Towards a discussion of support to Urban Transport development in India Energy & Infrastructure Unit South Asia Region



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A Way Forward

  1. To conform more closely with the strategic directions, the two study cities in particular, and Indian cities more generally, need a demand-segmented, service-oriented urban transport strategy, which would balance growth with equity concerns, with a strong but cost-conscious orientation in favor of public transport modes. Practically, this would involve a progression of steps from simple to the more difficult:


  • Measure and evaluate the performance of the transport system, regularly, from the point of view of different groups;

  • Introduce road and street design standards and practices that are walk-and bicycle-friendly;

  • Re-allocate the existing road space to provide substantial exclusivity and priority of use to public transport vehicles on arterial streets. The corollary of this is that general traffic would be restrained. It also implies a great intensification of traffic and parking management activities;

  • shift attention and resources to repairing and/or constructing anew secondary and tertiary urban road networks within low-income and poor areas, and connecting them to the arterial network;

  • address squarely the issue of public transport fares, subsidies and service levels, balancing social protection and modal split concerns;

  • implement a regulatory reform aimed at getting substantially higher-quality services and/or lower production costs (internal incentives for MTCs, a gradual move to competition; new organizational form for commuter rail);

  • develop a market for public transport modes suitable to serve travel demands at the low end of the income distribution (this also may involve breaking the monopoly of MTCs);
  • introduce rigorous project evaluation for large, risky projects;


  • focus on at-grade, bus-based rapid transit lines, with publicly-owned infrastructure and competitively awarded service concessions,(inclusive of feeder/distributor networks); and

  • ensure that new primary roads include a provision for rapid public transport modes.

  1. To move in this direction three ingredients are essential. First is the political agreement with the strategy, difficult because the proposals run counter to pro-growth forces, unions, motor-vehicle owners and the formidable urban rail lobby. Second is a streamlined and strengthened institutional setting, e.g. lead institution appointed in Bangalore, critical mass of regulatory skills created in both cities, and moving traffic management functions into municipalities.

  2. The third aspect is financial. The problem is to reduce the overlong agency chain between what is paid by local road users (a growth sector in two well-off cities) and the funds brought back to bear on the local transport system. There are several ways to do this. The most common way is to escape budget funding and create a closed loop from road user fees via dedicated funds to cities. A less common way, highly successful where it has been implemented, is to introduce local road charging systems, aiming for both revenue generation as well as demand management. Either way, the challenge is to create not merely urban road funds, but urban transport funds. Private sector funding has a potential as a complement, but the prime source of funds should be local.

A Potential Role of the World Bank

  1. The Bank’s Country Strategy6 recognizes that in India, urban transport is a high-risk sub-sector with fragmented responsibilities, weak fiscal and implementation capacity of local bodies, and complex safeguard issues. It is also potential high-return, especially if an emphasis on management improvements and traffic engineering helps defer high cost investments in mass transit and flyovers. Given the risks and competing demands on Bank resources, Bank lending support will be through pilots incorporated into operations to support broader municipal reforms. This engagement will be selective, focusing first on investments that have short paybacks, such as traffic engineering and management, bus ways, and slum accessibility. Drawing lessons from these pilot engagements, the Bank will thereafter seek opportunities for scaling up, IFC may also provide support in the area by investing in infrastructure development companies that are constructing and operating urban transport infrastructure.


  2. Reflected in the Country Strategy are agreed “Guidelines for Bank Lending in Key Sectors”, including in Urban Transport where instruments would include Analytical, and Advisory services (AAA) and investment lending limited to a few major urban centers and contingent on:

  • Existence of a statewide urban policy aiming to clarify roles in urban development (including transport) and to enable ULBs to become financially viable;

  • Quality of municipal management, including capital planning and budgeting, financial management, revenue administration, and financial performance;

  • Willingness to prioritize investment using economic criteria; development of a sound urban transport development strategy and investment program, commitment to the introduction of modern traffic management and enforcement; and

  • Commitment to institutional reforms required for citywide transport management.

  1. The involvement of the World Bank has several beneficial prospects. First, its direct engagement in the growth-equity rebalancing will provide an added weight to the equity camp, much needed in these growth-dominated cities. Second, Bank loans can fund the planning effort for strategy development, and –through stringent engagement and selection criteria—ensure that some of the more difficult policy and investment shifts are tried, evaluated and refined. Third, the implementation of thus selected projects would re-direct immediate benefits to social sectors hitherto neglected in the current transport strategy. Fourth, given its urban and transport operations in the two states, a program approach is feasible.
  2. The table below shows a hierarchy of 8 project types defining an exhaustive agenda of policy initiatives and investments. The current series of Bank-funded urban and transport projects in both Tamil Nadu and Karnataka, with their adaptive design and stress on local institutions and finance, provides a ready vehicle to test the three lower-rung projects/policy couplings. If these work well, free-standing urban transport projects in Chennai and Bangalore could aim at one of the higher-rung operations. A project to finance a rapid busway corridor (even a network) would be of highest priority in either city, because of its truly strategic investment and regulatory aspects. Proposals for bus-based rapid transit, in the form of sketch plans and outline cost estimates, are said to have been tabled in both Bangalore and Chennai, and could be built on readily and rapidly.


  3. The next three rungs (primary roads, commuter rail upgrading, and a metro line or metro access facilities) are project possibilities for the medium-to-long term, to be considered only if the strategic change has occurred.

  4. The table does not show any policy/investment couplings that would address the funding constraint cited above (the investment box in the last row is left blank). The introduction of a national system of road user charges with an urban transport provision could only be leveraged through a national transport project or a structural adjustment operation. The Bank is working with the Government of India on the reform of road user charges. This effort should take into account the urban transport dimension before some other arrangement is firmed up. Regarding a possible system of locally based user charges, it is premature to think of an urban transport investment in either city which would have the scale sufficient to leverage such a major policy innovation. Keeping the subject on the agenda, however, is not premature, and could be further advanced through technical assistance.


MENU OF POSSIBLE BANK-FUNDED PROJECTS

Investments

Policy/institutional aspects

Project type

Traffic & parking control, road and area at-grade improvements

Re-allocation of street space to serve NMT modes; intensification of T&PM

Current state-based urban projects


Area-wide road maintenance and/or road improvements on secondary/tertiary network;

Intro of demand-based resource allocation; shifting funds to benefit low-income communities, local economies

Free-standing UT project or component in a state road project

Multi-grade intersections; rail-bus interchange facilities


Re-allocation of at-grade street space to serve NMT and UPT modes

Current state-based urban projects and/or free-standing UT project

Infrastructure for bus-based rapid mass transit

Introduction of concession-based operations; creation of a regulatory authority

Free-standing UT project

New primary roads

Re-allocation of at-grade street space to serve NMT and UPT modes; provision for rapid transit lanes

Free-standing urban transport project

Upgrade fleet, facilities of commuter rail lines and rail-bus interchanges (Chennai only)

Creation of Chennai Metro Commuter Rail Corporation; creation of a regulatory authority

Free-standing urban transport project

Metro-related investment (Bangalore only)s

Tandem with financing bus rapid transit; test case for rigorous project preparation


Free-standing urban transport project

None

Introduce urban-friendly road use charging system

National transport project; structural adjustment loan

NMT=non-motorized; UPT=urban public transport; T&PM= traffic and parking management



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