Reimagining

public transport
in India

October 2017

KPMG.com/in
© 2017 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Table of contents
Executive summary 01

Background 03

Challenges facing the public transport

sector in India 07

Way forward 13

Action agenda 15

Conclusion 16

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 Executive summary
01

Propelled by several contribute almost 6601 per For sustainable development,

global mega trends, public cent to the Gross Domestic a paradigm change in terms
transport is witnessing Product (GDP) of the country. of avoid-shift-improve needs
Reimagining public transport in India

transformational changes It is expected that by 2030, to be adopted in order to

across the world, and India 40 per cent02 of population transition to public transport.
is no exception. In the past will call cities home and are Changing trends in consumer
decade, India has witnessed also expected to contribute preferences, increasing
deep penetration of metro to 7501 per cent of the GDP. awareness and sensitivity
rails, highway infrastructure, The Ministry of Housing and towards the environment,
ride hailing services and Urban Affairs estimates that improvements in technology,
many such other innovations INR39,20,000 crore03 (USD600 thrust towards digital
that mark a march to billion) needs to be invested payments, electric vehicles
modernity. India’s airports during the period 2011-31 out and other renewable sources
have turned world class in of which 4403 per cent is to be of energy are expected to
this decade and competition allocated to urban roads and usher in newer modes and
is vibrant in segments driven 11.503 per cent to mass transit models of transport much
by the private sector. Inter- systems. earlier than expected which
modal competition is picking can take public transport to
High levels of investments in
up pace rapidly. the next level (international
roads without commensurate
standards) in terms of quality,
Yet deep deficits remain in the enhancement of quality
sustainability and efficiency
provision of public transport public transport leads to
for the end user. One of the
services in India. The more personal modes being
greatest drivers of efficiency
extensive-but overburdened adopted. This has several
is the technology-enabled
rail system has raised major negative externalities in
sharing economy and peer-
operational and safety the form of fatalities, air
to-peer networks that can
concerns. Bus transport, pollution, congestion, etc.
enable real time alignment of
mostly dominated by state- It is estimated that in India
demand and supply, thereby
owned transport corporations approximately 88 million
eliminating expensive
fails to match modern global trips(70 04 million by buses,
underutilisation of assets and
standards. Inter-modal approximately 1804 million
inventory of time.
integration is largely non- by railways and 0.2305 million
existent. First mile and last by air) are made on public
mile connectivity challenges transport on a daily basis 01. Cities for all, National Institute of Urban Affairs, October
2014
deprive users of a consistent which translates to 6-9 per 02. Handbook of urban statistics 2016, Ministry of Urban
Development, September 2017
experience. cent of total trips being 03. Sustainable smart cities in India: challenges and future

catered to by public transport perspectives, Springer,Poonam Sharma, Swati Rajput, 2017

India’s public transport needs 04. Review of Performance of SRTUs 2014-15, Ministry of
as against 30-35 per cent06 in Road Transport and Highways, Government of India,
are likely to grow rapidly February 2016
most countries across the 05. Handbook on civil aviation statistics 2015-16, Directorate
as the country urbanises at General of Civil Aviation, January 2017
world. Clearly there is a
a fast clip. As per Census 06. KPMG in India’s research and analysis 2017 based on

need to provide more public research on public transport share in total trips across

2011(the population of India is countries

transport in India as it has

1.21 billion), India is about 31
numerous benefits.
per cent urbanised and cities

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 02

This background paper, • Secondly, it proposes that with limited revenue

released on the occasion of the definition of public leakage and integration
the KPMG Transport Summit transport should cover the opportunities provides for
focuses on the remedial entire door-to-door travel better cash flow visibility,
measures which are available span of the user involving thereby promoting various
in the short to medium third-party infrastructure or innovative financing.
term, viz. opening up of resources and thus should The demand exists and
the public transport market cover all non-self-owned commuters are willing
in India, customer-centric motorised or even non- and possibly able to pay.
public transport planning, motorised transport means Bringing it all into a single
use of technology for better basket makes the entire
• Thirdly it argues for public
customer experience and system more viable.
transport to be made
efficiency in operations and
amenable to technological Reimagining our public
having a wide spectrum of
innovations that can transport to cover the above
public transport options
enhance user experience will involve deep shifts in
to bridge the gap between
and make transport safe public policy. Our view is that
the demand and supply
and efficient this has become unavoidable
of public transport. The
in a modern disruption-
paper principally makes the • Fourthly, it asserts that the
driven world. Past policy
following assertions: role of public authorities
initiatives have largely been
is principally to create an
• It starts with a revised of an incremental nature,
enabling environment
definition of public except perhaps in the aviation
for transportation and
transport. It asserts that sector to an extent. This
to regulate adherence to
public transport is the paper presents a few ideas
service standards rather
transport system for that we believe should be
than providing transport
the public at large and debated as India attempts to
itself, which may or may
not necessarily being take a generational leap and
not be in public hands
provided by public sector transform its public transport
enterprises (as has • Finally, it suggests that services and radically
traditionally been the case) financing follows form. improve user experience.
An organised sector

