Indian Institute of Management Ahmedabad

IIMA/CIPR0003(A)

Indore City Bus Transport Service (A)

It was November 15, 2005. The meeting of the major decision makers and stakeholders of the city of Indore (Indore Municipal Corporation (IMC), Indore Development Authority (IDA), Traffic Police, Nagar Seva operators, Tempo union, and citizen groups) chaired by Mr Vivek Aggarwal (Collector and District Magistrate, Indore) had just ended. It was one of the series of meetings that Mr Aggarwal had convened over the last couple of weeks to concretize the idea of providing a city bus service in Indore. This meeting entrusted Mr Aggarwal with a mandate to go ahead and prepare a note detailing the plan of implementation. This note had to be approved by the state government (state cabinet), after which the implementation could start. Public Transport Service Towards the end of the 90s, mounting losses forced Madhya Pradesh State Road Transport Corporation (MPSRTC), the sole provider of public transport in Madhya Pradesh, to suspend their urban services. As a consequence, organized public transport services ceased to exist in Indore, the largest metropolitan city of the state of Madhya Pradesh. This void was filled by Intermediate Public Transport (IPT) consisting of minibuses, tempos and auto rickshaws. As of January 2004, 300 private minibuses, 150 tempos, and 10,000 auto rickshaws were plying as IPT. Minibuses had fixed routes and were operating under the banner of Nagar Seva. Nagar Seva was operating on 19 routes with 263 bus operators. Minibuses played a significant role in providing transport services as compared to tempos and auto rickshaws. They carried twice the demand in terms of passengers and four times in terms of passenger kilometers compared to tempos, the second highest mode (Exhibit 1). These modes were earning sufficient net income to sustain the services. However, according to Mr Aggarwal, These were overcrowded and the behavior of crew towards commuters was poor. Ladies, especially, faced severe problem, as overcrowding, coupled with the behavior of the crew and co-passengers, were not conducive for their travel. Overcrowding also dissuaded transport disadvantaged commuters (children, senior citizens, and physically challenged people etc) from traveling. There were frequent complaints of rash driving. Lack of public transport had acted as one of the catalysts for the rapid growth of personalized vehicles (Exhibit 2). The decision makers expected the growth rate to increase further due to increase in disposable income owing to economic prosperity of the commuters. Though the existing level of road congestion was not perceived as very high, they expected higher congestion if the proportion of private transport increased further. There were road stretches where the average speeds were as low as 16.9 kmph during peak hours.
Prepared by G Raghuram and Satyam Shivam Sundaram Research assistance by Himanshu Patni is acknowledged. Cases of the Indian Institute of Management, Ahmedabad, are prepared as a basis for class discussion. They are not designed to present illustrations of either correct or incorrect handling of administrative problems. 2010 by the Indian Institute of Management Ahmedabad.

2 of 16

IIMA/CIPR0003(A)

Increasing number of fatal accidents was a concern for the decision makers (Exhibit 3). In 2004, on an average, one person was killed everyday in a road accident. They expected an alarming situation in future, if the trend continued the same way. Pollution was another concern. Suspended Particulate Matter (SPM) and Particulate Matter with lower than 10 micrometer aerodynamic diameter (PM10) were higher than the ambient air quality standards (Exhibit 4). In order to contain the pollution level, vehicular growth (two wheeler and car additions had grown at a rate of 18.5% and 32.3% for cars respectively (Exhibit 2) between 2000-01 and 2004-05) had to be restricted. Parking space was becoming scarce within the city. With the expected growth in transport demand (at the prevalent transport mode share), shortage of parking was going to be even more acute. Revival Attempts Attempts of reviving the public transport were made by different stakeholders in the past. However, none of them had been successful. The latest attempt was made by the local administration (IMC and IDA) in 2004. According to Mr Aggarwal, The proposal was to provide city bus services, operated by MPSRTC, with financial support from the state/local government. Financial support from the government warranted a close evaluation of the project by the state government. Evaluation of the project took a lot of time and also presented an opportunity for the vested interests to lobby in favour of certain service parameters/specifications (eg front/rear engine, low floor bus, size of bus, routes, frequency etc). Lobbying led to indecisiveness and the proposal never materialized. By early 2005, MPSRTC completely closed (winding up of already extinct organizational division and transferring of assets to other services) their urban services, which had already been suspended in 90s, putting a curtain on any chances of revival of the public transport in Indore with the assistance of MPSRTC. In June 2005, Mr Aggarwal joined as the Collector and District Magistrate of Indore. He was not new to Indore as he had served as Managing Director of the Industrial Infrastructural Development Corporation, (IIDC) Indore during 2002-03. He was also passionate about urban transport which drove him to get involved in tackling the problems faced by the commuters of Indore. Mr Aggarwal identified the information required to move forward towards understanding and resoling the urban transport problems of the city. They included understanding the travel characteristics (O-D matrix, mode choice, trip length etc), socioeconomic characteristics (age, income level, expenditure on different activities etc) and infrastructure conditions (road surface condition, road width, condition of bus shelters etc). Travel and Socioeconomic Characteristics The city had a work force of 0.52 million and generated 2.27 million trips per day (January 2004). The travel demand was expected to double by 2025 to 5.5 million (Exhibit 5). This meant that at the current mode share, demand for physical infrastructure such as road and parking places was going to create huge pressure on the city. A well organized public transport may have been able to reduce the pressure by shifting the mode share away from personalized modes.

