Wednesday, August 27, 2014

Planning mass transit for urbanizing India

As India urbanizes rapidly, metro-railway projects are being planned in many cities across the country. The Government of India (GoI) have formally declared its support for metro-rail for 2 million plus cities on public procurement, as a joint-venture between the central and state governments. But given the massive upfront expenditures and consequent debt-financing burden, as well as high operating costs, it is important that we critically examine our urban mass transit policy.

Consider this. Experience from across the world, developed and developing, shows that mass transit systems, even the most efficient, are very expensive and have to be heavily subsidized. Not only do they consume massive public grants for construction, generally raised through taxes or federal government grants, but also their operation and maintenance (O&M) require subsidy support. In fact, apart from East Asia, where major share of revenues is from real estate developments, the farebox recovery ratio is less than half the operating expenses. This is all the more so for the most capital intensive of them all, metro rail systems, at-grade, elevated, or underground.

In countries like India, with fiscally strapped state and local governments and a very tariff sensitive demand-side, the risks associated with operating and maintaining good quality metro systems are considerable. State governments will find it difficult to subsidize metro rail systems for too long. Given the difficult political economy surrounding tariff increases, large volumes are the only insurance to atleast slightly mitigate commercial risks. Unfortunately, it is here that many of the Tier II city metro rail project stumble badly.

In this context, let us examine three of the newest metros under planning or development - Kochi, Nagpur, and Vijayawada. 

The Kochi metro, spanning 25.6 km and being built at a cost of over Rs 6000 Cr, is estimated to have a peak passenger per hour per direction (phpdt) of 23621 in 2030. It also estimates annual peak and total traffic growth of 4.4% and 3.5%  respectively in 2015-25 and an initial ridership of 381868, or 19% (a fifth) of the entire 2 million population of the larger Greater Cochin Development Authority (GCDA). The metro rail is most likely to fall short of realizing these traffic forecasts. It didn't help that the traffic forecasts, project DPR, and project construction in Kochi is being done by the same agency, possibly the first time ever for such a large project anywhere in the world. 

Nagpur's City Development Plan (CDP) indicates that public transit forms just 7% of the city's vehicle trips. The Nagpur Metro Project estimates that by 2021, 12.2% of the city population of 2.9 million will use the metro. This assumes a very high displacement from existing buses and other modes. Even assuming this, a number of 363000 commuters per day looks more suited to a BRT or a light rail system than a full-fledged metro. 

As regards Vijayawada, the traffic estimates are even more depressing. Assuming the entire current bus traffic gets displaced and an equivalent volume of traffic gets induced by the formation of a new capital city, both highly unlikely, the total daily traffic in the Vijayawada-Tenali-Guntur corridor would still be only about 50000. To put this in perspective, this is just a little more than the minimum peak phpdt to sustain a metro. Clearly the region just cannot sustain a metro. 

In fact, as this graphic shows, metro is clearly suitable only for very high density corridors in large cities, while other mode choices are superior for less dense corridors.
At a time when state and city government across India have come to view metro rail projects as an aspirational symbol and pressure mounts on GoI to sanction them, it is important that such sanctions be de-politicized and made based on rigorous analysis of traffic forecasts. Urban transit mode choices should be made strictly based on demographic trends and professional traffic forecasts.

This assumes even greater significance since experience from across the world and India show that urban transit traffic forecasts invariably fall short, forcing governments to step in with even more subsidies or skimping on maintenance. If the latter happens, as is more likely, it will pose considerable safety risks and quality deterioration, thereby engendering a negative spiral of lower demand, larger O&M deficits, even more skimping, and so on. Furthermore, as these trends play out, the physical infrastructure, already a blight on urban form, will fall into disuse, dragging down property values in the neighborhood. It could be a very short distance between urban regeneration and urban degeneration. 

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