To make the public transport system efficient and reliable India needs 76,000 additional buses from the organized private sector, according to estimates by Dare, a CyberMedia publication for the entrepreneurs. The demand for buses, to travel within the city, along trunk routes as well as to connect the deep interiors, will be met by public-private partnership, which has been successfully implemented in a few cities.

Dare estimates that private sector needs to invest Rs. 14,000 crore to get these buses on the road. Additional investment will be required for setting up infrastructure, building workshops, providing spare parts, manpower and training.

Of the 76,000 buses, the Top 35 Indian towns with population of over 1 million need19, 000 buses and the rest of the country requires the balance 57,000.

Once these buses enter the transport grid, there will be 500 buses per million population. Compare this to London, which has the one of the best traffic and public transport systems in the world, with 1,000 buses per million population.

Public private partnership

Public transportation was a government monopoly till 1980 run by State Transport Corporations. Thereafter some states invited private sector participation but till recently there were no real success stories.

All state-run transport utilities excluding Andhra Pradesh State and Pune City reported a combined net loss of Rs. 2,660 crore in 2005-06 while private players have been successful in the areas and states where they have been allowed to participate in the public transportation system.

Dare, found two reasons for the current state of these corporations. On one hand, government run public transport incurred very high costs and on the other private operators did not seem to follow any rules.

A World Bank report says that 35 Indian cities having a population of more than one million should have Urban Bus Transport Corporation in which the state owns 30% and contracts 70%  buses from private organized operators.

Indore implements successful public-private model for urban transport

The Central Indian city of Indore has implemented the public-private model successfully. Indore implemented the National Urban Transport Policy (NUTP), drafted in 2006, which said private companies should be invited to provide mass public transport services in Indian cities. Currently the Madhya Pradesh government provides the regulatory framework and the private companies operate the routes after an investment of Rs. 50 crore.

Vivek Aggarwal, Executive Director, Indore City Transport Services Ltd told Dare, "It took a lot of convincing to rope in the skills and the capital of the private sector. When we initiated the process, private companies were reluctant to come forward as they were not sure of the business aspect but slowly and surely the confidence levels are rising."

The UP government has recently advertised for private bus operators having a fleet of least 4000 buses each. To provide 4,000 buses could mean a capital investment of about Rs.1200 crore for every private bus operator. The number of operators to be inducted in UP has not been indicated in the tender.

Such investments will have positive implications for the bus manufacturers. Ashok Leyland sells slightly more than a thousand buses every month in the country. Induction of 76,000 new buses could tie up the company's production lines for six continuous years! Or it could use up Volvo's worldwide production for five years!

Challenges

Transport sector is heavily regulated and most investments in the sector are from the central as well as the state governments. There are multiple agencies overseeing the sector which leads to lack of clarity in areas like road planning and maintenance, traffic control licensing, etc.

About Dare
'Dare' the latest publication from CyberMedia covers the entire gamut of entrepreneurial activities starting with the idea, funding, creating an organisation, marketing logistics, branding, growth and value realization, and environment policy and law.

About CyberMedia 
CyberMedia is South Asia's first and largest specialty media house, with fifteen publications (including BioSpectrum, Dataquest, Dare, DQ Channels and DQ Week, PCQuest, Voice&Data and Global Services) in the infotech, telecom, consumer electronics and biotech areas, and is a media value chain including Internet (www.ciol.com), events and television. The group's media services include market research (IDC India), job board (CyberMedia Dice), content management, multimedia, and media education. 

For media inquiries, please contact:
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At CyberMedia: 
Krishna Kumar 
Group Editor, DARE,
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dare@cybermedia.co.in