Is the Government subsidising the Delhi Metro?

The title of this post is slightly misleading. Firstly, the Government already subsidises the Delhi Metro. For example, electricity used by the DMRC is subsidised by the Government. Secondly, this is not some serious article. It is just an observation that I want to share with the world.

The Delhi Metro has always intended to raise a significant part of its revenue by means of property development and advertisements. My contention is with the second. While travelling in the Delhi Metro, the advertisements that I most often come across are ones by the Delhi Government (especially the ladli scheme), public sector banks, MTNL and a few private universities. I also observe that a lot of metro coaches don't have advertisements, even though space is left for them. The third observation is that even though advertising space has been outsourced to private companies such as BigStreet, most such space has still not been booked.

Can it thus be concluded that advertising on the Delhi Metro is not as attractive as it is made out to be? If, for example, most advertisers on the Delhi Metro are Government - owned, is it fair to assume that they are free from Government control of their advertising? If the Delhi metro has not been such a success as far as commercial advertising space is concerned, then is the Government playing a greater role than what meets the eye in making the enterprise profitable? This all leads to the question - is the cost of the metro to India greater than what meets the eye?

On the flipside, one can argue that even PSUs have only a fixed advertising budget, and what they are forced to do (if at all) is to divert funds from one form of advertising to another. However, optimal allocation would require equi-marginal utility in all forms of advertising. However, given that marginal utility from advertising (especially online forms) are extremely hard to monitor, a proper economic argument against such a diversion is nearly impossible to make. What could be done in this regard is to consider the ratio of public to private advertising on the metro to that outside the metro, and see whether it is significantly different.

Till then, chew on this thought!

- Subhashish Bhadra