Investments have remained sub-optimal Even what has been invested remains under-utilised
At the same time, modern transport systems becoming increasingly unaffordable for urban commuters – says new CSE study
NEW DELHI, SEPTEMBER 4-5, 2018
Towards Clean and Low Carbon Mobility: Addressing affordability and scaling up of sustainable transport, the new assessment by Centre for Science and Environment (CSE), germinated from a local concern – the turmoil over Metro fare hikes in Delhiin the not so distant past. Following which, CSE initiated a diagnostic analysis of what it takes to keep public transport and overall journey costs affordable for all city dwellers while modernizing the systems. This is needed to ensure that new investments in modern systems – be it the Metro, or bus rapid transit systems, or modern and electric buses – can lead to an effective shift in ridership from personal vehicles to public transport in all Indian cities.
The assessment was released here today at a two-day International Conclave on Clean and Low carbon Mobilityorganised by CSE (see complete details of the conclave on www.cseindia.org).
Delhi Metro saw a sudden drop in ridership following the fare hike – approximately, by 4.2 lakh passengers by 2018. This, say CSE experts, “is symptomatic of the lack of overall policy for pricing of all transport services and a lack of strategy for funding of these systems and increasing ridership.”Individual Metro and bus systems are struggling to recover costs and retain and improve ridership, in the absence of any strategy to increase ridership and address the economics – this was one of the clear take-aways from the proceedings of the Conclave’s first day. In is ironical that when travel demand is exploding in cities the transport service providers are facing a crisis.
Opening the Conclave, CSE Director General SunitaNarain said: “Motorisationis assuming explosive proportions in India and locking in enormous carbon and pollution. Growing dependence on personal vehicles for urban commute can lead to irreversible trends and damages. Greenhouse gas emissions from transport -- though the third highest currently among all sectors -- has recorded the steepest increase. This is also responsible for health-damaging toxic exposure.”
The CSE assessment points out that initially, it took 60 years (1951-2008) for India to cross the mark of 105 million registered vehicles. But thereafter, the same number was added in a mere six years (2009-15). The share of public transport -- at the same time -- is expected to decrease from 75.5 per cent in 2000-01, to 44.7 per cent in 2030-31, while the share of personal transport will be over 50 per cent.
Said AnumitaRoychowdhury, Executive Director-Research and Advocacy, CSE: “The only way cities can reverse this trend is by ensuring massive scaling up and modernisation of integrated public transport systems to provide attractive, comfortable and reliable options supported by walking and cycling infrastructure.”
According to her, CSE has initiated an assessment to understand how one defines and accounts for affordability in public transport while investing to modernise and deploying the systems.What should be the fare-setting and revision mechanism? How should the integrated journey cost be reflected within the public transport fare? What are the best practices for recovering costs outside fare revenues? Who other than direct users can and should be asked to pay for public transport?
Addressing the Conclave participants, Varsha Joshi, Principal Secretary and Transport Commissioner of Delhi, said: “Mobility has not been at the center of planning in Delhi; many of the capital’s high density neighborhoods are unplanned colonies, which have little public transport connectivity. The Delhi government is augmenting transport infrastructure through land pooling in some areas. It is also considering using para-transit for last mile connectivity. While the government is planning to acquire 3,000 buses, there is a need to improve bus shelters and ancillary infrastructure.”
Joshi contended that the issue is not only about affordability, but also about quality. She added: “The question is, how much fare is affordable for a particular quality of ride.” Joshi said the government sees a huge potential for the private sector in transit – what was needed was a mechanism to reduce costs and ensure efficiency. It is the government’s responsibility to aggregate demand and supply in transport: to do this successfully, the government needs a proper mechanism to collect and process data and a responsive feedback channel open to public entities like the civil society and RWAs.”
The preliminary findings and lessons from the ongoing initiative
Making modern public transport services affordable for the majority: There isno absolute threshold to define affordability of public transport.Globally, it is generally accepted that about 10-15 per cent of household income can be spent on transport as the upper cap for a system to be accepted as affordable. For poor people, higher spending on transport leads to lower spending on housing, health and education, which therefore spirals them into greater poverty.
Going by the criteria of 15 per cent of income spent on transport, almost one-third (34 per cent) of Delhi’s population is excluded from basic non-AC bus services as it simply cannot afford it. If one were to consider the middle income groups (30 per cent of the populationapproximately) which are just above the lower income classes, one finds that after accounting for integrated journey cost (at a conservative estimate of 25 per cent of the system cost – a person using a Metro is likely spend at least 25 per cent of the cost paid to the Metro to get to the Metro station and then reach the destination from the station), AC buses and Metro are almost unaffordable for them too. They have to spend, on an average, 9 per cent and 14 percent to use an AC bus or the Metro,respectively. Of nine metropolitan cities across the world which have operational Metro systems and where the cost for a 10-km trip is less than half a US dollar, the Delhi Metro remains the second most unaffordable system in terms of percentage of income spent for using it.
