I came up with this idea while i was thinking on how to contribute my knowledge to my financially deficit state i.e Andhra Pradesh and get rid of its problem at least to small extent.

 

I thought of contributing something from my side to our country/state. Though financially I am not that much strong to contribute amount, but I can help by giving some small, feasible & easily implementable ideas on how to earn/save some money by doing some small changes in government regular procedures.

 

In this process, I thought of suggesting some small change in procurement of vehicles annually for government officials in different departments which can in turn leads to save annual budget of around  80-100 Crore(calculations were discussed below).

 

Presently government is procuring vehicles for different range of officers in all departments; usually these vehicles were procuring via online/offline tendering process for one to three years. As per information from few government officers, government is paying around Rs.30000 to Rs.44000 per month for each of these vehicles, which includes a part of diesel expense up to certain limit in kilometers of travel. If the officer usage of vehicle crossed the limit means sometimes billing may rise up to Rs.50000 also.

 

Among these departments, if you observe, only few departments like MHA, etc. were utilizing the vehicles daily to maximum extent, excluding those few departments, in many departments and in PSU’s these vehicles procured were keeping ideal after usage of around 1 to 2 hours daily for usual commuting from home to office and government/PSU is paying them a normal rents as the vehicle will be parked in offices and will be available to them.

 

Sir, In order to utilize resources optimally, instead of procuring the vehicles and keeping them ideal, if government/PSU can enter an MOU with cab services companies like Uber/Ola. Those company cabs can come and drop the officials and will return with minimal amount. And they can provide services with just a small click on smartphone. Whenever the officer is needed the vehicle, they can book it and reach the destination either it is office/work spot/home within few minutes.

 

As every officer whoever getting this car services from government now will have Id cards, they(cab service companies) can create a separate account for each official and book threw them, and the amount whatever is recorded can paid by government to those cab services companies through online at one go per day/per month. These all terms and conditions can be decided while formulating MOU.

 

E.g.

Scenario 1:

Suppose, let’s take a government official for whom government is providing a sedan vehicle for each working day. And he/she is using it for five days a week and two times (on average) per day for his office visits/for commuting. Government is paying around 32K (average basis) per month for this vehicle. I.e. government is paying around Rs.1066 per day on an average (including every day of the month having 30 days) if the officer is used the vehicle within the limit of travel distance.

 

Scenario 1:
Average Rent Per month for a Sedan in tendering process  32,000.00
Amount incurring per day basis     1,066.67
Net Amount Paid by Government  32,000.00

 

Scenario 2:

Let’s see, if the same official is using cab services, and he/she using for 4 times per day for commuting/office visits. And on an average amount will come around Rs.225 per usage that too if he/she is in metros, because only in cities he/she have to travel far, otherwise in normal district headquarters also maximum travel distance in regular commuting will be around 5 KM which not even costs Rs.150. And as it is a government’s proposal and it will be very big order to those cab service companies they can plan for one whole day renting also officially as this officers will be needed such services in important occasions like CM visit, etc.

 

Scenario 2:
Rs/Days Note:
Average Amount Collected by Cab Service for regular Commuting(If it is not a Metro)        225.00 Normally in towns (other than metros), vehicle wont cross more than 5 Km for an officer to reach office/home/work spot. In that case, Average amount won’t cross Rs.150 also.
Average No of Times a vehicle used in a day 4 Mostly it will be optimal case.
Average amount To be paid by service person to the CABS per day        900.00 Understandable
Average no of Working days in a month (Excluding Holidays, Festivals, etc.)           24.00 In this Holidays I included Sundays, Normal Festivals, and Government Holidays.
Average Amount per month  21,600.00 24*900
Net Amount paid by Government  21,600.00
Difference in amount borne by government in both scenarios  10,400.00
In Scenario 2, Amount is reduced to around 33%

 

In the both scenarios, difference will be Rs. 10,400 per month per one vehicle which means a reduction of around 33%. This amount will be saved to the government. Suppose even if there are at least 20000 such vehicle in all the departments, in all the districts Rs.20 Crore will be saved to government.

 

And government officials will take leaves(excluding government holidays and Sundays, we can say this days as ideal days for vehicles) also in every month, even in this ideal days also in scenario 1 government needs to pay amount to the contractor/vehicle vendor unlike government cost in scenario 2 will be Rs. 0. Suppose if we consider average no. of ideal days as three days per month, government can save around Rs. 8000 per month on each vehicle.

 

Advantage for Government/PSU:

  • They can reduce at least an amount of Rs 2-3 Crore as per above calculations.
  • They can reduce the expenses/corruption incurring for tendering process for recruitment of this vehicles in different departments.
  • Proper vehicle tracking can be done like whether the officer is really used the vehicle or not, so that government can avoid dummy bills from few officers.
  • They can reduce an ample amount of corruption, because we heard instances like officer and vehicle contractor will come to an understanding and increase the diesel expenses of the vehicle, and few officers will use their own vehicle and put bills to government as if they used contractor vehicle and the amount will be shared between two, etc.
  • And government officer movement can be tracked accurately with time and place in real time basis, if it is needed so.
  • And if these CAB services penetrate to every district, these cab service companies can automatically facilitate the employment to the local drivers whoever interested to work with them in utmost professional way.
  • Penetration of this credible cab service companies to every district will help tourist commutation around the district more safely than present, which in turn can help tourism development also to some extent, this objective is in-line with government vision to make state as tourist destination.
  • And if normal citizens start using these services, traffic will be reduced a bit as individual car owners will be reduced to at least 0.5 to 1% in the initial days and with that small portion healthy environment in cities can be improved slightly.

 

Advantages for UBER/OLA:

  • Actually they are planning to enter into tier-2 and tier-3 cities, they can easily have/create around 25% (which may decrease in future if penetration of them increases) of the market share if they enter an MOU with government. It will help them a lot in initial entry days to survive as they already have some assured orders by this government MOU.

 

Note: There will be some exceptions and adjustments in this idea. It can be done and can reduce your expenses if you people can implement this.

 

Regards,

Raviteja Penagaluri

Freelancer,

Alumni of EDII, Ahmedabad.

Mob: +91-96-183-55-264.

Published by Ravitejagruthi

SEBI Registered Investment Advisor || Alumni of Entrepreneurship Development Institute of India || Entrepreneur || Business Consultant || Founder of PVR Investment Advisory.

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2 Comments

  1. bagundi Ravi Garu 🙂
    Can be Implemented in Cities
    But In towns its a bit difficult. As they should maintain a good fleet to serve every officer at 9(lets assume all go at 9) and even the public peak time is that(adaptability will be difficult if they have to wait more)
    But yes after few years it might be a good one for towns as well

    Auto Rickshaws what about them, they are the immediate losers if ola or uber enters

    Like

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