A Benchmarking Strategy for Delhi Transport Corporation: An Application of Data Envelopment Analysis

The growth of any developing economy depends largely on its transport sector. Growing economy leads to more job opportunities and movement of people from rural to urban areas. Public road transport hence plays a significant role as a support system in carrying passengers. This paper discusses the efficiency of State Transport Undertakings of India, in particular, Delhi Transport Corporation (DTC) using the technique of Data Envelopment Analysis (DEA) and regression analysis. A data set of 46 State Transport Undertakings of India have been considered for the study. DEA was applied to compute the efficiencies of units under study. Potential improvements in the input and output variables were computed for the inefficient units. Regression analysis was then performed to identify the explanatory variables that significantly affect the input and output variables. It was observed that DTC is one amongst the worst performers. It showed a technical inefficiency of 50.94% and was operating on decreasing returns to scale. Further, DTC needs to increase its output substantially in order to attain the level of efficiency. Also it is not utilizing its resources optimally as it needs to reduce all its inputs. In other words, DTC is not utilizing its resources as optimally as its efficient peers. This paper is an attempt to apply regression technique along with the non parametric technique of Data Envelopment Analysis so that the decision makers of DTC can identify the areas where improvement is required and plan a strategy to improve their performance. This would enable DTC to move from a loss incurring to a profit making unit.