The daily average ridership of the DTC went down from 47 lakh in 2012-13 to 30 lakh by the end of 2016, it said.
The report, which is based on data available till November 2016, claimed that even the ridership figure of 30 lakh was an "overestimation".
As per the latest available DTC statistics, about 30 lakh passengers are carried daily, of which only 14 lakh (45 per cent) are ticketed passengers. The rest 16 lakh (55 per cent) use passes, it noted.
"Thus, a pass holder is counted as travelling nine times during the course of a single day and that inflates the daily trip number. It is possible, therefore, that the DTC's daily ridership is expected to be much less than the currently stated 30-lakh figure," it said.
The DTC bought new buses way in 2011-12. There has been almost no addition to the fleet in the past five years.
"If no new buses are added now, the entire fleet will get nearly phased out by 2025," said the report.
The system has "depleted" to such an extent that there is "enormous deficit" in bus service plagued by "crippling operational inefficiencies". This is leading to "rapid loss" of daily ridership, the report stated.
The public transporter also does not use nearly 700 buses on any given day, largely due to breakdowns, claimed the report.
"This is equivalent to halting the entire fleet size of cities such as Jaipur," it said.
"There is a shortage of 5,000-10,000 buses based on various estimates and judicial mandates," the report said.
The report also found fault with fleet utilisation by the DTC.
"DTC's fleet utilisation has also been going down over the past few years, having come down to 83.63 per cent in 2015-16, from 85.51 per cent in 2013-14. It is significantly lower compared to other cities such as Bengaluru (91 per cent) and Hyderabad (99 per cent).
"For a city with an already depleted fleet size, low fleet utilisation makes matters worse in terms of service provision ability of the operator."
The Delhi government has started the process for procurement of 1,000 buses each for the DTC and Cluster scheme.
The report suggested for speeding up the process.
"Bus procurement needs to be undertaken on a war footing to meet the target of 10,000-11,000 buses."
A fiscal strategy needs to be developed for the DTC, aiming at reduction of costs, augmentation of fare and non- fare revenue and phasing of interest payments, it added.
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