Project Report on
Urban Railways-Transport Infrastructure in
India-Outlook and Overview
Urban Railways
As for urban
railways, India is planning to develop metro systems in all of its large
cities, as they are facing high levels of congestion due to a rapidly
urbanising population. Plans for greenfield and brownfield urban railway
projects are moving forward in cities like Mumbai, Delhi, Bangalore, Chennai,
Kochi, Delhi, Pune and Hyderabad.
According to UN
data, the urban/rural split in India was 28% urban to 72% rural in 2000; by
2012, BMI estimates that the urban population reached around 30% of the
total, meaning that 385mn people live in India's cities. This trend is set to
continue through 2020 (34% of the population) and 2030 (38%), while India's finance
ministry believes that over 500mn people will be expected to live in urban
areas by 2020.
This rapid
increase in urbanisation has increased the car population in the cities. Delhi
in particular is suffering from severe traffic congestion because it has the
highest number of vehicles per km2 in India, with more vehicles than Mumbai,
Kolkata and Chennai combined. Therefore, in order to match this urbanization
rate and to keep the economy functioning in India's cities, we believe that
investment in urban transport such as commuter railways and monorails will be
crucial to improving traffic conditions. The appointment of Kamal Nath as
Minister of Urban Development is an indication of a change in the government's
attitude towards private sector involvement in this sector. Nath was widely
credited with harnessing greater private sector involvement in his previous
post at the Road Transport Ministry.
In July 2011,
the Finance Ministry was readying a blueprint on financing of urban transport
systems, favouring a new PPP approach as opposed to the existing model of joint
development by the Planning Commission and states, which often lead to cost
overruns and projects delays, due to lack of coordination and oversight. The
PPP approach is also favoured because the Planning Commission and Urban
Development Ministry has limited fiscal strength to meet the necessary
investment. A study by Wilbur Smith Associates for the Ministry (cited
by the Economic Times) estimated that the total funding required for transport
projects in 87 cities in India by 2030 is INR4354bn - approximately INR230bn a
year. India's fiscal budget for 2011/12 only allocated INR80bn to the Urban
Development Ministry.
This preference
for the PPP approach has changed dramatically in 2012, where in March 2012, a
planning commission working group on urban transport for the 12th five year
plan has outright rejected the model for developing core urban infrastructure
projects, like metro-rails, and bus procurement and transit systems. The
working group, headed by former managing director of Delhi Rail Corporation
(DMRC), has particularly opposed PPPs for metro rail projects in the country.
This turn-around
towards urban transport PPPs is due to the numerous conflicts between the
public and private sector over the Delhi Airport Metro Express, the showcase
urban transport PPP project built by DMRC and operated by Reliance
Infrastructure. The urban railway project, completed in February 2011, has been
forced to suspend train services in July 2012 after defects were found on the
civil structure. These defects required repairs to take place for more than
three months, incurring losses for Reliance Infrastructure. Indeed, Reliance
Infrastructure wants to restructure or withdraw from the concession – the
company was believed to be losing about INR10mn a day before the July
suspension - but the DMRC has rejected their request.
In our opinion,
it highlights the lack of maturity in India's PPP market. Not only is current
regulations not sophisticated enough to ensure an accurate allocation of the
risks in the business between the public and private sector, but there is also
a lack of expertise in India to indentify these risks. More needs to be done by
both parties to develop India's PPP structure for urban transport. The conflict
between Reliance Infrastructure and DMRC has since been resolved in January
2013, but the subsequent measures to keep the Delhi Airport Metro Express
financially viable (50% hike in fares and a 50% reduction in train speeds)
supports our view of a lack of maturity in India's PPP framework for urban
railways. As of July 2013, DMRC has taken over operations of the Airport Metro
Express from Reliance Infrastructure.
If you want to
writer Dissertations on Urban Railways, than you have read Literature Review on Transport Infrastructure and contact Thesis Writers at Mahasagar Publications. Also read Airports Industry Analysis Report in India.
