CHENNAI: The Tamilaga Vettri Kazhagam (TVK) government’s white paper on State finances has reignited discussions on a possible bus fare revision, highlighting the worsening financial health of State Transport Undertakings (STUs) even as the government remains committed to expanding free travel for women across all categories of government-operated buses.
The report stated that TN’s 8 State-run transport corporations, including the Metropolitan Transport Corporation (MTC), State Express Transport Corporation (SETC), and 6 regional TN State Transport Corporations (TNSTCs), were under severe financial pressure due to rising operating costs, weak revenue growth, and mounting debt.
It noted that passenger fares have remained largely unchanged despite inflation, making the absence of periodic fare revisions a key factor behind the sector’s financial stress. Accumulated losses of STUs increased from Rs 41,826 crore in 2020-21 to Rs 72,667 crore in 2025-26, while total liabilities rose from Rs 33,190 crore to Rs 61,642 crore during the same period. Although annual losses declined from Rs 8,318 crore to Rs 4,725 crore, the corporations continue to rely heavily on borrowings and government support to sustain operations.
The document also revealed that the cost of operating buses has reached Rs 78.81/km, while revenue realisation was only Rs 25.97/km, resulting in an operational loss of Rs 52.84/km. While subsidies for diesel, student concessions, and free travel for women help offset part of the burden, the report warned that the long-term financial sustainability of public transport remains under strain.
The government attributed the deteriorating finances mainly to a sharp rise in expenditure while comparing 2020-21 (COVID year) with 2025-26. Employee-related costs climbed 43% to Rs 12,559 crore, diesel expenses surged 185% to Rs 5,598 crore from 1,962 crore in 2020-21(when bus services were suspended due to the pandemic), pension liabilities increased 86% to Rs 2,380 crore, and interest payments nearly doubled to Rs 3,122 crore over five years. Overall, major operating costs rose 74% to Rs 23,659 crore. In the pre-COVID-2019-20 period, the corporations had incurred expenditure of Rs 3,860 crore towards diesel expenses.
Calling it a “deep-seated revenue failure”, the white paper observed that past fare revisions had offered temporary relief to transport corporations, though losses continued because of unresolved structural issues
Interestingly, the government chose pre-COVID data to compare revenue growth, which remained weak. The white paper noted that the total operating revenue stood at Rs 7,852 crore in 2025-26, lower than the Rs 9,028 crore recorded in 2019-20 despite inflation and service expansion. The drop in revenue was mainly due to free travel for women passengers in the ordinary fare city and town buses, which the government compensated for through the subsidy.
The white paper described the trend as a “deep-seated revenue failure” linked to the lack of fare revisions. It further observed that past fare revisions had offered temporary relief to transport corporations, though losses continued because of unresolved structural issues. It added that reforms in route planning, fleet utilisation, and workforce management have not kept pace with changing transportation economics.
The report also highlighted that a significant portion of the sector’s debt is financed through borrowings raised by the TN Transport Development Finance Corporation with State government guarantees. Outstanding guarantees linked to the transport sector stood at Rs 5,903 crore as of March 31, 2026.
Losses: Rs 41,826 crore in 2020-21
Rs 72,667 crore in 2025-26
Total liabilities – from Rs 33,190 crore to Rs 61,642 crore
Cost of operations – Rs 78.81/km
Revenue – Rs 25.97/km
Loss – Rs 52.84/km
Employee-related costs: 43% higher to Rs 12,559 crore
Diesel – 185% surge to Rs 5,598 crore from 1,962 crore
Pension – 86% spike to Rs 2,380 crore
Interest payments – Rs 3,122 crore (doubled) over 5 years.
Operating costs – 74% high to Rs 23,659 crore
Pre-COVID (2019-20): Rs 3,860 crore for diesel