Rebuilding economy and saving the environment through investments in public transport

By Shilpa Kharwal & Sreekumar Kumaraswamy
January 28, 2021, Updated on : Fri Jan 29 2021 13:37:55 GMT+0000
Rebuilding economy and saving the environment through investments in public transport
The investment needs of the bus sector are urgent and immense and given the limitations of STUs, financial support is required from governments at all levels.
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Before the pandemic, more than 7 crore Indians would take the bus every day. They remain the most ubiquitous low-cost mobility option for crores of citizens whose finances and savings have been hit by during the lockdown. They enable equitable access to jobs, education and health services for the economically weaker and vulnerable sections.

However, over the last two decades, we have witnessed a rapid decline in the mode share of buses owing to the deterioration of bus services and rapid motorization. For example, the bus mode share in Bengaluru dropped from 54 percent in 2011 to 32 percent in 2019 and in Delhi from 64 percent in 2001 to 26 percent in 2019.

This trend has contributed to reduced air quality, increased traffic congestion and declining road safety, which in turn has impacted human health, quality of life and economic prosperity. Indian cities are amongst the world’s most polluted and congested cities and record the highest fatalities in road accidents.

A modal shift towards public transport, by improving bus transport systems, can help mitigate any further increase in negative externalities in the transport sector arising from growth in passenger transport demand. A 30 percent shift in passenger kilometres from personal vehicles to public transport is estimated to reduce carbon emissions by 24 percent. Upgradation of bus services will also improve access to economic opportunities for existing users and enable a new workforce.

Existing situation of bus systems

State Transport Undertakings (STUs), which are responsible for providing public bus services, own and operate 1.4 lakh buses. This means 10.4 buses are available per lakh population, which is far lower than the proposed standards of 40-60 buses per lakh population by the Ministry of Housing and Urban Affairs. Around 22 percent of this fleet is overaged and STUs are slow in replenishing buses.

Between 2007-17, bus fleets across the country grew by only 21,000 at an annual rate of 1.7 percent. Currently, there is a shortfall of 2 lakh buses and by 2031, India will need an additional 2.5 lakh buses.

Combining the procurement cost of these buses with costs of development of depots and terminals, implementation of Intelligent Transport Systems (ITS), technical capacity building to support operations, an estimated investment of up to Rs 3 lakh crore is required.

Need for renewed approach

Given the economic, social and environmental repercussions of not improving bus transport, this investment is critical and requires a renewed approach of shifting away from the existing trend of minimum financial allocation by national and state governments to STUs. STUs are, currently, unable to invest in their services because of financial losses which amounted to Rs 16,000 crore in 2016-17.

The pandemic has further weakened the finances of STUs and impeded efforts to improve services. STUs operating in Delhi, Mumbai, Bengaluru, Ahmedabad, Pune, Chennai and Hyderabad alone are estimated to have incurred losses of more than Rs 3,400 crores between March - September 2020.

The loss-making trend is comparable among public transport operators across the globe and relies on regular grants. However, Indian STUs receive only 13 percent of their revenue as grants compared to transit agencies in London and Singapore, which receive grants of up to 33 percent and 53 percent of their total revenue, respectively.

Additionally, the expenditure by STUs will further increase as they will procure only Bharat Stage (BS) VI buses, which are more expensive in order to meet emission norms.

Bus systems receive less allocations, in Union and States budgets compared to the benefits offered. Less than 1 percent of the budget reserved for road transport and highways is allocated towards strengthening public transport. Majority allocations are made for construction of highways and roads.

Even in the budget allocated for urban transport, metro rail systems receive much higher allocation, while buses contribute higher mode share. Last year, Rs 18,000 crore was reserved for metro projects with no direct allocation for city buses.

Some cities used funds under the centrally sponsored schemes - Smart Cities Mission and Atal Mission for Rejuvenation and Transformation - for development of bus systems.

Steps to recovery of bus systems

The investment needs of the bus sector are urgent and immense – up to Rs 3 lakh crore in 10 years - and given the limitations of STUs, financial support is required from governments at all levels. Towards this, a centrally sponsored scheme along with annual financial commitments from states can help in improving public transport overall.

Specifically, the support will be required for procurement, depots, and terminal development, adoption of Intelligent Transport Systems, operations planning, technical capacity building, and enhancing the financial autonomy of STUs through regulatory practices such as setting of transport funds with dedicated budgets for public buses, tax relaxations and non-farebox sources.

The national government can provide financial and advisory support and state governments can proactively foster reforms, regulations, and capacity building.

Lastly, interventions are required to ramp up bus production and streamline existing procurement processes by STUs to avoid delays.

Strategic investments and financial packages for bus service improvement can help retain the existing mode share and enable a shift towards public transport. Buses are less capital intensive, easy to implement, flexible to operate, and can be easily scaled up.

Furthermore, investments in improvement of bus services is a cost- and time-effective method to achieve national commitments on carbon reduction while meeting economic development goals.

For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or

Edited by Diya Koshy George

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)