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Unravelling Myths about Subsidies in Urban Transport

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Public Transport

In a recent article published by Ashok Sreenivas and Girish Sant in EPW, they demonstrate that private vehicles get more subsidy from Goverment than public transport.

The report is available here for further reading.

Some excerpts:

This article challenges the popular perception that urban public transport, especially bus services in India are subsidised while cars and two-wheelers are not. It demonstrates through a case study of urban transport in Pune
that a bus user is much less subsidised han a car or two- wheeler user when all costs imposed by transport modes are considered. In the process, it also examines some issues regarding municipal budgeting in Indian cities.

This article exposes the hidden subsidies enjoyed by users of cars and two-wheelers, thus marginalising the needier sections. Since such a subsidy structure defies all rationale, there is an urgent need for reform in urban transport pricing in our cities. Rational  pricing of urban transport can not only move people away from private modes to more desirable public modes but also help improve access and mobility of the poorer sections of society and provide more funds for other social expenses.

The analysis in this paper also highlights some misplaced priorities and a certain lack of transparency in municipal budgets. For example, Pune’s budget allocates less money to public health than to providing signals at junctions and dividers on roads, and proposes an SPV ostensibly to improve public transport but actually containing a large number of road
improvement projects that will primarily benefit private motorised vehicles. This
highlights the need for greater transparency and public participation in municipal
budget preparation, as this will help in allocating funds according to public needs and priorities and help citizens better understand how their money is being spent.



tsubba's picture


86 users have liked.
thanks a million man. we have been saying the same thing for a long time now. now we have numbers to back us up. i am going to bookmark this page for future battles.
murali772's picture

not subsidy; proper policy initiatives required

105 users have liked.
Public bus transport services meet a vital infrastructural need, and consequently, every effort should be made to facilitate their healthy sustenance. That being so, taxes levied on them should be viewed from a purely regulatory perspective, rather than from the present revenue maximisation perspective, and kept to the barest minimum.

Along with this, if smoother bus operations are further facilitated through measures such as
1) levy of congestion tax on individualised forms of transport in crowded city centres,
2) barring entry of individualised forms of transport in narrow road stretches, during peak hours, etc,

the buses will be able to travel faster, helping them make more trips, and thereby improve their revenues. This will then go on to improve riderships, providing further boost to the revenue earnings.

With all this, not only will the talk of subsidies for the sector become superfluous, but it will emerge as the next biggest investment opportunity.

Muralidhar Rao

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