Buses are the key to a good public transport system, so why is it that they are ignored? This is a question that ought to bother us. The very fact that it doesn’t tells us something about the way urbanisation and urban transport is planned.
Let’s start with an incredible statistic from the Bengaluru Master Plan 2015. The city’s 3,800 buses carried 48 per cent of motorised trips, while 25 lakh private vehicles carried the other half. Yet we complain that we don’t have space for buses on the roads. In the decade since this data was collected, Bengaluru has increased its bus fleet by 60 per cent to 6,100. But the number of private vehicles has shot up to 1.1 crore, an increase of 340 per cent. We don’t have data on mode share, but it would be reasonable to expect that buses carry less than the 48 per cent they did earlier.
The root of the problem lies in the perception of buses among decision-makers and opinion leaders—who don’t use buses themselves. Buses are seen as ‘poor people’s transport’. While there is a segment of society too poor even to use buses, that’s a discussion for another time. For now, let’s focus on the image problem that buses have.
An aspirational society wants motorcycles and cars. This image has percolated into the minds of decision-makers and is heavily promoted by the automotive industry. A poorly funded bus system then delivers low-quality services, reinforcing the image problem.
Urban public transport systems around the world usually require some government support as they are not profitable. The most explicit support is to recognise the need for money and provide it as a subsidy—a grant paid without the expectation of repayment.
Instead, in India, rather than recognising the need for subsidy, we label bus companies as loss-making. We then compound the problem by providing support in the form of debt and, sometimes, equity. Not surprisingly, the bus companies have become progressively debt-burdened and subject to ridicule. This is clearly not the way to support a public transport system, and we need to switch from debt to grants.
Once we get past this, we confront the real issue of how to organise bus services.
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Urban neglect
There are many distinct markets for buses. Inter-city buses are the most profitable and enjoy the best service from both state and private sectors. Urban buses are loss-making and poorly provided, while rural services are even less sustainable, and largely left to ramshackle, overloaded, unsafe, and unregulated services.
In India, some larger cities have dedicated bus companies focused purely on urban transport. In the rest of the country, urban transport is provided by state transport undertakings (STUs). The challenge for the STUs is balancing their services between inter-city, urban, and rural routes. Being cash-strapped, it is not surprising that they tend to focus on inter-city transport, as it requires the least subsidy. Meanwhile, urban transport goes largely neglected.
Altogether, there are only about 48,000 urban buses in India, with another 1 lakh or so serving inter-city and rural markets. International benchmarking suggests there is a market for 7 lakh to 12 lakh urban buses alone.
Between the STUs and the urban bus companies, the cost of providing buses has become higher due to inefficiencies such as poor labour practices, lack of investment, badly targeted investment, and more. The result is that bus services cost upwards of Rs 100 per kilometre operated, while revenue recovery rarely exceeds Rs 40 per kilometre and is often much lower. This gap creates a demand for subsidies— which is at the heart of the poor reputation of the service. The inability or unwillingness to provide subsidies also limits growth.
Going private—misses & hits
Reforming state bus companies to make them efficient would be ideal but is nearly impossible. The barriers to change are far too entrenched. However, India has one advantage that many others don’t—a thriving private sector.
What we need is a means to organise the private sector to meet the needs of an urban bus service. Leaving it to an unregulated market is not the answer, as the private sector will need government subsidies if it is not profitable. This is not the only reason to put effort into proper regulation, but it is sufficient by itself.
Attempts to introduce the private sector in the past have had mixed results.
Red Line buses in Delhi, for instance, acquired a terrible reputation and were dubbed “Dead Line” due to their shocking safety record. Renaming them Blue Line and repainting them did nothing to improve their safety record. The source of the trouble was clear. Competing operators were given the right to operate on the same routes with no real constraints other than the number of buses they could ply. The operators kept all the revenue they earned—so, racing to the next bus stop to pick up passengers ahead of competitors was the way to make money. Coupled with severe cost-control, leading to poorly trained drivers and poorly maintained buses, this approach was a recipe for the “Dead Line” reputation.
In contrast, other attempts such as Delhi’s cluster bus service—a modern fleet of AC buses operated by private companies under contract—proved more successful. There is a reason for it. Delhi’s experiment with cluster buses, in which I played an advisory role, followed a model of privatisation that has been fine-tuned over the last four decades in London.
The basic idea is very simple: the state contracts with private operators to provide the desired service, pays them for the service, and keeps all the revenue. This is known as a Gross Cost Contract (GCC)—so named since the operator is paid only for the service and is not entitled to the revenue.
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How GCC model works
GCC contracting started in London in 1985, and over the last four decades, we have learned how to enhance these contracts, support systems, and the entire ecosystem to achieve high-quality results. The costs are lower and the system requires less subsidy. It is possible to run an exceptional service, as anyone who has used London’s buses will attest.
Before the Covid-19 pandemic, Transport for London and the World Bank collaborated on a major project for the Government of India. The result was the National Bus Rejuvenation Programme (NBRP), which outlined how buses could be transformed across India. At the core of it was a GCC contracting model, but it also included a framework for institutional reforms, as well as mechanisms for contracting, fare setting, revenue recovery, and dispute resolution. It defined the roles that the private sector, the STU or other contracting authorities, state and central governments, and possibly international organisations like the World Bank, would need to play to bring about sustainable transformation.
After much work, the proposals found a place in the 2020 budget before the pandemic disrupted everything. Since then, elements of the NBRP have been incorporated into bus procurements, such as the Grand Challenge scheme to deploy over 5,000 electric buses in five Indian cities.
However, in the pursuit of Mission Mode delivery, the subtleties of the institutional reforms have been set aside in favour of achieving near-term procurement success. Despite these limitations, recent procurements show that costs can be reduced to Rs 60 per kilometre or less— a 40 per cent or greater reduction from what state-owned bus operators are able to deliver.
A GCC model of privatisation transfers the responsibility of procuring and operating buses to private operators, but the contracting authority retains responsibility for route planning, maintaining fixed infrastructure such as bus stops, providing customer information and support, fare collection, and so on. This is not a “government has no business in business” model. The government still has a distinct role to play.
However, the current implementation of the GCC model in India falls short. For instance, buses are contracted for a set number of kilometres per day. This is a far cry from the NBRP or the London model, where contracts are set out on the basis of the service required, a set timetable, as well as quality parameters such as timeliness, cleanliness of the buses, and much else. So, while a form of the GCC model is being implemented in India, it would be a stretch to expect the same results without all aspects of the NBRP being implemented alongside.
The central and state governments must recognise that buses present a unique challenge. Highways and metros benefit from decades of expertise in capital investment. But buses require a different skill set—how to make a contracted service model work. It needs serious capacity building, not just a mission-mode delivery.
Shashi Verma is Chief Technology Officer at Transport for London. Views are personal.
This article is the second part of a series that will examine how the government should address issues in urbanisation and urban infrastructure.
(Edited by Asavari Singh)