How can Investing in Bus Fleets Propel UP's Economy to USD 1 trillion?

REPORT

Investing in Bus Fleets to Help Uttar Pradesh Achieve the Trillion-dollar Economy Goal

19 June, 2024 | Sustainable Mobility

Himani Jain, Udit Narayan Mall, Arun Kumar and Krishna Khanna

Suggested Citation: Jain, Himani, Udit Narayan Mall, Arun Kumar, and Krishna Khanna. 2024. Investing in Bus Fleets to Help Uttar Pradesh Achieve the Trillion-dollar Economy Goal. New Delhi: Council on Energy, Environment and Water.

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Overview

About 12 percent of UP citizens, and even more in bigger cities, continue to rely on shared transport, including buses and shared transport like auto-rickshaws etc. Buses offer the most suitable public transport for several large cities housing above 5 lakh populations in UP. However, bus system development requires planned long term investments and infrastructure development. The report estimates the urban bus demand in Uttar Pradesh (UP) over the next two decades, under two distinct scenarios for people shifting from two and three-wheelers. The study estimates the required manpower, viability gap funding (VGF), and related infrastructure costs. These estimates could inform the planned UP State Urban Bus Programme (SUBP).

As Uttar Pradesh (UP) plans to achieve an ambitious gross state domestic product (GSDP) of USD one trillion, its cities would contribute more than 75 per cent of the GSDP. Affordable and efficient city bus transport will help connect people to manufacturing, IT, tourism, and education hubs. Thus, aligning users’ travel needs with services, bus stops, and accessible infrastructure is integral to the success of the state’s trillion-dollar ambition. The Government of Uttar Pradesh (GoUP) has, therefore, renewed its focus on comprehensive bus systems to ensure connectivity and enhance the economy.

Key Findings

About 445 lakh residents in 26 cities in Uttar Pradesh will drive the mobility demand for city buses by 2041. 17 metropolitan cities and 9 other large cities will constitute the majority of urban hubs.
15,500 midi–standard buses in the low-ambition scenario will likely serve 6 million riders per day and about 16,000 standard buses for 8 million riders everyday in the high-ambition scenario by 2031.
E-buses are likely to be 23–32 per cent cheaper for typical UP cities than compressed natural gas (CNG) buses, for lifetime vehicle and energy costs.
The study estimates a combined outlay of INR 18,700 crore (USD 2.2 billion) to procure 12,229 buses by 2031 and set up charging and depot/terminal infrastructure.
Operation and maintenance (O&M) costs of about INR 3,286 crore (USD 393.5 million) per year will also be needed. The fare box revenue is estimated at three-fourths of the O&M cost. Thus, to sustain bus services, a 24% VGF of INR 786 crore (USD 94 million) per year is required in the short term.

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Himani Jain

Senior Programme Lead

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As UP scales its trillion-dollar economy goal, its cities are poised to become the economic engine of its large, growing manufacturing, services and tourism sector. Here, buses will play a pivotal role in providing affordable and sustainable mobility to over 6 million people daily. The 6.7 billion passenger kilometers shifted from 2W and 3W will reduce 59 KT of PM 2.5 and 6 MT of CO yearly. Also, there will be 1.9 million fewer 2W & about 23,000 fewer 3W on the road. Thus each bus will replace about 160 2w and 3w on the road, combating congestion.

Executive Summary

Uttar Pradesh’s plan to achieve a gross state domestic product (GSDP) of USD 1 trillion hinges on its fast- growing transport and tourism sector (Deloitte 2023). Affordable and efficient public transport (PT) plays a critical role in connecting manufacturing, tech-clusters, tourism, and education hubs while mobilising the skilling sector and entrepreneurs in sunrise sectors.

Cities contribute more than 75 per cent of the GSDP, and buses are vital in transporting people within and across these hubs. Thus, developing bus services, bus stops, and accessible infrastructure is critical to propelling UP’s economy. The Government of Uttar Pradesh (GoUP) has, therefore, renewed its focus on bus systems to enhance connectivity across the state and provide accessibility to jobs. To support this transformation of PT, there is a need to estimate the total bus demand in UP over the next two decades.

The Directorate of Urban Transport (DUT) in UP currently operates about 1,235 buses in 14 cities. It is planning to expand its bus services under the PM-eBus Sewa Scheme and state programmes. The Council on Energy, Environment and Water (CEEW), as part of the United States Agency for International Development (USAID)–supported Cleaner Air and Better Health (CABH) project, conducted an assessment of the number of buses required in 26 cities of UP, whose population is projected to surpass 3 lakh people by 2031. Further, this report estimates the required manpower, the viability gap funding (VGF) needed, and related infrastructure costs. The assessment will facilitate drawing up the UP State Urban Bus Programme (SUBP).

