Towards a discussion of support to Urban Transport development in India Public Disclosure Authorized Public Disclosure Authorized Energy & Infrastructure Unit South Asia Region March 2005 Public Disclosure Authorized Document of the World Bank Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ACRONYMS BDA Bangalore Development Authority BMC Bangalore Municipal Corporation BMTC Bangalore Metropolitan Transport Corporation BMRTL Bangalore Mass Rapid Transit Ltd CMA Chennai Metropolitan Area CMDA Chennai Metropolitan Development Authority CMC Chennai Municipal Corporation CMTC Chennai Metropolitan Transport Corporation CTTS Chennai Traffic and Transport Study (1995) KRDCL Karnataka Road Development Corporation Ltd KUIFDC Karnataka Urban Infrastructure Development Corporation LRT Light-rail Transit MTC Metropolitan Transport Corporation MRTS Mass Rapid Transit System (Chennai urban railway) TM Traffic Management T&PM Traffic and Parking Management TNUDF Tamil Nadu Urban Development Fund UTP Urban Public Transport CONTENTS Page PREFACE ............................................................................................................................... i How significant is the urban transport problem in India?................................................... 1 What is the Government of India policy response to the Urban Transport problem? ........ 2 What is currently being implemented to address the Urban Transport problem? .............. 4 Putting policy into practice – the case of Chennai and Bangalore ..................................... 5 A Way Forward...................................................................................................................7 A Potential Role of the World Bank................................................................................... 9 ATTACHMENT I: URBAN TRANSPORT IN BANGALORE AND CHENNAI......... 12 1. OBJECTIVES AND CONTENT OF THE REPORT .......................................................... 12 2. THE BACKGROUND ................................................................................................ 13 3. URBAN TRANSPORT ISSUES ................................................................................... 18 4. THE WAY FORWARD.............................................................................................. 28 5. THE POTENTIAL ROLE OF THE WORLD BANK ........................................................ 30 ATTACHMENT I-A: URBAN TRANSPORT IN CHENNAI........................................................ 34 ATTACHMENT II-B: URBAN TRANSPORT IN BANGALORE ................................................. 53 ATTACHMENT III: URBAN TRANSPORT IN INDIA – BIBLIOGRAPHY ................................... 64 ATTACHMENT IV: CITIES ON THE MOVE – EXECUTIVE SUMMARY ................................... 69 Towards a discussion of support to Urban Transport development in India PREFACE The purpose of this policy note is to respond to the request from the Government of India for the World Bank to provide support to the development of the urban transport agenda in India and to provide lending support. During the discussions between the World Bank and the Government of India represented by the Ministry of Finance, the Department of Economic Affairs (DEA) agreed on a three year program of support 2005-2008 reflected in the World Bank’s Country Strategy for India September 15, 2004 (Report No. 29374- IN). Support is currently reflected in the Operations Program as an Urban Transport project under consideration and as a policy note as part of the non-lending services. In conjunction with these operations support to urban roads are included in Chennai under the proposed Tamil Nadu Urban Development Project III and in Bangalore under the proposed Karnataka Municipal Reform Project. This report was written by Slobodan Mitric, Urban Transport Specialist (consultant). Isabel Chatterton, Financial Specialist (SASEI) contributed to the Chennai case study. The task leadership was shared by A.K. Swaminathan, Zhi Liu, and Sally Burningham (SASEI). Guang Zhe Chen is the Transport Sector Manager in SASEI and Vincent Gouarne is the SASEI Director. i Towards a discussion of support to Urban Transport development in India How significant is the urban transport problem in India? 1. Efficient and reliable urban transport systems are crucial for India to sustain a high growth rate and alleviate poverty. Indeed, the significance of urban transport in India stems from the role that it plays in the reduction of poverty, both through its indirect effects as a stimulator of poverty reducing growth and through its direct effects on the quality of life of people1. 2. Services and manufacturing industries particularly concentrate around major urban areas, and require efficient and reliable urban transport systems to move workers and connect production facilities to the logistics chain. In China for instance, service industries as well as manufacturing and labor-intensive industries have developed in economic centers endowed with good transport systems that could efficiently handle mobility needs of millions of workers and facilitate the movement of goods. India’s economy is currently more service-oriented than China, with only about one million people employed in the IT industry—the mainstay of the tertiary sector2. But growth in the services sector and development of Indian manufacturing industries will put more pressure on already saturated urban transport systems. Many Indian cities such as Bangalore and Chennai have attracted significant investments in high-technology industries thanks to a competitive and highly qualified workforce. In the past few years however, urban infrastructure, and transport systems in particular, have been struggling to keep up with the growing number of firms moving into these cities. Local and international media have been continuously reporting the cities’ difficulty in coping with growing demand for efficient transport systems3. The financial press has been describing Bangalore for example as a city of 60,000 unfilled potholes and where software workers’ morning commute to work can take up to two hours. Developing an efficient urban transport system should be part of the broad Government policy aimed at improving the attractiveness and competitiveness of Indian cities. 1 The importance of growth to poverty reduction can be demonstrated by comparing the performance of the Indian and Chinese economies over the last two decades. Over that period the GDP growth rate in India has been around 5.5% with the economy growing about 2.6 times reaching a level of about US$510 billion in 2002. In China the GDP has been growing at about 9.5 % over the same period with the economy growing more than five fold between 1982 and 2002 reaching a level of about US$ 1,232 billion in 2002. In terms of impact of the economic growth on poverty reduction, by 2002 China had lifted 400 million people out of poverty and its poverty rate had declined to 4.6%. In India over the same period the poverty rate only declined from 36% to 29%. 2 The Indian and Chinese economies have evolved differently in the past two decades, with the share of the agriculture sector declining more sharply in China – to less than 15% of GDP in 2002 – while in India it was nearly 23%. In India the contribution of services to GDP grew to above 50%; in China services contributed 33.7 %. In India, industry share of GDP is about 27% and in China it is 52%. Moreover, by 2002/2003, the amount of foreign direct investment and volume of trade in China have reached a level that is many times of those in India. 3 See for example: The Economist, March 3, 2005: A Survey on India and China. The Guardian, September 24, 2004: India’s silicon city booms to busting. Business Week, November 1, 2004: Bangalore: Tech Eden No More; India’s IT center has exploded – and so have its infrastructure problems. 1 3. Responding to the needs of the economy is not just a matter of the cost of transport, but also of the quality of service provided. A 2003 Confederation of Indian Industry survey of urban populations in Southern India showed 90% dissatisfied with roads, and 58% dissatisfied with public transport services. Interestingly, the same survey showed that 89% were willing to pay for good-quality toll roads and 65% are willing to pay higher public transport fares to get more comfort and frequency. A survey of the business community recorded similar answers. Developing a degree of flexibility in public transport supply so that differentiated services may be tailored to the needs of different groups of the population is thus an important requirement of a future urban transport policy. 4. The impacts of transport on the quality of urban life go even further than that. In the 1990s, as India experienced a period of economic and urban growth, air pollution in its major cities became a cause of national concern and generated worldwide attention. The levels of airborne suspended particulate matter recorded in largest metro-cities far exceeded the ambient air quality standards adopted by India and many other countries. As manufacturing and power sectors are progressively cleaned up the relative importance of the urban transport sector to air pollution increases. There is much current discussion about the development of Mumbai as a “world class city” rivaling