Highways, Major District Roads, Other District Roads and Village Roads. Road

Transport Corporation Act was passed by the Government of India in 1950 for the

better functioning of the Road Transportation.

1.1.3 Himachal Road Transport Corporation

Road transport plays an important role in the process of economic

development of any state. In a hilly state it is considered to be the life line of the

people. In Himachal Pradesh where other means of transportation is negligible the

road transport acquires added significance. It has changed the life of people of the

state since its inception. In order to accelerate the process of economic development

of the state the HRTC was established in the year of 1974 after the merger of Mandi-

Kullu Road Transport in Himachal Government Transport.

In Himachal Pradesh, the passenger and goods transport was completely

nationalized during the year of 1949. It was put under the control of Himachal

Government Transport. This department acquired a fleet of 107 vehicles which

included 52 buses operating on 21 routes covering 19 Lacs K.ms annually. Mandi-

Kullu Road Transport Corporation was established during September 1959 mainly

with the object for operating passengers transport services on Pathankot-Mandi-Kullu

section. It was established as a corporate body in the year 1959 with the share capital

contribution of the Punjab state, Government of Himachal Pradesh and Northern

Railway in the ratio of 40:40:20 respectively. With the merger of hilly areas of Punjab

in Himachal Pradesh as a 1.11.1966 a long cherished goal of the people of the Pradesh

was fulfilled. Himachal Pradesh Road Transport Corporation came into existence on

2.10.1974. Himachal Pradesh Road Transport is an organization providing Passenger

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Road Transport Services to the general public under the ownership of state

government and it is established under section 3 of Road Transportation Corporation

Act, 1950.

After the nationalization of bus transport, economic activity picked up even in

inaccessible areas of Himachal Pradesh. Himachal Road Transport Corporation has

developed a bus route network in remote and inaccessible areas like Lahaul-Spiti,

Kullu, Sirmour and Chamba. Besides providing passenger transport in the State,

Himachal Road Transport Corporation has been operating as goods transport system.

It is also providing food and essential commodities to the remote corners of the state

even where private truck owners hesitate to go. HRTC has undoubtedly, played a

major role in the economic development of the state.

At present Himachal Road Transport Corporation has 23 operational units

functioning in the state. The operation of the corporation is being controlled by four

divisional officers functioning at Shimla, Mandi, Dharmshala and Hamirpur. The

objective of the corporation is to provide better transport service to the people and the

corporation is doing its best to achieve this objective.

1.1.4 Organizational Structure of Himachal Road Transport Corporation

In order to know the ins and outs of the working of an organization, it is

important to analyze its organizational structure. Since the year 1975, Himachal Road

Transport Corporation has a three tier structure. The corporation office at Shimla

controls four divisional officers located at Shimla, Hamirpur, Dharamshala and

Mandi. These divisions control the Regional Offices (Depot) under them.

The management of the corporation vests in the Board of Director consisting

of 16 directors including the Chairman, Vice Chairman and Managing Director. Out

of 16 directors, 15 are nominated by the State Government and one is appointed by

the Central Government. The Managing Director is the Chief Executive of the

Corporation. There are three general managers who look after the Secretarial work of

the board of directors, administration, traffic operations and technical operations. The

three General Managers are General Manager Administration, General Manager

Operation and General Manager Technical. The transfers of employees even at lower

level, starting a new schedule, control of flying squad etc. all is under the corporate

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office. This Office is known as Head office which works as corporate office for taking

policy decisions and further asks the divisional offices to get it implemented the

decision taken from the units.

