The urban transport sector has made significant progress over the past few years. The outbreak of the pandemic impacted the promoters and operators of mass transit systems in the country. The ridership of city buses reduced and metro rail operations came to a complete halt for several months which led to a major fall in revenue. Despite resuming operations from September 2020 (after the first wave of Covid-19) and July 2021 (after the second wave of Covid-19) in a graded manner, the trend of low ridership has continued.
Sector outline
The urban rail segment has witnessed a rise in activity, especially since 2014. The operational metro network has increased from 200-plus km in 2014 to nearly 740 km in 2021 across 18 cities. The metro development in the country recorded the highest growth during 2018-20, with the metro network of nearly 296 km getting completed in key cities. These include Chennai (17.9 km), Hyderabad (38.44 km), Delhi (130.54 km), Noida (29.71 km), Ahmedabad (6.5 km), Mumbai (11.28 km), Kochi (6.8 km), Nagpur (24.5 km), Jaipur (2.35 km), Kolkata (7 km), Lucknow (14.38 km) and Bengaluru (6.29 km).
The bus rapid transit system (BRTS) has also witnessed some developments in the past year. With the opening of the Kumbharia-Kadodora BRTS corridor, Surat became the first city in India to have the longest BRTS network. There are many new upcoming BRTS networks in cities such as Jodhpur, Mumbai, Chennai, Hyderabad and Raipur. However, with cities such as Delhi, Pune and Pimpri Chinchwad (which implemented BRTS early) that have disbanded their BRTS, the future of the segment doesn’t look so bright.
Upcoming trends in the new normal
- There are a plethora of opportunities that the pandemic has thrown open. The scope of application of technology and innovation in fare collection and driverless coaches is huge. Contactless ticketing in metro rail systems is assuming importance in preventing the spread of Covid-19 through surface contact. Innovative fare collection mechanisms, including the use of bank cards and mobile wallets for payment, along with QR code-based ticketing and biometric-based ticketing systems, are also gaining traction.
- India’s first indigenous automatic fare collection system – the National Common Mobility Card – was launched in March 2019. In December 2020, the NCMC service was launched for Delhi Metro’s Airport Express Line and is expected to cover the entire Delhi metro network by 2022.
- Emerging segments such as station branding, commercial development and real estate development will also provide significant opportunities in the years to come. Meanwhile, some states such as Maharashtra, Madhya Pradesh and Uttar Pradesh have started capturing land value under the value capture finance framework. Transit-oriented development will also augment revenues of metro authorities.
- Multimodal integration is gaining importance with the uptake of regional rapid transit systems. Metro authorities are working in this area for providing a seamless travel experience to commuters.
- Elevated/At-grade structures will continue to dominate the future urban rail map. In a bid to improve urban transport in smaller cities, the government plans to deploy two new technologies – MetroLite and MetroNeo – to provide metro rail systems at a much lesser cost with the same experience, convenience and safety in Tier II cities and peripheral areas of Tier I cities.
- New concepts and technologies such as mobility-as-a-service, internet of trains, big data and predictive maintenance are also being explored. Other technological initiatives including unattended train operations, CBTC, open-loop ticketing, environment safety solutions, and increased mechanisation and remote monitoring in project implementation are upcoming trends.
- There has been a growing focus on the use of green energy to reduce the growing dependence on conventional energy sources. The use of energy generated by waste-to-energy plants has also displayed the potential to be an upcoming alternative to conventional sources. Electric mobility too is gaining popularity.
Budgetary allocations
The Union Budget 2020-21 had set aside Rs 200 billion for MRTS and metro projects, an almost 6 per cent jump from the Rs 189 billion apportioned in 2019. However, the revised estimate dramatically reduced to Rs 90 billion during 2020-21. The year 2021-22 saw the highest outlay of Rs 235 billion for metro projects during the 2015-22 period. The budget has allocated investments for four metro projects. These include Kochi metro railway project Phase II of 11.5 km at an investment of Rs 19.57 billion, Chennai metro railway project Phase II of 118.9 km at an investment of Rs 632.46 billion, Bengaluru metro railway project Phase 2A and 2B of 58.19 km at a cost of Rs 147.88 billion, and Nagpur metro rail project Phase II and Nashik metro at a cost of Rs 59.76 billion and Rs 20.92 billon respectively. Further, Rs 180 billion has been allotted to a scheme to augment public transport in urban areas. Further, innovative PPP models will be in place to run over 20,000 buses. A new vehicle scrappage policy for both personal and commercial vehicles was also outlined in the budget. The proposed policy can help drive the modernisation of city bus fleets.
The Covid-19 crisis
Like all other infrastructure sectors, the urban transport sector also faced the inflictions of the ongoing pandemic. Metro operations across the country were suspended on March 22, 2020 on account of the Covid-19 pandemic. Despite the resumption of services across the country after nearly six months, ridership remained low in almost every metro system, due to the social distancing measures being adopted by corporations, coupled with a general fear of virus spread from public modes of transport. Further, construction work for metro projects in most of the cities was postponed due to the pandemic. The projects under bidding also took a hit due to the extension of bid timelines. It is expected that the outbreak of Covid-19 will have a bearing on the pace of project execution for the coming six months at least. The subsequent labour migration, limited liquidity and a halt on Chinese imports have impacted the construction activities. When the sector started recovering, the second wave of Covid-19 brought it back to where it started.
Pain points
One of the major challenges faced by the sector is financing troubles and revenue shortfalls. Long gestation periods render financing of urban rail projects difficult. With limited public funds available, the sector’s growth is stalled at large. The economics of urban rail systems is such that fare box collections are hardly ever enough to recover costs.
Another issue plaguing the sector is delays in land acquisition, which continues to derail project implementation. In the past, unavailability of land for construction of projects has affected timely implementation of many metro rail projects in Delhi, Chennai, Kochi, Mumbai and Ahmedabad. Meanwhile, due to different geological and soil conditions of each city, metro rail construction becomes a challenge. The sector also faces a difficult execution and operating environment. Further, fare hikes always carry an imminent threat of ridership loss, with implications for revenue generation.
What lies ahead
According to the Ministry of Housing and Urban Affairs, the urban rail network is scheduled to increase to about 900 km by 2022. As per the ministry’s estimates, the operational urban rail network is expected to cross 1,700 km in the next five years. The government aims to expand metro services to 50 cities in the next few years. New metro rail constructions are coming up in cities such as Kanpur, Indore, Surat and Patna. In some cities, metro rail projects are at a nascent stage while others are testing the waters with MetroLite and MetroNeo systems. The uptake of the Make in India initiative has also increased the level of indigenisation in metro projects. Given the policy support, robust project pipeline and increasing emphasis on efficient modes of mass transport, the sector has a promising outlook, both for bus and metro rail development.
The overall growth of the sector is dependent on a number of factors such as the creation of a Unified Metropolitan Transport Authority, integration of various transport modes and smart ticketing. Moreover, the outbreak of the pandemic has ensured that new and advanced technologies for tracking, monitoring and providing information are adopted for safe travel and project implementation in the current circumstances.