3 of 16

IIMA/CIPR0003(A)

The distribution of trips amongst different modes showed that the share of trips by personalized vehicles (cycles, two wheelers and cars) accounted for 51.1% whereas IPTs/public transport share was only 16.4 %. Walk trips constituted about 27.6 % of total trips and non motorized 5.9%. More than 85% of the trips had a trip length of less than 7 km (Exhibit 6). Apart from the travel characteristics, understanding the socioeconomic details was also important to assess the kind of transport system the city can support. The average income for a household in Indore was around Rs 7,524 per month of which on an average nearly 8% was spent on travel (Exhibit 7). A closer examination reveals that the average spending varied from 4.5% to 12.4% for different income groups (Exhibit 8). The proportion of expenditure was higher for the lower income group which meant that poor transport facility negatively affected the lower income group more than the higher income groups. The distribution of household expenditure on travel revealed that nearly 65% of the households spent less than Rs 500 per month, while 80% of the households spent less than Rs 800 per month (Exhibit 9). The statistics pointed towards the low expenditure capacity of the commuters as far as transport was concerned. The Meeting (The meeting was attended by Mr Vivek Aggarwal: Collector and District Magistrate; Mr Chandramauli Shukla: Joint Collector, Indore District; Mayor, IMC; Chairman, IDA; Regional Transport Officer (RTO); Academic Expert; Joint Commissioner, Traffic Police, Indore; IPT Union Leader, and NGO representatives.) Mr Aggarwal: Good morning to all of you. As you are aware, we are here to build on our previous meetings and arrive at a solution for the prevalent transport problems of the city. I had asked some of my office staff to prepare a summary of the key points related to transport in the city. Let me present them before we start discussing on the problem. 1. An understanding of the future growth pattern of the city is critical while considering various transport modes for the city. IDA extended over 504.691 sq km of which IMC area was 130.1 sq km. IDA had a population of 1.69 million of which IMC accounted for 1.50 million in 2001. The population of IDA increased at a decadal rate of almost 42% during the period 1991-2001 (Exhibit 10). The city was growing in all directions simultaneously and approximately in the same proportion (Exhibit 11). To me, this meant that the travel demand is expected to grow equally in all the directions and the proposed transport system should be able to cater to this need. 2. The prevalent demand in the city during peak hour is as high as 9,000 Passenger Car Units (PCUs) and as low as 700 PCUs in different regions of the city (Exhibit 12). A transport system should be able to cater to this magnitude of variation across regions during peak hours. 3. The proposed system should also be designed to have minimum operation and maintenance costs for which economies of scale and scope should be used to the extent possible (to reduce costs). 4. The fare cannot be very different from the marginal cost of travel for a commuter in the prevailing circumstances. This means that fare has to be fixed keeping in mind the IPT fares as well as the marginal costs of travelling by personalized vehicles (equal to the cost of fuel).
1

Some of the records indicate the area as 505.25 sq km

4 of 16

IIMA/CIPR0003(A)