The Accounts Department is being headed by the Financial Advisor cum

Chief Accounts Officer (F.A. and CAO) who is a government nominee. The five units

named Dharamshala, Palampur, Baijnath, Pathankot and Chamba are being controlled

by Dharamshala Division. Mandi division controls five units, namely Kullu, Keylong,

Mandi, Sarkaghat and Sundernagar units. Hamirpur division controls five units

namely Bilaspur, Nalagarh, Una, Hamirpur and Dehra. Shimla division controls eight

units namely Shimla Local Unit-II, Shimla Rural Unit-III at Dhalli, Shimla Tara Devi

Unit-I, Solan, Nahan, Rohru, Rampur and Recong Peo. In addition to this, there are

four workshops at Taradevi, Jassur, Parwanoo and Mandi. The workshops at Tara

Devi and Jassur are responsible for major oversetting of engines and fuel pumps

assemblies etc. The workshop at Taradevi is responsible for printing, stocking and

issue ticket books to Regional Offices. The workshop at Parwanoo, Mandi and Jassur

are responsible for fabrication of bus bodies, tyres retreading etc.

The Primary Accounts are maintained by each divisional office workshop unit

and rendered to Head Office for consolidations. Account wing at Head Office headed

by Financial Advisor / Chief Accounts Officer look after the work of account wing.

The divisional officers headed by Divisional Manager work more or less as a channel

between the Corporate Office and the Regional Office. Divisional Office gets the

compliance variant from units. It also amalgamates policies/ strategies framed by the

Head Office. It compiles all the information pertaining to the working of every unit

and monitors the functioning of each unit.

1.1.5 Privatization of Buses in Himachal Pradesh

Liberalization of the road transport sector introduced under the amendment act

1988, by the government of India has resulted in rapid increase in private participation

in the transport sector. Through this transport policy, the government of Himachal

Pradesh in February 1991 proposed to have passenger transport in the ratio of 70:30

between Himachal Road Transport Corporation and Private Operators. As per

notification in May 1991, HRTC and Private Operators have maintained the

prescribed ratio of 70:30 at the district level.

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Himachal Road Transport Corporation at the time of its inception during the

year of 1974 was having 819 buses while the number of private buses was almost

negligible in the state. During the year 1990-91, HRTC was having 1525 buses and

number of private buses were 147 only (hence the ratio was 91:09). But private buses

have been increasing year after year at a very fast rate and the ratio of 70:30 between

HRTC buses and private buses was totally violated. Presently, HRTC has a fleet of

2026 buses where private have reached to 3307 buses in the state. Thus, ratio between

HRTC buses and private buses came around 38:62. Due to the state government’s

policy of liberalization and privatization the size and share of Himachal Road

Transport Corporation buses is synchronizing year by year.

1.1.6 Efficiency

The comparison of what is actually produced or performed with what can be

achieved with the same consumption of resources (money, time, labor etc.) It is an

important factor in determination of productivity. There are different types of

efficiency- productive, allocation, X- Inefficiency, Dynamic, Social, Financial,

Distributive and Technical efficiency.

Technical Efficiency: Technical efficiency is the effectiveness with which a given set

of inputs is used to produce an output. In last few years government has given more

attention towards the improvement of transport inputs like technology, engine, fuel,

tyre and springs etc. By these improvements, the earning per kilometer is increased

and cost has decreased. By using new technology life of the vehicle increases.

Technical efficiency of seen in terms of increased earning per bus per day, decreased

expenditure per bus per day, less breakdowns and accidents etc.

Viability and Technology: The use of input which ultimately reflects cost and

returns are determinant of viability. If the cost on transport and returns are equal, the

transportation can be considered a viable one

1.2 Review of Literature

In India public sector enterprises played an important role. It has contributed

significantly for the development of this country. No doubt few public sector

undertakings were existing in India prior to the Independence like P&T and Railways.

After Independence the role of public sector increased many folds. There is a plethora

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of literature available on public sector. However, the role of public sector started

synchronizing after the government initiated the structure adjustment, programme and

initiated a number of measures for bringing reforms in the economy. The

liberalization, privatization and globalization programme were accorded the place of

prominence. All these measures have reduced the role of public sector undertaking in

India. With the starting of the disinvestment process of public sector, its size has

shown a decreasing trend. Here we are presenting the studies which have been taken

for measuring the performance, functioning and evaluation of public sector in India.

Tyson (1970)4 took up the issue of raising the bus fare at the peak hours in U.K. Heb

studied the effect of differential bus fear in Greater Manchester for the period 1970 –

1975. The study was based on passenger behavior one day before and one day after

each policy change. The study reveals that the surcharge on the fares during the peak

period does not have any adverse impact on the traffic.