Such spending comes at huge social costs. For example, for a person in Delhi earning a minimum daily wage (unskilled) of Rs 534, the 15 per cent spent on transport translates into Rs 80 roughly (assuming the person is the only earning member of the household). As per CSE’s calculations, an unskilled daily wage laborer in Delhi, on an average, has to spend around 8 per cent of his/ her income if he/ she travels on a non-AC bus, 14 per cent for an AC bus, and 22 per cent on the Delhi Metro. Figures are even higher in case of Bengaluru and Ahmedabad. If one counts the cost of making interchanges (at a conservative estimate of 25 per cent of the system cost) towards the full journey cost, the amount increases.
If this spending were to be around 3-4 per cent (as it is in Singapore), the person could save up to Rs 60 per day. This could mean around 1.5 to 2litresof milk every day for the family. A month of these savings could mean life insurance for a year for a family of four for a year for Rs 2 lakh each under the Pradhan MantriJeevanJyotiBimaYojana (PMJJBY) scheme.
At the same time it is possible to have stratified public transport services with differential pricing to make it attractive for all income classes but there should not be any service deficit for any income class.
Challenges before public transport operators– increasing costs, limits to fare hike, reducing usage: Even when some bus operators have access to the system of automatic fare revision, they hesitate to use it because of affordability. The Ahmedabad BRTS is a typical example. Fares have not been increased since 2013 despite legal provisions for an annual hike. In the absence of a larger fiscal strategy, this creates problems for the organisation. Without any strategy in place, shockincreases (as in the case of Delhi Metro) becomes inevitable.
The BMTC uses a slightly different fare revision mechanism for its buses. A revision is triggered when the total value of impact (in aggregate terms) due to change in fuel prices and DA crosses a threshold of Rs 0.25 per passenger km. If it is below that, the organisation tries to make up for it through productivity improvement. This is a valuable practice that needs to reflect in fare revision practices, as the lack of it means that the penalty of organisations not being productive and efficient is paid by the passengers in terms of increased fares to make up for increased costs. DMRC has accounted for productivity factor to be included for consideration by the next fare fixation committee.
Funding and subsidy for public transport in India: Currently, for the Metro, subsidy costs for each passenger trip is enormous, particularly in the smaller metropolitan cities. In Jaipur,the per passenger trip subsidy is Rs 50, in Lucknow,Rs 78 and in Kochi, Rs 28. Without a fiscal strategy and an overall plan for improving ridership, how can these cities hope to keep these systems sustainable? Given the price sensitivity of its commuters, India will have to devise locally appropriate systems and create institutional and technological ecosystems for ensuring affordable fares and subsidy delivery. How the combination of fiscal support for operators and users will work, needs to be addressed. It is also important to address the hidden subsidy that cars and two-wheelers enjoy. Two-wheeler in many ways is the cheapest mode and cars are also competitive if the integrated journey cost for public transport users is accounted for. This rationalization is critical to make public transport work. Costs of operating improved public transport cannot be met through fares alone or even non fare revenues. This may require subsidy to meet the deficit. In India, typically this subsidy is provided directly to the operator, be it Metro corporations or STUs. This creates a challenge - the agency does not have any direct incentive or targets for achieving a preset degree of efficiency, as the remaining part no matter how much will get eventually covered by subsidy.
Massive investment gaps expected that can perpetuate undersupply of public transport services -- new urban transport policies are under-funding sustainable mobility: As per the estimates made by National Transport Development Policy Committee, by year 2031, an investment of Rs 10,900-18,500 billion would be required in urban transport; of which approximately 55 per cent would go in for public transport. Urban India would require approximately 196,000 buses with an investment of Rs 1,181 billion by 2031. How will cities balance affordable and sustainable public transport systems while making huge investments to increase public transport supply? Even the existing under supply of public transport is unable to sustain itself financially while there is a huge gap to be bridged as far as demand of urban transport is concerned.
Thescope of investments even under the current urban transport programme is limited and inadequate. Out of the total allocation to the scheme, the share of urban transport projects is 21 per cent which is expected to provide smart parking, intelligent traffic management and integrated multimodal transport and walkable localities, public transport etc. However, according to the information available from the Ministry of Housing and Urban Affairs, the road infrastructure has the largest share (31 per cent) followed by transit infrastructure that gets 26 per cent and active transport – walking and cycling, has the lowest, 8 per cent. This is even lower than the funds allocated to parking (15 per cent). About 14 percent of the funds are set aside for Intelligent Transportation Systems (ITS). As overall spending has remained low, each element is underfunded.
Similarly, till date, out of total number of projects under AMRUT only 7.4 per cent are under urban transport and comprises only 1.75 per cent of total cost of projects which is significantly lower amount as compared to share of emissions in cities. The AMRUT scheme has allocated 10 per cent of the annual budget to cities for ‘Incentive for Reforms’ which could help attract cities to implement urban reforms.
Most projects are on pilot scale with little clarity about their potential scale for city wide implementation.
