Budget 2021 is giving public transport reasons to smile

As part of her 2021 Union Budget speech, Finance Minister Nirmala Sitharaman announced an expansion of the National Infrastructure Pipeline, now covering 7,400 projects with a required outlay of ₹111 lakh crore, by 2025. As a part of this broader push on infrastructure, the speech included several measures to boost the modal share of public transport in Indian cities and towns. The key announcements on public transport cover the expansion of metro networks and new PPP approaches for augmenting bus services in cities and towns. A new vehicle scrappage policy for both personal and commercial vehicles has also been outlined, which can help drive the modernisation of city bus fleets.

Expansion of metro networks

702 km of conventional metro rail is already operational in the country, mostly in Tier-I cities. A further 1,016 km of metro and regional rapid transit lines is being constructed.

Four operational metro networks have been given central funding for expansion this year:

1) Chennai Metro – ₹63,246 crore towards its 118.9 km under Phase 2 expansion.

2) Bengaluru Metro – ₹14,788 crore for its 58.2 km under Phase 2A and 2B expansion.

3) Nagpur Metro – ₹5,975 crore for its 48.3 km under Phase 2 expansion.

4) Kochi Metro – ₹1,957 crore for a 11.5 km line under Phase 2 expansion.

Bearing in mind the need to improve public transport in Tier-II cities and towns, but mindful of the high cost of typical metro projects, the budget included an announcement of two new technologies - metrolite and metroneo. These technologies would help reduce the cost of metro construction by focusing on light networks that are more suitable for smaller cities and peripheral areas of larger ones.

To begin with, the Nashik Metro, which will be India’s first rubber-tyred metro network (akin to modern trolley buses), has been allocated ₹2,092 crore for its first phase of 32 km.

PPP approach to bus operations

The budget announcement included a new scheme to enable PPP operators to finance, procure, operate, and maintain over 20,000 buses across the country. This scheme, which would have an outlay of Rs 18,000 crore, should help bring innovation to urban bus operations, a sector which is dominated by state-owned bus operators in many cities.

Existing schemes like FAME II have been used to procure electric buses via PPP operators across the country. Further details of this new scheme need to be unveiled, but it may seek to build on such efforts by widening the approach to conventional vehicles, helping transform bus services in urban areas.

Vehicle scrappage policy

The Finance Minister’s speech also included an announcement on a planned voluntary scrappage policy for personal and commercial vehicles. Personal vehicles older than 20 years and commercial vehicles older than 15 years would be subjected to fitness tests at automated fitness centres. The Ministry of Road Transport and Highways is likely to publish further details soon. One suggestion would be that vehicles failing three automated fitness tests would mandatorily have to be scrapped.

The ministry recently approved a scrappage policy for government-owned vehicles, wherein effective from 1st April 2022, any vehicle older than 15 years would be eligible for scrappage. Both this policy and the announcement of a nationwide scheme are expected to provide a fillip to the domestic auto manufacturing sector.

In the context of public transport, such policies may help in accelerating the efforts of state-owned public transport operators to modernise their bus fleets by scrapping older vehicles. The adoption of the new Bharat Stage VI emission standard is already driving some of this change and incentives offered by a new scrappage policy can give a further boost to this effort. Modernised bus fleets will be a major element of Government efforts to increase public transport’s mode share, offering an attractive transit option for commuters.

Views are personal. The author is partner, PwC India.