Satyanarayana (1971)5 observed that the cost of the service of road transport

depends upon the size of the fleet, the vehicle condition and the length and road

condition. His study attempts to find out the inter-relationship between these factors

on the basis of the data collected from a representative sample of motor vehicle

operations in Andhra Pradesh. He observed that the size of the motor transport unit

has been a fundamental factor influencing the cost of operations of motor transport

industry.

Seth (1972)6 while analyzing the function of joint management council in Public and

Private sector undertaking observed that Public sector enterprises formed joint

management council under the direction of the government, whereas Privates sector

enterprises had already launched the scheme of participative management. It was

observed that this scheme of joint management councils is functioning better in

private sector as compared to the Public sector undertaking. The worker and the

management have shown much more interest in this participative scheme in private

sector than in the public sector undertaking He highlighted the need of cooperative

attitude among workers and management for the success of the participative

management schemes. He argues that the success of the scheme depends upon the

need for participation as felt by the employees, manager and workers for the

accomplishment of their respective goals.

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Pereira (1975)7 examined the causes for the leakage of revenue in metropolitan

transport organization and inferred that metropolitan service earns no profit mainly

due to human problems. Leakage may be because of ticket less travel, by not paying

for luggage carried, for over travelling beyond stag permitted by ticket, by issue of

spurious tickets etc. He suggested that overcrowding foot-board travel and

indiscipline in the bus should be reduced. Dishonest crew should be detected. Special

cadre with integrity, honesty and efficiency should be periodically employed on the

various routes to have a better collection with normal crew. Special buses should be

introduced during peak hours. Checking should be strengthened and dishonesty and

cheating should be severely punished. Sample incentive schemes linked to collection

should be introduced.

The National Transport Policy Committee (1980)8 in its report on “Passengers

Road Transport in India,” taking the cross-sectional data of 31 undertakings for 1976-

77 observed that the unit cost was mainly influenced by two variable namely fleet

utilization and vehicle utilization. The committee advocated for a direct exchequer

subsidy to urban transport undertakings in view of the social benefits that they extend.

Central Institute of Road Transport (CIRT), Pune, (1980)9 contributed a paper to a

seminar on “How to make STUs Financially Viable?” held by Association of Road

Transport Undertaking, New Delhi. The paper identified the problems of interest

burden, constraints on increasing fare, and leakage of traffic revenue, and traffic

management as major problem in the way of effective management of State Transport

Undertakings and made some Practicable suggestion.

Sharma (1980)10 highlighted the role of board of directors in public and private

enterprises. The research pointed out that in the private enterprises the board of

director enjoys the command of top management and all the important decisions

relating to distribution of dividends to the share holders etc. are taken by the board of

directors themselves, whereas in the public sector enterprises the boards of directors

play a negligible role. It was observed that the private sector boards of directors are

more powerful than that of the public sector undertakings.

Rao K. Rajeshwar (1982)11 while studying the management effectiveness in the

transport operations has stated that Delhi Transport Corporation is not being managed

properly due to mismanagement the corporation running into losses. The study reveals

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that the corporation needs a favourable government attitude in terms of transport

policy; simultaneously the working of the organization is to be improved by

introducing scientific organizational structure, effective planning and sound financial

management only than the corporation can take stand.

Vijay (1982)12 conducted study on “Corporate Model for Kerala State Road Transport

Corporation”. He has pointed out that Kerala government is creating “zones” for the

efficient operations, without many changes in the administrative setup, which has

result in creating another level in the management hierarchy. He feels that any plan

for recognition should take in consideration, among other things, the geographical

factors, the development of other modes of transport and the Kerala State Road

Transport Corporation in the overall transport plan of the state.

Patankar (1983)13 studies the various dimensions of Road Passenger Transport since

1950s and analyzed the operational productivity and efficiency of STUs for the period

of 1973-74 to 1979-80. He opined that the future of road transport sector in India

would brighten only with productivity oriented planning.

