‘The government is increasingly focused on augmenting the public transport system to meet the urban mobility challenge’
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Among the various aspects of Viksit Bharat by 2047, an urbanised India is sure to be a principal one as it is expected that urban India will be the engine of growth in this transformation. Let us note that over 60% of India’s population would move from low-productive rural India to highly productive urban India by the 2060s.
Clearly, the mobility of people on such a large scale within cities, from their residential quarters to work areas, will be a test for urban planners. While policymakers have plans to construct smart cities, where the need for the mobility of workers will be substantially reduced, the fact remains that, unlike China, we do not see many of the newly emerging smart cities coming of age. In contrast, the metros/existing tier 1 cities are on an ever-expanding spree, leading to rising challenges for policymakers, such as meeting the transportation demand of workers.
Rising to the challenge
The government is increasingly focused on augmenting the public transport system to meet the urban mobility challenge. This year’s Budget saw the launch of the PM e-Bus Sewa-Payment Security Mechanism, with the aim of improving urban bus transportation in India (nearly 10,000 urban buses). The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM e-Drive) scheme was introduced, which will support the procurement of 14,000 new e-buses, 1,10,000 e-rickshaws, e-trucks, and e-ambulances. However, according to estimates, India needs 2,00,000 urban buses, but only 35,000 are operational (including e-buses). This is far below the requirement.
Another initiative has been the greater emphasis on building metro networks and a higher allocation of funds in multiple metro/tier I cities to cater to the high density. This is in line with the trend seen in the recent Budget.
However, as the Economic Survey that was released on the eve of the Budget on January 31, has cited, only 37% of urban residents in India have easy access to public transportation. In contrast, in Brazil and China, more than 50% of urban residents have convenient access to mass transit. Clearly, India is too far behind in developing an efficient public system.
The development of a metro network is a long-term and costly venture. Much of it has been developed with the Centre’s funding. And invariably, most have yet to recover their total costs (which includes fixed and operational costs). In almost all metros, the ridership projected in the project document has still to be matched. So, recovering the cost may be a difficult proposition unless the route lies along a high-density route. Also, it has been observed that users are extremely fare sensitive — a fare rise invariably leads to a fall in footfalls. Invariably, consumers seek out their ways keeping in mind comfort, time and cost due to the high cost of last-mile connectivity from metro stations to their work/residence points.
Unlike in some developed countries where public transport is highly subsidised in order to make metro transportation cheap, our government is not financially rich enough to dole out recurrent and large subsidies.
Seeking alternatives
India also needs cost-effective, road-based public transport for better last-mile connectivity. This year’s Budget has increased allocations for urban bus systems, thus continuing efforts to boost capacity, especially in the metros. However, private investment remains limited due to uncertain returns. Government funds have shifted from CNG to more expensive e-buses. Future bottom-up transport models may focus on road-based modes that use electric, CNG, hydrogen, or biofuel technologies. Yet, they often overlook trams and trolleybuses, which, based on a life cycle cost and revenue analysis, can outperform e-buses in financial terms and deserve serious policy consideration in India’s urban transport planning.
Some estimates
Revenue generation and economic viability over time are the necessary parameters to estimate whether urban road-based public transport has a financial deficit or is making a profit in its life cycle. Analysing the profit and loss (P&L) percentages for various public transport modes will help in accurate decision-making on adopting a future transit. We find that trams show a 45% long-term profitability over seven decades, the usual life cycle of the tram, along with scalability and alignment with climate goals. In contrast, an e-bus system, which is currently the preferred mode on Indian roads, fails to maintain profitability due to high operational and replacement costs, resulting in a net loss of 82% over seven decades. Though moderately efficient, trolleybuses fall short of matching the overall benefits of trams, incurring a minimal loss over the specified time frame.
This raises a critical question. Are we truly investing in the most sustainable and cost-effective transit solutions, or are we chasing a future dependent on continuous public subsidies? The planned introduction of trams in Kochi could mark a game-changing moment in India’s urban mobility story. Reviving our past is not just a nostalgic choice of what Kolkata thinks — it is a smart and timely move toward a more sustainable and financially viable transport future.
Sanjib Pohit is with the National Council of Applied Economic Research, New Delhi. Sovini Mondal is with the National Council of Applied Economic Research, New Delhi. The views expressed are personal
Published – June 13, 2025 12:08 am IST