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India News

Rs 140cr insurance cess vanishes, Kerala RTC takes passengers for a ride

Ajay Menon


The next time one travels by a Kerala State Road Transport Corporation (KSRTC) bus, one should remember there is a catch. Passengers paying for a ticket more than Rs 25 are being ‘cheated’ in the name of an insurance cess.

On an RTI query recently, the corporation admitted that over Rs 140 crore it collected since more than a decade is no longer there in the bank.  Besides it is unable to say if any insurance claim has been paid to passengers.

Social activist PG Sunil Kumar of Koothattukulam in Ernakulam district had sought details, under the RTI Act  of the cess introduced in 2007. The corporation collected Rs 140.14 crore over the years from passengers, and as on May 31, 2019, there was no balance amount in the account, according to the reply received.

The reply also said the accounts had not been audited after 2015 and the reason for this was not given.

In an order of March 16, 2007, the corporation decided to introduce a Re1 cess on tickets above Rs 25 in fast passenger and other upper class services. The reason for such a move was because the corporation had been spending more than Rs 1 crore per month as payments to awards pronounced by motor accident claims tribunals.

For this, it even set a collection target of Rs 7 crore annually which it reached from the fifth year. Though it was decided to have a separate treasury account for this, it was finally decided to deposit the money in a PSU bank and thus an account was opened at the Puthanchantha (Thiruvananthapuram) branch of State Bank of India.

Sunil says the authorities need to explain what happened to such a huge amount collected. He had raised the issue in 2014 but got no clear reply, and so decided a followup.

To a query on whether a part of the amount collected was used for  repair of damaged buses or insurance premium payment, the corporation says no.

Sunil is to pursue the matter as he wanted to know under what authority the corporation took the decision to collect insurance cess. The rule is very clear, he says as it is not passengers who are to pay for their insurance. Under the Motor Vehicles Act, the bus owner (in this case KSRTC) has to pay the premium under third party insurance.

Worse still,, the Insurance Regulatory and Development Authority, which is the final authority in this matter, does not appear to have been consulted. Insurance premium or cess has to be collected through an IRDA-approved agency and KSRTC was not such a one, say experts in the sector.

Officials contacted refused to comment on the matter. A passengers forum said the issue would be taken up as the corporation was already a sinking ship or a white elephant which has nothing to do with the symbol of two elephants, the official symbol.

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