Arora (1987)14 made an appraisal of three different bus services operating in the state

of Punjab. It was pointed out that the performance of Private operators is better than

that of Punjab Roadways and Pepsu Road Transport Corporation both in terms of

physical and financial variables. The study further points out that with increasing

economic development and consequent urbanization, the movement of menalong with

materials is likely to go up manifold.

Verma (1987)15 in his study on “performance appraisal of Public enterprises in India”

concentrated on desirable measures to improve the operational efficiency of Public

sector undertakings in terms of productivity, business efficiency and human

efficiency. The study concluded that these efficiencies can be brought about by a

proper pricing policy of the products of the Public sector units, by securing

coordination among various parts involved in operational efficiency.

Acharya (1988)16 examined the necessary of training and development as well as the

need to introduce a well defined recruitment policy in Public sector undertakings. He

highlighted the significance of talent hunting recruitment and training for bringing

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about an improvement in the performance of public enterprises by providing security

and promoting professionalism.

Lowe (1989)17 did a study on the development of transportation system in Japan.

Thus, analyzed the transport and communication system during the Tokugawa Era

(1600-1686) and described the process of development of certain features which

ultimately helped the establishment of modern transport in Japan.

Morris (1990)18 analyzed the cost and time in public sector projects. He pointed out

that delay in projects implementation and attendants cost overrun have become a

regular feature of public sector projects delay and cost overrun have serious

consequence just like that of poor project planning and management, inadequate

funding of projects, bureaucratic indicators lake of coordination and inadequate

technical skills. The study concluded that delay and cost overruns in Public sector

project investment can raise the capital output ratio and bring down the efficiency of

investments.

Naidu (1990)19 in his research work analyzed the form and organization structure of

public enterprises in India. He presented a profile of directors at the board level and

examined the managerial environment and highlighted the extent of control over the

public enterprises. The study reveals that there is no uniform organizational structure

for each establishment in public sector undertakings. The study reveals that

managerial environment is not conductive for effective functioning of public

enterprises.

Kulshrestha (1994)20 selected a new area of study in the State Road Transport

Undertakings. He explains that as the Public Sector Transport has been facing

competition from others means of transport and from the private operators, bus station

management is important. He throws light on the bus station management and offers

some practical ways and means to improve the condition in Uttar Pradesh State Road

Transport Corporation.

Majumdar (1995)21 evaluated relative performance differences between private joint

and public sector. He found that private sector is more efficient than public and joint

sector. Further, the public sector undertakings are less profitable and efficient than

joint sector. He found private sector to be more efficient in area of capital formation

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contribution to national economy due to efficient utilization of available resources and

on account of its growth rate. Although the public sector reforms has helped to

increase the efficiency of this sector but it is not only necessary to continue with the

major liberalization to encourage individual growth but also to undertake speedy

restructuring of public sector undertaking management so that the efficiency gain are

realized in long run also.

Raghavan (1995)22 in his research paper highlighted that the criticism of SRTUs has

become more transparent with the recent policy changes. One of the major criticisms

is that they are, by and large, operations-oriented rather than strategy- oriented. He

observes that the state Road transport Undertakings in India are not really competing

well in an industry, which is becoming more and more unstable. He suggests

competitive types of strategies emphasizing the importance of service marketing

approach

Subramanyam (1996)23 conducted her research work on “Working Capital Analysis

of State Road Transport Undertakings in Tamil Nadu”. She has stated that the

corporation does not enjoy the authority of fare fixation, however the corporation may

be held responsible for day to day operations as reflected in the working capital

position. The author has adopted liquidity rations analysis and concluded that there is

no uniformity between the corporations, as to the influence of factors identified on the

study of current assets. If the physical performance is improved it would take care of

financial performance. The way to improve its physical performance is to improve

fuel efficiency, technical knowhow and to avoid unhealthy competitions.

Gundam (1998)24 examined both the financial and social performance of Andhra

Pradesh State Road Transport Corporation both at the state and regional levels.

Particularly she dealt with the pricing policies. She described in detail the

organizational setup of the corporation along with its various features like capital

investment and staffing.