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 03
Reimagining public transport in India

Background

India is experiencing rapid urbanisation and the However, as indicative estimates depict in Table
trend is expected to continue in the future as well 1, the adoption of public transport is quite low in
Hence, the focus on providing sufficient and quality India compared to a select few other countries. This
public transport in cities is as critical as improving translates into a greater use of personal transport
the inter-city connectivity. In order to sustain this modes, primarily cars and bikes. This has negative
growth, the Ministry of Housing and Urban Affairs externalities of:
estimates that during the period 2011-31 approximately
• Increased congestion
INR21,75,60001 crore (USD333 billion) needs to be
invested in urban roads and mass transit. • Increased travel times

• Air pollution and consequent health issues

Figure 1: Allocation of funds for transport
• More road fatalities whose costs on the economy
are 1-302 per cent of GDP
Others Roads
45% 44% • Loss of economic productivity.

Table1: Public transport share in total trips across

select countries

Estimated Public transport share

Country
in total trips (per cent)
Mass
India 7*
transit
11% Australia 17

Source: Sustainable smart cities in India: challenges and future perspectives, Springer, Poonam Sharma, U.S. 9
Swati Rajput, 2017

Singapore 86

Brazil 29
01. Sustainable smart cities in India: challenges and future perspectives, Springer,Poonam Sharma, Swati
Rajput, 2017 Source: KPMG in India’s research and analysis 2017 based on research on public transport share in total
trips across countries
02. Global Cost of road crashes, iRAP,2013 *Note: Indicative number

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 04

Further, as a majority of investment (4403 per cent) is In order to circumvent this challenge/impending
allocated to roads, it inevitably leads to an unending problem, there needs to be a paradigm change in
cycle as depicted in Figure 2: the approach to urban and transport planning which
effectively translates into adopting the Avoid Shift-
Figure 2: Consequences of investment in roads Improve (ASI) framework:
Avoid - need for motorised travel which is possible by
integrated land use transport planning and measures
like tele commuting, work from home, etc.
More
roads Shift from personal modes of transport to public
transport and non-motorised transport
Improve - Make improvements in technology, cleaner
fuels and vehicles, etc.
This ASI framework needs to be at the heart of a public
transit system that needs to be customised to the
Increased needs of the area due to the large variance in India
Traffic urban agglomerations.
private
congestion
modes

03. Sustainable smart cities in India: challenges and future perspectives, Springer,Poonam Sharma, Swati
Rajput, 2017

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 05

Approximately 377 million people live in the 7935 urban centres with population ranging from 50,000 to
urban centres04 of India (population greater than 5,000 1 million people. Most of these (7882) smaller urban
Reimagining public transport in India

is classified as an urban centre). In 2011, there were centres are still dependent on intermediate public
three cities04 with more than 10 million population transport (IPT) modes to satisfy their mobility needs
and 5304 cities with more than 1 million population. viz. shared autorickshaw, jeeps, vans,etc. These
As depicted in Figure 3, 42 per cent of the urban forms of transport typically work in an informal or
population lives in 53 cities (with populations of 1 unorganised manner on a hail-and-ride basis. The
million+) while the balance 58 per cent live in 788204 payment mechanism is primarily cash.

