Panel Discussion Reinventing Public Transport

Funding and Financing Mechanisms

“Public transport initiatives have to emerge locally, have to have some kind of a driving force within the urban local bodies. Just like you have water charge or water tax, or sewerage tax, we need to have a transport tax”, stated Prof Swamy. We need to have a dedicated, locally generated resource base for public transport and that has to happen at the local level. Surat and many other cities in Gujarat are looking at introduction of a transport tax right now, mainly focussed on funding public transport gap. Also, state has the role to reimburse the gap created by the subsidies fully. Gujarat government has also come out with a viability gap funding for public transport. For every kilometre of bus operated one has to pay twelve and a half rupees and the equation is like this. They estimate the total cost of the bus operations for a standard bus is about 75 rupees; of that 75, two-third has to be generated through revenue fare box and one-third has to be a viability gap. Of that onethird viability gap, 50 percent has to be borne by the local authority and fifty percent by the state.”

According to Patwardhan, cities are sitting on a goldmine; even if they start charging congestion tax and parking fees for personal vehicles, they will have enough money to support public transport. In India, 90% of the people do not own any vehicle, so for them public transport is important. It is very important whatever money you spend on transportation, it has to be spent on the basis of how many people are travelling from point A to point B and not how many vehicles are travelling from point A to point B. So, there is no dearth of money.

The panel felt that Bus Transport should not face discrimination. “In Bombay, the cars carry 7% of the population but occupy 87% of the road space. If you look at urban transportation spent, cars are used by about 7% but account for 80% of the transportation spent because it is that expensive to own a car, the diesel, the parking etc. A car pays a one-time tax when purchased but a private bus pays a tax per seat per month on a monthly basis. There is an imbalance in terms of how we are generating revenue to be used for transportation”, argued Shah. If you look at the most valuable private company in the world today is Uber, which is a transportation company. That is the value that can be generated from moving people and it need not be generated from 100% of your population. If it is generated from the top of the pyramid, it can actually be used to subsidise or to provide transportation for the entire segment.

If we can create an efficient system today there is no reason why we can’t generate investments even from private companies. WRI’s Better Bus Challenge brought private startups to tie up with road transport unions to see how they can collaborate together. An efficient system can possibly do away with the need for viability gap funding.

Talking of the Pune experience, Deshpande said that, till 2014-15, the city used to spend only ten to twenty percent of its total transport budget on sustainable transportation — that was walkers or cycles. Only in the last three years that it has started putting at least fifty percent of its own budget into sustainable transportation. Now there is money but priorities are changing. The city is saying that it needs walk paths, buses and cycle, that is the future of our city. There has been reallocation of budget.”

“Money or funding is not the issue. There should be some pressure from the state or the central government so that cities spend in sustainable transportation. In Maharashtra, there is Draft Sustainable Transportation Policy, that says cities should spend fifty percent of its budget on sustainable transportation.”

In Ogra’s opinion, capability of a technology lowers the requirement of operational funds. Most of the city transport organisations in India do not have scientific means, that is planning and scheduling platform to really ensure their vehicles are operated efficiently. In Ahmedabad, planning & scheduling system was implemented in BRTS and the first month itself, in just two routes, it started saving Rs 70 lakhs. Technology interface should be utilised as a tool for advocating funds for our cities.

“Technology does play a very important role when we look at allowing equitable access to the transportation system in a city. Today with the telecom density that we experience in India, it is all the more easy to make a system available to the people at an equitable basis. The cities are going the app way allowing private systems and public systems to coexist. First and last mile connectivity is being solved by an app-based platform where private system and public systems can interact with each other, coexist and be cofed to each other. How do we institutionalise onto a streamed platform, private, public and personal and that is how the new definition has to be given.”

Responding to this Deshpande added that it is important for the government or STU to change its perspective. What a private operator needs is government support.