Kaushal, S.L. (1998)25 observed that Quality of Work Life had Positive relationship

between QWL and Quality of Life and job satisfaction. The Author has suggested

implementing Quality Circles (QC) programmes for improvement in job satisfaction

of 2nd class Employees.

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Ekramul and Alinoor (1999)26 found that the workers of Private Sector Textile Mills

receive significantly higher QWL than their Counter parts in the Public Sector. The

study also revealed Positive correlation between QWL and performance and Negative

correlation between QWL and accidents.

Singh (2000)27 studied the productive efficiency of 21 state road transports

undertaking in India during the period 1984-85 to 1996-97. Multilateral index

procedure is used to compute the growth and relative levels of gross productivity of

the STUs. The study examined the temporal relationship of the cross-sectional

rankings of individual STU’s productive efficiency estimates. The study revealed

wide disparity among STUs with respect to productive efficiency on an average small

size STUs is more productive than the larger one. The productive efficiency ranks of

STUs have remained broadly unchanged over the years.

Batra and Dangwal (2001)28 their study found that Quality of Work Life can be

define and operational zed in term of employees perception of their physical and

psychological well being at work. The another’s further suggested joint labour

management cooperation and participate decision making for making better the

quality of work life.

Parmar (2002)29 observed that with the establishment of new corporate culture, new

vistas in the QWL areas would be explored with the advancement in technology.

These changes in technology will force the leaders in industries to think in different

terms of establishing a new work culture. The further opined more autonomy at the

work place and more participative decision making to ensure improved QWL.

Venkatesh (2004)30 studied the technical efficiency of twenty three major Indian

State Transport Undertakings mainly providing rural and intercity passenger transport

service for the year 2000-01. This is done by the estimation of Stochastic Frontier

Production function using the method of maximum likelihood. It was observed that

there is huge disparity in technical efficiency across STUs ranging from 56.15% for

Madhya Pradesh State Road Transport Undertaking to 98.99% for Tamilnadu State

Transport Corporation Average of technical efficiency scores of sample STUs was

found to be 84.22%. The study concluded that given the size of distribution of the

sample STUs and their working environment, the potential gain in productive

efficiency for most of them is very high.

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Agrawal (2006)31 explained the public transport in urban area and given suggestion

for of improvement of vehicle technology in India. Most of the states having public

bus services. In urban area, bus services have been also spread out. Projection of the

increased urban travel demand require that policy measures be adopted the fulfill this

enhanced demand in a sustainable manner. Government of India had cleared that

economic development would not gain in the compromise with economic health of

the nation. For this many strategy has been made, for the development of public

transport as well as pollution less economy. Improvement of vehicle technology

required mandating the phased use of cleaner technologies and cleaned fuels. It

includes both cleaner petroleum fuels and as well as alternative.

Kharola and Tiwari (2008)32 explained the public transport system in cities in India

has been largely based on buses and operated by public agencies. The performance of

this organization on the financial front has been rather wanting. Several reasons - both

internal and external – have often been cited for their unsatisfactory performance. One

of the less reached areas has been the various taxes these organizations have to bear.

This paper has been analyzed the different levies on the operation of buses in a city

and also attempts to compare these in different states in the country. It also compared

the taxes levied on other modes of transport. The impact of these taxes on the total

operating cost has also been brought out. This paper concluded that the high rate of

various taxes, one of the reason for the financial unavailability of public transport

system in India.

Sharma (2009)33 examined the working of government for development of national

highway. He highlighted the National Highway development Programme (NHDP)

that is launched by government this project has planned to complete till 2015. It

connects the metropolitan cities – Delhi, Mumbai, Chennai and Calcutta. In this

project the national highway authority of India designing roads with the safety point

of view.

Shiv Agerwal (2011)34 studied the Total Factor Productivity (TFP) growth and its

components in 34 State Road Transport Undertakings (STUs) of India for the period

1989-1990 to 2000-01 using DEA based Malmquist Productivity Index (MPI)

approach. The study finds that on an average, the TFP change is 10.9% per annum

over the sample time period. In order to identify the sources of TFP change, technical

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efficiency change for each STU is also measured. The results show that there is no

significant change in technical efficiency but remarkable change in technology. Thus,

the decomposed index of TFP growth shows that much of the observed regress in total

productivity is explained by the negative change in technology of the STUs, over a

sample period.