Figure 3: Urbanisation in India

100% 3% 1% 3% 3% Megacities (> 10 m)

1% 3% 4% 4% 4%
3% 3% 2% 2% 3% Large metropolitant cities (5-10 m)
2% 4% 4%
7% 5%

Class I Other urban Large

6% 6% 265 m

cities
90% 8% Million + cities (1-5 m)
3% 8% 7%
1% 8%
5% 1% 8% 9% Other class I cities (0.1 to 1 m)
80% 8% 1% 8%
8% Class II (50-1,00,000), Class III (20-50,000),
10%
centers villages
1% Class IV (10-20,000)
12% 1% 9% 112 m
17%
Proportion of all India population (%)

70% 1% Class V & VI (<5-10,000)

18% 14%
16%
20% 17% 200 m
60% Very large villages (<10,000),
21% Large villages (>5,000)
20%
50% 22%
21%
23%
40% 21% 24% Medium sized villages (2-5,000)
20%
21%
small villages
Medium and

30% 19%
19% 537 m
18%
18% Small villages (1-2,000)
20% 17%
15%
12%
10% 22% 10%
17% 8% Hamlets (500-1,000)
13%
10% 7% Small hamlets (<500)
5% 3%
0%
1951 1961 1971 1981 1991 2001 2011
(estimate)
Source: Urban India 2011: Evidence, Indian Institute of Human Settlements, January 2012

As India aspires to become a middle income

economy(Gross National income per capita ranging
between USD1006-3955)05 with very large urban
agglomerations, the need to rapidly modernise
and integrate its public transport is an imperative.
However several challenges would need to be
addressed in this endeavour.

04. Urban India 2011: Evidence, Indian Institute of Human Settlements, January 2012
05. The World Bank Group, 2017

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 06

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 07

Challenges
Reimagining public transport in India

facing the public

transport sector
in India

While the current use/adoption of Public Transport Institutional structure and capacity gap
appears lower for India compared to a select few other
The transport sector has a presence of many agencies
countries, there is a an emergent need to enhance the
such as bus operators, metro operators, regional
capabilities and services of public transport to not only
transport authorities, auto-rickshaws, etc. that are
improve the adoption at current volume of passenger
governed by different agencies. In order for all these to
trips but also for the future demand.
work cohesively, an apex body dealing with all matters
The challenges for the Indian public transport sector are: pertaining to the transport sector and especially public
transport does not practically exist which leads to
1. Institutional gaps
the different agencies operating in silos and without
2. Inadequate supply coordination. Moreover, the public agencies may lack
technical expertise with respect to public transport
3. Poor customer experience
which leads to inefficient operations and sub optimal
4. Lack of the use of technology. performance.
With individuals exercising their preference for work-
place mobility, flexible occupations, and choice of
type and nature of places to stay, city traffic patterns
are becoming more dynamic. The concept of Central
Business Districts may be fast disappearing as people
work from home, children spend time in extra-
curricular activities or tuitions after school hours and
start-ups/entrepreneurs travel far and wide to access
business. In summation, point-to-point transits at
certain peak times for various segments of residents
may no longer hold true leading to more dispersed
movements. In such scenarios, fixed circuit systems
may be either unutilised or require even higher degree
of first and last mile connections to provide commuters
the desired level of flexibility akin to personal modes of
transport.

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 08

Multimodal transport planning and integration:

Land Transport Authority- Singapore
Intervention Impact
The Land Transport Authority was established on Nearly 80 per cent of trips (4.24 million) in
1 September 1995, after the merger of four public Singapore are performed on Public Transport
sector entities: comprising of bus, MRT, LRT, Taxis. The supply of
public transport per capita is one of the highest
• Registry of Vehicles
in the world, due to which there is high usage of
• Mass Rapid Transit Corporation public transport, which coupled with travel demand
restraint measures, like area licensing system,
• Roads & Transportation Division of the Public
vehicle quota system, congestion pricing etc. has
Works Department
resulted in decreasing registration of private cars.
• Land Transportation Division of the Ministry of
Communications.

It is a statutory board under the Ministry

of Transport, which heads land transport
developments in Singapore. It is the agency
responsible for planning, designing, building
and maintaining Singapore’s land transport
infrastructure and systems. It uses technology to
strengthen public transport infrastructure.

Source: 1. Our History. Land Transport Authority. Retrieved 26 September 2013.