Key Findings

The research used bus routes and cycle-times based established methodology to calculate the number of buses required in two scenarios – Low Ambition and High Ambition (40% and 60% viable trips shift to buses) (Vuchic 2007). The analysis done improved on this methodology by considering the potential growth in the city habitat area, trip lengths and consequently route lengths, and the number of routes, which all impact bus demand. The analysis projects an estimation for bus requirements for two decades till 2041. Further, it also provides the required outlay to implement the shortterm plans by 2031 across the 26 studied cities. For 2041, the outlay requirement will need to be calibrated basis the changes in city growth and travel demand patterns. Findings related to travel demand in cities, the bus modal share, and trip lengths are important for developing an urban bus programme.

About 3.75 crore residents in 26 cities will drive the mobility demand till 2031

The findings suggests that by 2031, there will be 13 metropolitan cities in UP. Lucknow & Kanpur will have a population of >40 lakh, and the remaining 11 will have populations of 10–40 lakh. 13 other large cities will also have populations of 5–10 lakh.

Buses are integral to meeting travel demand

The study finds that, two-wheelers (2Ws) have a higher modal share in metropolitan cities as compared to large cities. However, people prefer buses for commutes longer than 5 km.
About 50 per cent of the total three-wheeler (3W) trips are more than 5 km long in all the major cities. Individuals taking these long trips are highly likely to opt for buses (Khanna et al. 2024a).

E-buses are cheaper for typical intracity operations in UP cities

Buses will likely serve 60 lakh (6 million) riders per day by 2031 across 26 cities in the low-ambition scenario and 80 lakh (8 million) riders in the highambition scenario.
In terms of lifetime vehicle and energy costs, e-buses are likely to be 23–32 per cent cheaper for UP cities compared to compressed natural gas (CNG) buses with an average utilisation of 140–200 km per day

State Urban Bus Programme (SUBP)

The GoUP’s vision for urban PT in the state, and the state electric vehicle (EV) policy, explicitly focus on buses. E-buses will ensure maximum benefits for several cities reeling from worsening air quality, especially due to vehicular pollution.
Midi buses (9 meters) are appropriate for cities in the 5-10 lakh and 10-20 lakh population category.
Standard buses (11-12 meters) are to be deployed in cities if they have midi bus headways of <5 minutes during peak hours. Thus, several populous cities like Lucknow, Kanpur, Ghaziabad, Agra, Prayagraj, Varanasi, Meerut, Bareilly, Aligarh, Moradabad, Saharanpur, and Muzaffarnagar will need standard buses.
The analysis estimates a total of 12,229 midi and standard bus combinations in the low-ambition scenario and about 15,583 standard buses in the high-ambition scenario by 2031.

Recommendations

Given the growth trajectory of the state, the study suggests that the DUT should aim to procure buses as per the low- ambitious scenario 2031. For this, the Urban Transport Fund and state schemes would require the following investments:

daily ridership demand of ~60 lakh by 2031
of INR 3,000 crore

The SUBP will positively impact mobility, abate emissions and congestion, and enhance the economy. An estimated 40 lakh (4 million) passengers will shift from 3Ws and 2Ws to affordable and clean buses. This shift shall result in the yearly reduction of 59 KT of particulate matter (PM) 2.5, 6 MT of carbon monoxide (CO), and 0.6 MT of nitrous oxides (NOx) emissions by 2031. Additionally, over 2 crore (20 million) passenger kilometres are estimated to shift from 2Ws and 3Ws to buses daily, which will lead to substantial decongestion leading to economic savings in road infrastructure costs, fuel, and time. Thus, the SUBP is integral to the accessibility and connectivity needs of the vital city workforce. Indeed, it will help propel UP to a trillion-dollar economy.

Figure ES1 Bus demand in 26 cities of UP under different scenarios

FAQs

How many buses are there per 1,000 people in cities of India?

As per the World Bank, 1.2 buses per 1,000 people is required in urban areas. Indian cities typically have 0.05–0.65 buses per 1,000 people in cities with a population of 5–15 million. As of 2024, million plus cities in Uttar Pradesh have 0.02-0.10 buses per 1,000 people which is much lower when compared to cities of similar sizes such as Bhopal (0.14), Nashik (0.12), Chandigarh (0.32), Ahmedabad (0.15). As per the CEEW’s analysis, bus requirement in the million-plus cities of UP is currently between 0.13–0.5 per 1,000 people.
Why is there a need to invest in bus infrastructure?

Buses help connect people to jobs and education affordably, additionally, it contributes to the GDP by generating jobs and the economy in the transport service sector. Further, the co-benefits of a bus-based public transport system are reduced pollution and vehicular congestion. Our analysis finds that the low ambition scenario would lead to a yearly reduction of 59 KT of particulate matter (PM) 2.5, 6 MT of carbon monoxide (CO), and 0.6 MT of nitrous oxides (NOx) emissions by 2031. Additionally, over 6.7 billion passenger kilometres are estimated to shift from 2Ws and 3Ws to buses, which will lead to substantial decongestion, road infrastructure, and fuel, time, and economic savings.
What are the government policies and incentives for investing in bus infrastructure in India?

The Government of India and various state governments have introduced both demand and supply incentives for investment in bus infrastructure through its various public transport and EV policies. The PM E-bus seva scheme aims to add 10,000 e-buses across 169 cities of the country. It also includes support for building depots and provides incentives for the operational cost of buses.