1.3 Need of the Study

Public transport in India has always played a vital role in furthering the

economic development of the country. It has shown enormous growth in all parts of

the country and Himachal Pradesh is no exception to this rule. The rational for the

establishment of public sector as a part of social economic policy inherent in the

economy. The public enterprises where established in all the sectors of the economy.

As result of the emphasize given in the establishment of public sector in Indian

economy, the size of this sector increased rapidly. This is evident from the growth rate

in assets and the variety of economic activity now being undertaken in this sector. It

has expanded in public utilities, industry, finance, commerce and trade of the state. It

has made in roads for the state interventions in all spheres of the activities of

economy.

Since public transport is considered to be a backbone for the development of

the regions for the state, most of the state government in our country, monopolized the

operation of the transportation. The public transport system was considered to be an

instrument for maximization and realization of social gain. Himachal Road Transport

Corporation is one of the biggest Public Sector Corporation of the state. Therefore it

becomes pertinent to study the performance of such biggest public sector undertaking

of the state.

1.4 Scope of the Study

Public transport is considered to a backbone for the development of any

region. In Himachal Pradesh there is an adequate network of roads. Although, being a

hilly area the government of Himachal Pradesh has given due emphasize on the road

transport. It expanded its area of operation and provided transport facilities in most

parts of the state. The Himachal Road Transport Corporation has been divided into

four divisions namely Shimla, Mandi, Hamirpur and Dharamshala. This study will be

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emphasized on the evaluation of performance of HRTC, productivity of both public

and private operators in Himachal Pradesh and economic viability of both public and

private operators in Shimla division. With a view to study the performance of HRTC

certain financial, qualitative and physical indicators will be formulated. Shimla

division will be taken for field study. It is one of the biggest divisions among the four

divisions of HRTC. The Shimla division controls eight regions / units including two

workshops. It covers four districts also. Therefore, it becomes all the more important

to evaluate the performance, productivity and economic viability of road

transportation.

1.5 Objectives of the Study

The following objectives have been visualized for the present research work:

1. To study the growth of Himachal Road Transport Corporation in Himachal

Pradesh.

2. To analyze the productivity of Himachal Road Transport Corporation vis-à-vis

Private Operators in Himachal Pradesh.

3. To compare the economic viability of Public and Private Transport in Shimla

Division.

4. To identify the problems and make suggestions for better performance of

HRTC.

1.6 Research Methodology

Methods of research are determined by the theory of the topic under study,

objectives of the study and resources of the investigation. The present research work

is a study to evaluate the performance of Himachal Road Transport Corporation and

its four units in Shimla Division. The Local Unit Shimla, Tara Devi Unit, Solan Unit

and Recong peo Units selected for the detailed study.

1.6.1 Data source

This study is based on both primary and secondary data. Secondary data will

be collected from different magazine, journals like: Kurukshetra,Yojana, Economic

and Political weekly, Directorate of Transport Shimla, HRTC Head Office Shimla and

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HRTC Divisional Office Shimla, Mandi, Dharamshala and Hamirpur. Primary study

will be held in Shimla Division. Data shall be collected with the help of structured

questionnaire.

1.6.2 Sample design

As already mentioned Shimla division will be taken for field study. On the

basis of secondary information collected, all units of HRTC in Shimla division are

arranged in descending order on the basis of number of employees.

Units in Shimla Division No. of EmployeesShimla 552Tara Devi 369Dhali rural 357Rampur 329Nahan 312Rohru 308Solan 297Recong Peo 260

Out of eight units, four units will be selected on the basis of highest and lowest

number of employees, i.e. Shimla local, Tara Devi, Solan and Recong Peo. Shimla

and Tara Devi having highest and Solan and Recong Peo having lowest employees in

HRTC.