Even when investments are taking place there is no clear strategy to improve ridership -- Metro projects remain sub-optimal: Many Metro projects have remained sub-optimal because of ineffective and inadequate planning and lack of inter-modal integration. The deficit between the actual and projected ridership in most Metro projects poses a greater question of operational sustainability, apart from debt repayment from the project itself. The existing ridership in Jaipur, Lucknow and Chennai Metro -- for instance -- shows a deficit of over 1,000 per cent when compared to projected ridership. The Metro rail is a long-term capital-intensive project which requires integration of mode and land use to realise its benefits. But increasingly, the programmes are focused on urban rail which leaves a majority of cities, especially small and medium sizedones, with no transit system. Currently, there are 425 km of Metro rail systems operational in 10 cities in India (Delhi, Mumbai, Bengaluru, Kolkata, Chennai, Hyderabad, Kochi, Lucknow, Jaipur and Gurugram); approximately,another 700 km is under construction.
Bus transport neglected despite being the prime mover and rising travel demand:While the buzz is aboutattracting investment to the sector – both public and private – there is no strategy to stop the slide in ridership. While ridership of Metro systems have remained sub-optimal, bus systems – both city bus services and bus rapid transit systems -- are experiencing slide.State Transport Undertakings – public bus agencies (STUs) carry a vastly higher number of passengers per day as compared to Metro systems in all cities. Yet, funding of this system has remained weak. So far only two schemes have focused on improving bus transport. These include the older scheme of JNNURM and the recent FAME policy that has funded electric buses in 10 cities.
The total share of the budget of the Ministry of Housing and Urban Affairs allocated to Metro Project has increased from 12 per cent in 2009 to more than half - 54 per cent, in 2017. There is no commensurate increase in funding of buses that is a prime mover. Investment on metro projects in 2017 has been approximately 3.6 times of that in 2010. But a disproportionately high amount of money is being spent by Governments to subsidize metro systems in Tier II cities. State governments are expected to fund buses.
Even in cities with metros buses prime mover across all citiesJaipur buses carry 11 times more commuters than metro; Lucknow – 2.4 times; Delhi – 1.1 times; Chennai – 88 times; Bengaluru – 12 times (as of 2017). If one adds the passengers being carried by private buses in these cities, the difference would increase even further. There is no clear strategy for bus system either at the national or at state levels.
There are mounting evidences of massive slide in public transport ridership in cities.Overallshare of public transport reduced from 64 per cent in 2001 to 54 per cent in 2010 in Delhi. Since 2013, DTC bus ridership is declining at an average rate of 8.88 per cent per annum; overall, dropped by as much as 34 per cent. Even Bangalore Metropolitan Transport Corporation (BMTC) which has witnessed ridership growth in past decadeis now facing accumulated losses leading to withdrawal of buses from low-revenue-generating routes – creating service deficit. Daily ridership of Brihanmumbai Electric Supply and Transport (BEST) buses is reported to have gone down to its lowest ever: -- a sharp fall of 40 per cent in the past seven years. AhmedabadBRT that has expanded its network from 35-km corridor 125km has not seen an upswing in its passenger traffic. Several cities are finding it difficult to run their bus rapid transit system. Cities like Vijaywada that made an early transition to BRT have stopped operating the system. Clearly, there is no strategy to make public transport work in cities – poor last mile connectivity for public transport, cheap or free parking, subsidised road taxes for cars, lack of integration, lack of operational reforms are big barriers. Several of them facing economic crisis and despite growing demand for travel, they are facing ridership losses.
An urgent and robust fiscal strategy for modernisation of integrated public transport systems and a supportive ecosystem for affordable services: Big investments are possible only with innovative fiscal strategies, which look beyond fare-box collections and advertisement revenues. The Metro Policy 2017, and the National Transit-Oriented Development Policy (TOD) 2017, besides state-level TOD policies, have provided for non-fare revenues through land value capture etc. There is considerable global experience with ‘polluters-pay’ and ‘users-pay’ principles like congestion and emissions pricing and road and parking pricing to generate additional revenues from direct and indirect beneficiaries of public transport. As this is a very new area of fiscal governance, it will require strong guidance and a legal framework for it to work correctly.It should not get reduced into a real estate led development instead of public transport led development. Fiscal strategy will have to be supported by the transit oriented compact urban form to bring jobs, homes and recreation together to reduce distances as well as application of polluter pay-user-pay principles to reduce automobile dependence. Only this can help to increase public transport ridership.
The way forward
Discussion on urban transport improvement becomes meaningless without financial planning and accountability for transformative changes. Indian cities are still far from reporting an effective and substantial shifts towards public transport systems. There is no clear strategy for such shifts – though master plans and city mobility plans of several cities have targeted at least 80 to 90 per cent public transport ridership by 2020 and 2025. While global learning shows that it is difficult to arrest and reverse the slide in public transport ridership, some cities like London, Paris etchave reported an improvement. Are Indian cities prepared?
The economics of this transition will have to be addressed along with the strategies for urban and transportation planning. In the light of this, the following actions become non-negotiable: