Bus Karo 2.0 – Case Studies from India

Table of Contents

Chapter 7: Financing Public Transport

7.1 Cost And Revenues: Understanding Bus Operations7.2 Fare Setting7.3 Alternate ways to Finance Public TransportDefault

Public transport faces a paradox: while its vital role in urban mobility and sustainable development is recognized, the financial resources allocated to its maintenance and development are scarce.Today, ensuring proper financing mechanisms is vital not only for the development of public transport networks, but also for the sustainable development of cities and urban areas (Zadra-Veil 2010).

Public transport agencies the world-over, face financial challenges due to the imbalance between costs and revenues. Many agencies find that fare box revenues do not cover all the costs. In many cities, either subsidies or alternate revenue sources are used. In India, the subsidies for public transport agencies are rare or ad-hoc, so developing alternative revenue sources is even more important.

The bus is the principal public transport mode available to commuters in the majority of Indian cities, especially Tier I and II cities. The Jawaharlal Nehru National Urban Renewal Mission (JnNURM) central government funding schemes have been successful in providing buses for public transport operations. However, inputs from major bus operating agencies indicate that the cost of procuring buses constitutes less than one-fourth the overall operational costs. Once buses are procured, there remains a gap of funding for approximately three-fourth of the remaining operational costs of an agency. A critical need exists to understand this financial load and to manage revenue inflows to provide for it.

The first section of this chapter establishes the typical inflow and outflow of funds for a public transport agency. Case studies from this section discuss the disproportionality between the operational costs and revenues. The latter sections explore the farebox and non-farebox revenues sources and the innovations in financing in public transport that are proving successful in establishing the financial longevity of agencies. Figure 93 depicts the structure of the chapter.


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