5. Given the prevalent surface conditions of the roads (Exhibit 13), investments would be desirable to be made within the next two to three years. This investment would become a must if we decide to go for a road based transport system. Before we get on to discuss the desirable transport mode, would any one like to add anything in terms of identifying the challenges? Joint Commissioner, Traffic Police, Indore (politely intervening): I think a bigger problem is IPTs. We need to control them first. They stop at any point to pick/drop commuters in spite of having designated bus stops. IPT Union Leader, and NGO Representatives (objecting): That is a wrong notion. We stop only where we get commuters and they want us to drop/pick them from. After all, we are serving them. There are no bus stop shelters. At some places, we have bus stop signs and in most of the places we dont even have them. The space designated as stops have also been encroached by vendors and hawkers. This is not our fault. Mr Shukla (interrupting): Yes, we need to make investments in creating bus stops. Physical infrastructure would help in both disciplining the IPT stops and in putting up an electronic display board for information dissemination to the passenger (if we think of road based system). Chairman, IDA: I think most of the issues that you have pointed out till now can be solved by adopting a Bus Rapid Transport System (BRTS). After all, Bogota and Curitiba have been able to solve their problems and the systems are popular in both the cities. This system can handle 9,000 PCUs pointed out by you. Mayor, IMC: I agree with Chairman, IDA. There is already a proposal to implement BRTS on one of the roads (A B Road). We can extend this system to other parts of the city. The Government of India is also providing financial support both for a transportation study as well as for implementation of these systems. We must try and quickly prepare a proposal. Since we will get a part of the funding from the Government of India, the state government may also quickly approve the project. The capital requirements for the road as well as for stops can be met from these. We can also get some soft loans. In fact, we can also think of light rail system for the city. Anyway a large chunk of fund is being given by the Government of India. Let us utilize this opportunity and plan for the far future. Mr Shukla: If you look at the development pattern of the city, it has been growing in all the directions in the same proportion. The future growth is also expected to be in all the directions. We cannot confine our solutions to two or three transport routes. We need to look at the whole city. BRTS will not be able to serve all parts of the city with exclusive right of way. The road widths are not sufficient for this. We need to look at a multimodal transport system. Mr Aggarwal (guiding the discussion): I studied some of the papers on transport published by the World Bank and participated in the educational programs at London School of Economics focused on transport and financing. Please look at the documents distributed to all of you. It provides the summary of the key features of different modes (Exhibit 14). As you can see, from the capacity point of view, we can go for bus, BRTS, Light Rail, and even Mono Rail. Let us discuss further on each of these to understand the implications for the city.

5 of 16

IIMA/CIPR0003(A)

Academic Expert (politely adding): We can add one more prospective solution to that list. We can even organize the existing IPTs to serve the purpose. Many cities across the world have done so. Jakarta is one example. Organized IPTs can together function as the transport system for the city. Mayor, IMC: I think it is a good idea to consider IPTs functioning as a coordinated unit seriously. This will also create employment and reduce any resistance from the prevailing IPT service providers. We will serve two objectives at the same time. Regional Transport Officer: Most of the IPT vehicles are old. They are not properly maintained and smoke a lot. Given the pollution levels, they should be pulled off the road. Joint Commissioner, Traffic Police, Indore: Regulating them more is going to be a very difficult task. They will compete with each other and drive rashly to create problems for us. IPT Union Leader and NGO Representatives: We already work as an organized unit. The problem is because government has not increased our permit to run on newer routes which have come up due to recent developments. We request you all to help us get extension on our routes and we will provide a good service. Let me also point out that we will need government support for running on the routes where demand is very less. As you are aware, IPTs make a descent earning. People commute using our services as we provide them an affordable mode of transport from point to point. Chairman, IDA: Why cant we use Information Technology (IT) for regulating these IPTs? Let us install Global Positioning System (GPS) devices on each of these and monitor their behaviour. It may be a costly proposition but an effective one. Mayor, IMC: In an overall sense, I would say that it may not even be costly. We will be able to save lives as rash driving will also reduce. The regulatory cost would also go down. Capital cost on provisioning of a totally new system will also be saved. Academic Expert: I think we should compare the various transport modes on the parameters as suggested in this sheet (circulates a sheet of paper). As the sheet shows (Exhibit 15), these parameters broadly represent the major demand and supply side issues that affect the choice of a transport system. This will also help us organize our discussions further. Mr Aggarwal (after some discussion): Well, now that we are converging towards the process of deciding a transport system that the city should be going ahead with, let us also discuss the financing issues. Past experience had shown that seeking government support would be both time consuming and may attract vested considerations such as preference to particular part of the city or particular mode of transport. On the other hand, a financially viable project is expected to get an immediate sanction from the government. (One of the reasons proposals failed in the past was the delay in approval, allowing time for intensive lobbying.) Academic Expert: One of the preferred methods of getting financially viable projects executed in India is through private sector participation. However, the past experience of involving private sector has not been very successful in urban transport sector in India (Redline/Blue line bus experience in Delhi). One of the problems has been inadequate regulation of the services, especially because each bus is under a separate owner. There are no scale economies. Indore also faces similar problems for IPTs. They drive rashly and behave poorly with the commuters.