2. Singapore Land Transport Statistics in brief 2015, Land Transport Authority, September 2017

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 09

Existing cities either do not have space at grade or in various forms that not only provide information for
have load centres of economic activity that have the user, but can go on to provide a seamless user
Reimagining public transport in India

grown around personal transport modes due to a lack experience. Many of these are outside the remit of the
of public transit options. In both cases, it becomes way in which transport services have been hitherto
difficult to plan an alignment for a mass transit mode provided in India, in which the State has played an
that can cater to the maximum demand or it becomes overwhelmingly dominant role.
prohibitively costly to use elevated or underground
Considering the above shifts and the new possibilities
options. Thus, traditional modes of transport need
occurring rapidly it has become imperative to
to be re-looked at with more flexible options that
reimagine public transport as the transportation
can align to the varying demand to avoid expensive
system for public at large and not necessarily being
redundancies and under-utilisation.
provided by public sector enterprises. This change in
Comprehensive transport planning and operations approach would require authorities to consider the
has to go beyond the backbone systems like rail and user and his/her preferences at the centre of the new
road to encompass all modes that permit a seamless age service and design the entire transport ecosystem.
experience for the user from door to door. This involves Accordingly we propose that the definition of public
modes that are not necessarily owned or operated transport should cover the entire door-to-door travel
by public agencies, but nonetheless have to become span of the user involving third party infrastructure or
a part of the integrated transport experience. Further, resources and thus should cover all non-self-owned,
this experience is coming to be enabled by technology motorised or even non-motorised transport means.

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 10

Inadequate public transport supply has to be dealt with inventively

Bus is the predominant mode of public transport both of the urban transport trips using public transport
in intercity as well as intra city travel in India. As stated (assuming public transport shall be provided by buses
earlier, India is 31 per cent urbanised currently which primarily), at the current passenger ridership per bus, it
is expected to increase to 40 per cent by the year is estimated that an additional 460,00002 buses shall be
2031. Currently, about 7001 million trips per day are required to cater to the urban public transport demand
being catered to by 140,000 government run buses in the year 2031 in addition to various other modes of
in the country. With a vision to cater to 5002 per cent public transport.

Table 2: Benchmarking of public transport systems across the globe

Metropolitan area Bus MRT
Bus Fleet/1000 MRT Km/1000
City Population Daily Daily persons persons
Area (km²) Fleet Size Km
('000) Ridership (mn) Ridership (mn)

Beijing 20186 16411 21628 13.8 554 6.7 1.07 0.03

Hong Kong 7184 1104 5743 3.8 178 4 0.80 0.02

Shanghai 23475 6341 16235 7.6 588 6.2 0.69 0.03

Singapore 5312 716 4212 3.5 167 2.2 0.79 0.03

London 8302 1572 7500 6.4 402 3.2 0.90 0.05

New York 8337 790 4344 1.8 370 4.5 0.52 0.04

Seoul 10442 605 7512 4.6 327 6.9 0.72 0.03

Tokyo 13277 2189 1462 0.6 305 2.2 0.11 0.02

Delhi 16788 1483 5942 4.8 215 2.7 0.35 0.01

Source: Key transport statistics in world cities, Pan Di, September 2013

It is evident from Table 2 that Indian cities appear to system in India. However another 537 km07 are
lag behind in the physical coverage of public transport planned over the next few years. The other cities that
network to most of the cities across the globe. are constructing metros are Hyderabad, Nagpur and
Ahmedabad07 which shall be operational by November
The government has been driving the provision of bus
2017, 2018 and 2020 respectively. By 2019, the total
and rail based mass transit systems through organised
number of cities with Metro Systems is expected to
and well planned models. While the Jawaharlal Nehru
be 12. Other rail-based modes are Tramways or light
Urban Renewal Mission (JNNURM) sanctioned
rail transit (LRT) as a medium capacity mode of mass
23,00003 buses at a cost of approximately INR11,000
rapid transport and monorail systems. LRT has been
crore04 (USD1.69 bn) in 141 cities, nine05 cities have
planned in Delhi (47 km) at a capital cost of INR100-
adopted BRT system with cumulative length of 17405
16008 crore/km. As depicted in figure 4, there are a
km carrying 340,00005 passengers on a daily basis. The
variety of options in terms of capacity and unit capital
Green Mobility Scheme of the Government of India
costs that India can consider given its large variance of
envisages 1300+ 06 km of BRT in 28 cities across the
urban centres.
country underscoring the importance of BRT. Currently
there are ten07 cities which have an operational metro

01. Review of Performance of SRTUs 2014-15, Ministry of Road Transport and Highways, Government of India, 06. Proposed Green urban mobility scheme, Ministry of Urban Development, February 2017
February 2016 07. New metro rail policy in India unveiled to promote private participation, UITP, August 2017
02. KPMG in India’s research and analysis 2017 based on analysis of bus patronage and industry 08. Modern Trams for cities in India, Institute of Urban Transport, September 2013
03. Annual Report 2011-12, Ministry of Urban Development, 2012
04. Letter to Principal Secetaries from Director UT, Ministry of Urban Development, July 2015
05. BRT data, Across Latitude and Cultures, SIBRT,September, 2017

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 11

Figure 4: Cost and capacity of mass transit systems transport technology such as Electric Vehicles (EVs)
and Autonomous Vehicles (AVs).These offer new
Reimagining public transport in India

140 opportunities for transportation planning in a more

120 efficient manner while also necessitating creation of
MRT aligned assets such as charging stations for EVs or
Capital costs per km (M USD)

100
sensors and dedicated lanes for AVs to navigate. Public
Monorail
80 Authorities need to be cognisant to design their public
60 transit systems with these in mind, including planning
LRT for recycling/disposal of batteries as EVs proliferate.
40
While globally there is a movement towards making
20 BRT the transport infrastructure amenable to EVs and
and Tramway High capacity BRT
0 also aligned to the needs of AVs, the planning
0 10000 20000 30000 40000 50000 60000 70000 80000 90000 paradigm in India is yet to evolve. There are a range
Capacity (passengers/hour/direction) of issues from road construction, parking facilities,
Source: International experiences with bus rapid transit,Northwestern University, Gerhard Menckhoff,
traffic management infrastructure, contingency
November 2010 management, etc. that would require the attention of
public authorities.
While much is being done, there is significant creation A persistent issue with transit systems is the relative
of physical infrastructure required. Mass transit rigidity and retro-fitment into existing urban areas
systems are fixed infrastructure with dedicated/ that do not have a clear right-of-way as they were not
committed resources (in terms of space for depots, traditionally designed with a mass transit backbone.
stations, terminals etc.) and rolling stock. Moreover, In fact, this forms an important hindrance while
with fixed routings, the transit capacity also tends to developing modern public transport systems and
get fixed whereas demand is variable, both in terms requires a comprehensive view on providing alternate
of time and locations. Moreover, as cities expand to modes for mobility to customers
the peripherals, residential areas are being developed
in erstwhile suburbs that are self-contained and
characterised in certain cities as new satellite cities Using appropriate technology for a
with mobility requirements restricted to those areas better customer experience
itself with malls, schools, colleges, hospitals etc.
Customer experience of public transport in India is
mushrooming across cities. Overall, trends indicate
largely poor due to i) absence of seamless intermodal
commuting is moving away from peak hour traffic
travel ii) absence of a feeder system for first and last
demand to and from Central Business Districts and
mile connectivity iii) poor quality of modes of public
select regions to more dispersed movements at a city
transport especially feeders iv) absence of integration
level and to extremely localised movements at the
of schedules of mass transit and feeders v) absence of
other end.
integrated ticketing vi) unreliable services.
In such a scenario, fixed capacity systems may
One of the forms in which this manifests itself is in
become expensive and inefficient with rapidly
terms of less reliable operations with public transport
dropping utilisation and risk of non-alignment to
modes being operated at fixed frequencies throughout
commuter needs. The transport sector also has
the day, irrespective of the time and passenger
seen attendant issues of delayed project execution,
demand or poorly-designed routes which are not in
financing issues, improper contractual frameworks
sync with passenger travel patterns.
that typically accompany infrastructure projects.
Undoubtedly, there is a clear need to address these
issues in order to create the physical assets and
capacity to cater to the absolute demand. However,
the nature and models for developing these require
a fresh approach given the recent innovation in

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 12

Insight in schedule and occupancy of

public transport- case study: Netherlands
Background • Providing valuable insights for different
A regional public transport company utilised data dimensions (rush hour, holidays, specific stations,
related to the occupancy of metro’s, busses and shared line segments)
trams. Based on this information, the transport • Data sources: one year of public transport chip
schedule for providing sufficient capacity to serve card data and vehicle data
the demand of the traveler can be enhanced while
reducing maintenance needs. It also provides • Duration (develop phase): Six weeks.
insight in possible capacity issues in the transport
network when the number of travelers increases. Impact
The vehicle occupancy calculated for different
Intervention circumstances is used directly as input for decisions
regarding the number of carriages and driving
Through Big Data analytics on the KAVE platform,
frequency. Multiple insights were obtained with
data was combined, and the occupancy of vehicles
this information. For example, the impact of costly
was calculated on ‘journey-level’ and analysed for
vehicle and bus stop modifications on halting time
different situations (e.g. rush hours during the year,
of vehicles was measured, including influence of
large events, different stations). This required:
the number of ‘on-boarders’ and external factors,
• Coupling public transport chip card data to as road infrastructure on these halting times.
vehicle data (EBS) Moreover, bottlenecks for increasing number
of travelers are identified to prioritise network
• Calculating the occupancy on ‘journey-level’
improvements.

Source: KPMG N.V. Analysis, 2017

Consequently, this results in poor customer customer or peer. This has significant implications
experience and patronage of transit. Moreover, the on reducing cost of transport while also reducing job
integration of various public transport services in opportunities for trained drivers/chauffeurs. These first/
operational and financial dimensions is severely last mile options whether through cars/vans or mini-
hampered due to non-application of technology that buses, monorails/LRTs etc. can be carefully planned
can unify different platforms and applications. to develop an ‘amorphous’ transit system that can be
flexible while complementing the backbone Metro or
Technology is transforming public transport. From
BRT. Also, depending on nature of the space and the
increasingly ubiquitous app-based information
population density, such modes can actually go on to
systems to the more advanced ones like Hyperloop,
be the most efficient or principal means of conveyance
technology is set to inevitably change the way we
for a particular set of circumstances (beyond traditional
derive value from transport infrastructure and services.
first/last mile roles).
Development of un-manned vehicles/Autonomous
Vehicles/Pods and rapid growth of ride sharing, peer-
to-peer networks and bus/taxi aggregators provide
options for individualised transport while eliminating
the cost of under-utilised capacity by sharing the
vehicles or re-deploying the same for another

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 13

At the basic level, these technological innovations

Way forward
Reimagining public transport in India

can bring about rapid efficiency improvements and

provide information to users that can help plan out
their journeys better on an everyday basis. At another
level, the new mass transport technologies and
systems can change where we live and how we Redefining the roles of public
commute. Technology thus has a bearing at every step authorities in transport
in a public transport journey. However in India at this
time the adoption of technology for public transport As this paper has earlier asserted, with so many
services is low. Minimal use of technology results in modes and options well beyond the traditional choices
poor integration- operational and financial and also commuter transit is being enabled by technology
unreliable services which manifests itself in the form in a myriad of ways. This is making new forms of
of bunching and overcrowding of public transport services and business models possible, including more
modes, longer waiting times for passengers, poorly recently the mass innovation on ride sharing for cars
designed routes which are not in accordance with and bikes. This also brings to the fore new challenges
passenger demand. Passenger safety and security is in regulating these businesses, especially since
another issue which is emerging as a deterrent to the there are emerging concerns around efficient use of
patronage of public transport. public spaces, safety and also core issues of fairness
of regulations governing one mode versus another.
India has inherent strengths in technology, especially This necessitates two changes in the roles of public
information technology that is a key enabler. The authorities managing the transport system. Firstly, the
challenge is that at this time the core infrastructure authorities have to devise regulations that encourages
works in silos and technology has had limited play in innovation while providing a level playing field for all
enhancing user experience. This leads to a preference players who want to further such innovation in the
for personal transport where the user can today time interests of the user. Secondly, public authorities need
the journeys (even if expensive and inefficient) with the to de-emphasise their roles in owning and providing
help of technology. If this has to change then transport transport services as compared to the first role of
planning has to start ab initio with the twin paradigms providing an enabling environment. We consider this
of (a) enhancing user experience and (b) adopting role shift essential for several reasons including the
technologies like Internet of Things (IoT) for enhanced challenges that public authorities face in technology
customer experience and also back end usage for adoption and modernisation, to run competitive
asset management, Artificial Intelligence-based businesses profitably and ensure high levels of
predictive analytics, etc. The possibilities are indeed customer service.
immense, but the key would be to avoid rigidities and
silos and instead focus on the utility that the customer India exhibits both ends of the spectrum- on the one
can derive from such applications of technology. The hand, we have Indian Railways providing the assets
overwhelming focus has to be on enhancing customer and services, including fixed and rolling stock under
experience. a common institution for technical, commercial and
safety regulations whereas on the other hand, we
have the aviation sector wherein airports are private or
under a separate authority (AAI) and service providers
are both public (Air India) and private that follow
an independent regulatory regime (DGCA, BCAS,
AERA). The sector structure in aviation is such that
inter-operability is ensured while providing enterprises
to follow divergent business models. Lessons
from the aviation sector can be usefully applied to
other segments – and with technology and financial
innovation, the transformation can be expedited.

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 14

While the role of public authorities in asset creation In summary the role of the public transit authorities
and operation would not conceivably go away in could entail the following:
the foreseeable future (and indeed may not be 1. Take an integrated view of comprehensive mobility
desirable), it should be limited to essential enabling for the city/metropolitan areas and/or national/
the infrastructure on which third parties can bring regional geographies
about service innovation. Indeed, in India, a large
enhancement of fixed infrastructure is required. 2. View the entire eco-system (and not only the transit
However, these need to be designed wherein mass system) as a ‘black-box’ to ascertain overall viability
transit systems can form a backbone complimented by and act as a financial intermediary between different
amorphous first mile/last mile modes as an integrated commercial models
end-to-end system with special focus on the differently 3. Provide inter-operability between transport modes in
abled, senior citizens and other needy persons. terms of quality, schedule alignment and integrated
Similarly, the promotion of Non-Motorised transport ticketing
coupled with Transit Oriented Development can
reduce the demand for vehicular movement and hence 4. Make the public transport system amenable to
pollution. India has had a history of using cycles for technological innovations that can enhance user
commutes that has diminished in cities as distances experience and make transport safe and efficient
have increased and cycling conditions deteriorated. 5. Facilitate the inter-connect between different service
There is a need to create dedicated cycle lanes, bicycle providers and modes
stops etc. so it is safe, secure and allows all weather
commuting even for longer distances. 6. Specify standards and deliverables on each
parameter related to customer experience for any/all
service providers and monitoring the same
7. Provide a mechanism for grievance redressal for both
customers and service providers with options for
modifying in light of changing business conditions
8. Promote research, development and innovation.

Institutional integration: Transport for London (TfL)

Background Impact
TfL was created in 2000 by the Greater London Thirty one million passenger trips are performed
Authority Act 1999. across London on a daily basis. The payment
mechanism is through a smart card which works
across all modes in London and also through
Intervention contactless payment cards.
TfL is a government body (statutory corporation)
in charge for the transport system in London. It
is responsible for London’s roads, for various rail
networks including the London Underground,
Docklands Light Railway and Rail, for London’s
trams, buses and taxis, for cycling, and river
services. The services are provided by a
combination of wholly owned subsidiary companies
private sector franchisees and by licensees.
TfL is controlled by a board whose members
are appointed by the Mayor of London. The
Commissioner of Transport for London reports
to the Board and leads a management team with
individual functional responsibilities.

Source: 1. Company information. Transport for London. 2013. Retrieved 10 August 2013.
2. Our role. Transport for London. Retrieved 29 January 2016.

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 15

Action agenda to improve financing for this sector that can be enabled
Reimagining public transport in India

through two thrust areas:

1. Bring the unorganised segment into the umbrella of
the formal transport system
Financing follows form 2. Create new and innovative revenue streams to
complement the basic fare-box.
As mentioned in the previous section, as an integrator
the core form and role of a public transit authority An integrating role can assist the transit authority in
would be to ensure the provision of transport services bringing in the informal service providers into the
to public at large that is safe, secure, affordable and organised segment that is expected to ultimately
reliable. The authority needs to focus on bringing improve the financial health and attract investments.
different service providers on a common framework Organised systems can forecast demand more
and be an all-encompassing agency that is not only accurately (due to reliable and recorded underlying
focused on transporting commuters but also on data on traffic), plan for it, provide resources
facilitating the economic development of the region adequately (and possibly timely) to respond to
and creation of infrastructure. This necessitates a demand and prevent revenue leakage. The improved
financially viable eco-system that is sustainable to predictability of cash flows in turn improves revenue
support innovation and commercially sound principles recognition, reduces project risks and project financing
for service providers to operate regularly. costs. Organised and large players or aggregators /
integrators can raise resources more effectively
Three aspects stand out for immediate attention-
and cheaper than unorganised, distributed service
restructuring PPP contracts through an objective
providers.
process, broadening and deepening access to long-
term credit and tightening procurement processes Core footfalls support a range of allied revenues that
and timelines. It has become impossible to foresee can finance fixed infrastructure and leveraging property
factors that would significantly impact performance development and real estate is a fairly established
over a long term contract period. Without recognition method for fixed passenger infrastructure. However,
of this fundamental aspect we are unlikely to attract monetisation through the relevant City Master
long term investment on the scale required and ensure planning regulations and institutional mechanisms
smooth contract operations. The Kelkar Committee’s that can channelise the value capture from land
recommendations in 2015 are worth reflecting on and appreciation into infrastructure needs to be rigorously
the capacity of our institutions needs to be significant and enthusiastically followed. Allied options such
enhanced to address the disruptions, both visible and as advertising, kiosks and leasing of assets may be
yet to come. explored in greater detail.
The dearth of bankable projects has contributed partly One of the most potent sources of value is data and
to the financing challenge but the inability of project going beyond merely collecting data for monitoring
development and procurement agencies to adopt fairer performance but churning it with analytical models
risk sharing principles and take on contingent financing for enhancing operations, dynamic pricing, and other
obligations has contributed equally. Also, while project models for data monetisation can provide a wide
preparation has improved, there are still substantial range of potential financing sources. As integrators,
improvement possibilities. High project risks, poor the public authority can then channelise and cross-
entity ratings and regulatory uncertainties also make subsidise the different segments of transit within
yield based structures difficult to implement. the total price to the consumer and enable various
business models in each segment.
Elongated timelines due to a lack of institutional
capacity in the project award process has been Finally, as transport costs come down through
hurting the implementation of projects. Single effective deployment of rolling stock aligned to the
window clearance has rarely worked. It has been demand by making the transit systems more flexible or
further challenged by a consistent lack of discipline ‘amorphous’, it can not only make the cost of business
in enforcing project timelines and inability to resolve lower, but reduced pollution can improve the living
disputes during the implementation stage quickly. conditions and make it attractive for people to settle
These are big deterrents for foreign investors and in. A better social and environment ambience can help
tends to weaken the competition as well. attract investment into the city and has to be seen as a
strategic investment by city authorities.
In summary, improving the capacity and form of
institutions as well as reliability of revenues are critical

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 16

Conclusion
The Indian public transport sector has significant distance to cover in terms
of provision of quality and affordable services to the public. Currently, it
appears that in addition to the government and organised segment, there
is a proliferation of the unorganised segment and personal modes to cater
to the demand as seen by the significant growth of sales of cars and taxi-
aggregators. However, the opportunity is now available to leap frog the
development of the sector through deployment of new technologies in
transport and IT as well as revenue mobilisation using innovative means.
By providing a deep and sharp shift in policy and perspective on outcomes
of deliverables, the ideas presented herein can be considered to take a
generational leap and transform the public transport services and radically
improve user experience. With the right enabling environment and
proper structuring, private sector investment, innovation and efficiency
can be brought onto a common platform to plug gaps in service delivery.
The opportunity is now to make our cities more mobile, enhance the
infrastructure of our public transport and boost its customer experience.

Acknowledgements
This publication has been prepared by a team comprising:
• Anish De
• Richard Threlfall
• Sameer Bhatnagar
• Rajaji Meshram
• Umang Jain
• Nisha Fernandes
• Shveta Pednekar
• Rasesh Gajjar

© 2017 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved
KPMG in India contacts:
Mritunjay Kapur
Partner and National Head
Strategy and Markets
Leader – Technology, Media and Telecom
T: +91 124 307 4797
E: mritunjay@kpmg.com

Jaideep Ghosh
Partner
Strategy and Operations, Management Consulting
Leader – Transport, Leisure and Sports
T: +91 124 307 4152
E: jaideepghosh@kpmg.com

Anish De
Partner
Head of Strategy & Operations,
Infrastructure, Government and Healthcare (IGH)
T: +91 124 669 1000
E: anishde@kpmg.com

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