‘A developed country is not a place where the poor have cars, it’s where the rich ride public transportation.’ – Gustavo Francisco Petro Urrego
Public
transport infrastructure is an important indicator of progress in global
economy where growth opportunities are linked to the mobility of people, goods
and information. India currently ranks 44th in the World Bank’s Logistics
Performance Index, a relatively high score compared to other countries at
similar income levels. This number matters not only to the transport sector,
but to India’s economy as a whole.
Global population is
continuing to expand and is expected to reach over 8 billion by 2030. According
to the United Nations, emerging markets accounted for nearly three quarters of
the world’s urban population in 2015. India stands out as a country which will
need extensive infrastructure enhancements, given that its already-high
population density will increase by 22 percent by 2030. Estimates suggest that
India will be home to a whopping 452 people per square kilometer.
Managing the Urbanization
process is likely to be the single biggest challenge that will confront policy
makers in India over the next decade.
Emerging economies such as
India must build and develop new infrastructure to meet basic requirements.
According to Rural Access Index (RAI) developed by the World Bank, there are
still nearly 301 million people who do not have access to public transport in
India. Entirety of the country’s high-density rail corridors face severe
capacity constraints. Moreover, freight transportation costs by rail are much
higher than in most countries, as freight tariffs in India have been kept high
to subsidize passenger traffic.
As stated by the Indian
Government, India requires around $4.5 trillion worth of investments until
2040 to develop infrastructure in order to improve economic growth
and community wellbeing.
Only Mass Urban Transport solutions
can provide India’s urban commuters with competent mobility
Nobody will disagree that the
best thing that happened to Delhi in recent years is the metro rail. Metro has
altered the character of the city in many locales. In Mumbai, the electric
train service is touted to be the lifeline, catering to almost 80 percent of
citizen trips.
The cost of travel,
especially for the poor, has increased considerably. Walking or cycling has
become risky or impractical with expanding urban sprawl. The increasing number
of personal vehicles is the leading cause for environmental degradation.
What is required is a
balanced focus on extending transportation infrastructure, as well as
leveraging smart technology solutions. The task list is long to improve and
extend public transportation infrastructure in Indian cities. The government of
India is investing in various national, state and local initiatives to improve
public transportation. There is also a necessity to leverage smart technology
solutions to quickly improve the efficiency and capacity of public
transportation, in order to establish a high quality public transportation
system.
While public transport
systems should be able to match the demand, they also need to be
self-sustaining in terms of revenue
The P&L debate is now
soundless
There is always a debate on
ways to make the entire system economically viable. Most metro operations begin
with low occupancy rate but as the network grows, it attracts more people from
all around the city, bringing down the cost per passenger trips. Take the
example of Mass Transit Railway (in Hong Kong) and Delhi Metro Rail
Corporation’s (DMRC). Mass Transit Railway is a major public transport network
serving Hong Kong and is one of the most profitable metro systems in the world.
It had a fare box recovery ratio of 187 percent in 2015, the world’s highest.
The level of profitability of
a transit system is usually measured using the fare box recovery ratio, which
is the difference between the revenue collected as fares from the users and the
operating expenses.
DMRC’s earnings per kilometer
have gone up by 74 percent since 2014, India’s highest. The DMRC has also been
able to meet the target for the last fiscal year. According to a statement by
Union Minister of Housing and Urban affairs, the government may not even
increase fares till 2020, as a result of this achievement.
Building an innovative
financing framework
It is necessary to consider
innovative urban transportation financing as part of a comprehensive framework,
rather than individual projects. At present, Government’s flagship urban
development schemes including the Smart Cities Mission and AMRUT (Atal Mission
for Rejuvenation and Urban Transformation), funds are only a fraction of the
required investment available. For instance, under the Smart
Cities Mission, Government has allocated $14 billion for 100 cities disbursed
over five years, with equal contributions from the central and state
governments. This amount is by no means sufficient. Thus, grants are to be used
as a starting point to attract funding from external sources.
Local authorities, including
urban transport, state-owned enterprises and the Union government should become
more receptive to private investors. Climate investors can also provide new
sources of funding. In December 2016, Mexico City became the first
sub-national Government in Latin America to issue a green bond, which was then
used to finance sustainable transport projects, including improvements to the
city’s metro system. The good news is that when there is a challenge to design
projects that can attract private sector interest, World Bank provides help to
governments to design better urban rail PPPs.
The framework should seek to
achieve maximized social-economic benefits to the society through
implementation of the most cost-effective option for urban transportation.
Leverage the advantages of
localization
The Make in India programme
significantly reduces the cost of metro rail projects by localizing
manufacturing. India has already proved that it has a huge reservoir of talent
and infrastructure required to create cost-efficient metro networks, which have
become a benchmark technically, economically and environmentally, for urban
mobility all over the world.
But localization needs to go
beyond manufacturing mechanical parts. It needs to cover design, manufacturing
and procurement, which can reduce the cost of metro projects as well as the
lead time. The reduced cost and time to execute will allow for the faster
execution of projects and improve customer satisfaction.
The number of jobs,
short-term and long-term, that a metro project creates should also be
considered while calculating the cost effectiveness of a metro project. A solid
localized footprint is the way forward for all the metro operators that view
India as a place for innovative mobility solutions.
Finally, there is no
substitute for experience. Metro projects are best handled by companies which
have been doing this all over the world and are well poised to bring their
global expertise to India. They can be quality guarantors with their proven
track record as a provider of advanced mobility solutions with high standards
in safety and efficiency.
A robust urban rail system
will be a huge advantage for growing Indian cities. A combination of the
correct metrics, procurement and industry policies, along with effective
planning can make metros a shining example for the rest of the world. Metro
rails can win any argument owing to their comparative cost advantage. Let the
wagon roll!
This article was first published in money control.