6 of 16

IIMA/CIPR0003(A)

IPT Union Leader, and NGO Representatives: We must have private sector participation in the project. We, from the union, are of the view that you should provide each minibus/tempo/autorickshaw designated route based on the volume. We are eager to provide the service. Some of us may need government support as we will have to provide services on less demanding routes also. Academic Expert: I also want to point out that mere financial viability is not enough to make the project sustainable. The proposal has to mitigate political risks and ensure political will for the project over a long period. Apart from project structuring, it would also be important give thought to the organization structure. Mr Aggarwal: I agree with our professor on the need to make a sustainable project. Let us focus on the comparison aspect of different modes and try to arrive at a solution. For some of the comparisons, we do not have data and hence let us restrict ourselves to qualitative comparisons only to quickly converge on the best transport system for the city. Chairman, IDA: I think we have discussed the key issues related to provisioning of a transport system. Let Mr Aggarwal prepare a note for the government. He may also run the note through the professor before submitting the same to the government. Mr Aggarwal: We can close the meeting here. I will proceed on preparing the note. Glossary BRTS GPS IDA ICBTS IMC IPTs ICTSL LRT MPSRTC PPP PCUs RRT SPM Exhibits Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Exhibit 7 Operational Characteristics of Transport Services Two Wheelers and Cars Registered per Annum Number of Accidents Ambient Air Quality Daily Travel Demand Forecasts for Horizon Years Distribution of Trips by Length Household Expenditure Pattern Bus Rapid Transport System Global Positioning System Indore Development Authority Indore City Bus Transport Service Indore Municipal Corporation Intermediate Public Transport Indore City Transport Services Ltd Light Rail Transport Madhya Pradesh State Road Transport Corporation Public Private Partnership Passenger Car Units Rail Rapid Transit Suspended Particulate Matter

7 of 16 Exhibit 8 Exhibit 9 Exhibit 10 Exhibit 11 Exhibit 12 Exhibit 13 Exhibit 14 Exhibit 15

IIMA/CIPR0003(A) Average Monthly Household Expenditure on Travel by Income Distribution of Households by Expenditure on Travel Population Growth Trends Urban Sprawl in Indore Peak Hour Traffic Details of Roads Public Transport Modes Parameters for Comparison

8 of 16

IIMA/CIPR0003(A)
Exhibit 1: Operational Characteristics of Transport Services

Characteristics Vehicles Maximum Operational Time Average Duration of Service Maximum Trips Average Trips Average Distance Dead Heading Average Passengers Passenger (p) Kilometers Fuel Cost Oil Cost Other Cost* Spare Parts Cost Net Income**

Unit (/Vehicle/Day) hours hours number number kms kms number p kms Rs Rs Rs Rs Rs

Minibuses 300 18 13 8 7 133 13.5 293 3,809 428 12 17 54 419

Tempo 150 18 13 12 8 105 23 145 943 136 21 36 16 149

Auto Rickshaws 10,000 15 12 15 12 79 29 20 66 100 15 10 16 100

Source: CES (2004) * As per the CES survey conducted in December 2000 * includes costs like maintenance, incidental etc. ** excludes salaries to crew

Exhibit 2: Two Wheelers and Cars Registered per Annum

Source: Registration Records, RTO Office Indore; CES (2004)

9 of 16
Exhibit 3: Number of Accidents

IIMA/CIPR0003(A)

Source: CES (2004); RTO Office Records; www.indiastat.com

Exhibit 4 : Ambient Air Quality

Source: CES (2004)