A sample of 400 employees will be selected from Public and Private Operators

from selected four units, i.e. 200 from Public Transport and 200 from Private

Transport. A sample of 200 employees of HRTC selected on lottery basis by

proportionate random sampling. Further sample will be divided into four categories

namely; Managerial Staff, Operating Staff, Technical Staff and Other Staff for

empirical analysis.

Sample Design

Units Managerial staff

Operating staff

Technical staff

Other Staff

Total staff

1.Shimla Local 4 60 8 3 752.Tara Devi 2 38 8 2 503.Solan 3 28 7 2 404.RecongPeo 2 28 4 1 35Total 11 154 27 8 200

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For further analysis, a sample size from Private Operators i.e. 200 employees

will be selected. Since the relevant information for Private employees in Private

sector is not available in records hence sample from Private employees will also

drawn in the same manner as HRTC employees. A structured schedule will be formed

to collect the required data regarding economic viability. Different categories of

employees are managerial staff (management staff, officers, supervisors), technical

staff includes (mechanic, welders and electricians), operating staff includes (drivers,

conductors and inspectors) and other staff includes (yard master, booking clerk,

chowkidar and sweeper).

1.6.3 Analytical Tools

The percentage method, Average Annual Compound Growth Rate, mean,

standard deviation, coefficient of variation, t-test and cost benefit analysis are the

statistical tools to be used in the study.

Statistical Tools

Average Annual Compound growth Rate

While calculating compound growth rate, the following equation has been

used.

r=( An

Ao)

1n−1

r = rate of the growth.

An= is the figure of nth year.

A0 = is the figure of base year.

n = is the number of years.

T-test: T- test will be used to compare the public and private sector organization of

road transportation. Formula is:

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Coefficient of variation

Coefficient of variation is relative measure of dispersion. It is used in such

problems where we want to compare the variability of two or more than two series.

The series for which the coefficient of variation is greater is said to be more variable

or less homogeneous. On the other hand, if coefficient of variation is less is said to be

less variable or more homogeneous. Coefficient of variation is denoted by C.V. and

obtained as follows:

C.V. ¿ σX x 100

C.V. = Coefficient of variation

σ=¿ Standard deviation.

X = Mean.

Cost Benefit Analysis

Cost Benefit Analysis method will be use for analyzing the economic viability

of Public and Private Transport. Collected information regarding cost and turnover of

Public and Private Transport will solve by Cost Benefit Analysis:

CBA= BC

Where:

B = benefit

C = Cost

B/C = 1, economic viable (marginal situation).

B/C > 1, the benefits is more than costs (profitable situation).

B/C < 1, the benefit is less than costs (losable situation).

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1.6.4 Terminology used

In the present work the terminology has been used to avoid repetition of words

is as under like:

1. Earning per Kilometer (EPKM) =

Total IncomeEffective Kilometers

2. Kilometer per Liter (Fuel Average) (KMPL) =

totalDiesel ConsumedKilometers Operated

3. Expenditure per Kilometers (EPKM) =

TotalCost / ExpenditureEffective Kilometers

4. Fixed Cost (FC): The fixed cost includes personnel cost, direction charges,

office expenses, interest charges, others etc.

5. Variable Cost (VC): Variable cost includes cost of HSD, cost of lubricants,

tyres and tubes, spring leafs, store materials, depreciation etc.

6. Load factor is the occupancy ratio in HRTC buses. Out of the total seats how

many seats are being utilized by the passengers? The load factor is being

calculated in the following way:

1.7 Chapter Plan of the Study

The present study will be divided into seven chapters, the details of which

are as follows:

Chapter (I) Introduction.

Chapter (II) Review of the Literature.

Chapter (III) Research Design.

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Chapter (IV) Growth of Himachal Road Transport Corporation in H.P.

Chapter (V) Evaluation of Productivity of HRTC and Private Operators in H.P.

Chapter (VI) Analysis of the economic viability of Public and Private Transport in

Shimla division.

Chapter (VII) Conclusion and Suggestions.

1.8 Limitation

Limitation of the present study is that secondary data of Private transport is

not available and maintained properly.

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