DH News Service 
 
Bangalore, June 22: The transport department has proposed a 18 per cent increase in bus fares of KSRTC, BMTC and two other RTCs to make up for the losses in the wake of the recent fuel price hike.
 
According to department sources, the RTCs would incur losses up to Rs 120 crore if the fares were not hiked.

Over the last two years there have been five upward revisions of petrol and diesel prices, but the bus fares have remained the same.  The mounting arrears make it inevitable to announce the hike in the fares soon, the sources said.

The proposal would be forwarded to the government and placed before the Cabinet.

In addition, the RTCs have to generate resources to buy more than 1,000 buses over the next couple of years to meet the demand for 10,000 buses by 2011.

The sources said that the financial burden on the RTCs would be reduced if the sales tax on purchases, currently 7.5 per cent for BMTC and five per cent for KSRTC, is abolished or reduced to two per cent.

The transport department will also phase away the contract system of awarding bus routes to private parties once their contract expires. The contract system had resulted in losses to the department, the sources said.