Exhibit 5: Daily Travel Demand Forecasts for Horizon Years Horizon Year 2007 2012 2017 2025 Passenger Trips Intra city 2,826,140 3,606,230 4,098,040 5,503,600 Inter city 330,810 388,320 513,250 782,436 Total 3,156,950 3,794,550 4,611,290 6,285,950

Source: CES (2004)

10 of 16
Exhibit 6: Distribution of Trips by Length Percentage of Trips Length (km) Up to 1 1-2 2-3 3-5 5-7 7-10 10-15 >15 Total
Source: CES (2004)

IIMA/CIPR0003(A)

Excluding Walk 9.4 17.8 16.6 28.5 14.6 8.3 3.1 1.7 100.0

Including Walk 27.6 17.9 12.8 21.2 10.8 6.1 2.3 1.3 100.0

A comparison of the average trip length with other cities (2001 data), published by Centre of Sustainable Transportation in India in 2004, is provided below. The overall average across these cities is 8 kms.

Average Trip length (km)

11 of 16
Exhibit 7: Household Expenditure Pattern

IIMA/CIPR0003(A)

Others Expenditure & Savings 47%

Food 28%

Housing 5% Education 8% Health 4%

Source: CES (2004) As per the CES survey conducted in December 2000

T ravel 8%

Exhibit 8: Average Monthly Household Expenditure on Travel by Income Household Income (Rs) Less than 2,000 2,001-5,000 5,001-10,000 10,001-15,000 15,001-20,000 20,001-30,000 30,001-40,000 More than 40,000 Average: 7524
Source: CES (2004)

Expenditure on Travel Rs % 186 12.4 363 10.4 586 7.8 1,035 8.3 1,075 6.1 1,475 5.9 1,574 4.5 2,964 4.9 602 8.0

12 of 16

IIMA/CIPR0003(A)
Exhibit 9: Distribution of Households by Expenditure on Travel

Monthly Household Expenditue on Travel

>1500 1001-1500 801-1000 501-800 301-500 201-300 101-200 <=100 0.00%

5.16% 6.48% 7.55% 16.18% 23.00% 12.38% 12.73% 16.52% 5.00% 10.00% 15.00% 20.00% 25.00%

% Households
Source: CES (2004)

Exhibit 10: Population Growth Trends Year 1971 1981 1991 2001 2011 2021 Population IDA 575,457 884,775 1,189,797 1,698,474 2,534,685 3,566,994 Decadal Growth (%) IDA 53.80 34.50 42.75 49.23 40.72 Population IMC 573,000 829,327 1,091,618 1,506,062 2,179,873 3,117,548 Decadal Growth (%) IMC 44.73 31.63 37.97 44.73 43.01

Source: IDA (2007) - Indore Development Plan-2021

13 of 16
Exhibit 11: Urban Sprawl in Indore

IIMA/CIPR0003(A)

Source: IDA (2007)

Exhibit 12: Peak Hour Traffic Sr No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Morning Peak Hour Traffic % of 16 Hour PCUs Traffic 3,937 9.2 6,965 7.7 3,474 8.9 3,119 7.7 803 3,900 2,931 1,390 2,661 3,254 3,129 892 1,597 3,009 7.5 8.8 10.0 8.2 9.8 13.1 14.6 9.3 7.3 7.6 Evening Peak Hour Traffic % of 16 Hour PCUs Traffic 3,044 7.1 8,988 9.9 3,432 8.8 3,749 9.3 1,145 3,899 2,064 1,706 2,224 2,787 1,286 703 2,259 3,431 10.7 8.8 7.1 10.1 8.2 11.2 6.0 7.3 10.3 8.7

Location Name Railway Crossing near Bhandari Mill Shastri Bridge (ROB) on MG Road Patel Bridge on Jawahar Marg RVB on Hathipali Main Road Railway Crossing on Nawlakha Main Road Railway Crossing Manikbagh Main Road Juni Indore Railway Crossing Kesarbagh Road near Pratap Statue Annapurna Road near Pratap Statue Sukhnivas Road near Pratap Statue Dhar Road near Gangwal Bus Stand Panchkua Road Depalpur Road near Bada Ganpati Banaganga Road near Mari Mata (IC10)

CES (2004)

14 of 16 Exhibit 13: Details of Roads

IIMA/CIPR0003(A)

The total road length, within IMC, was 1,170 km as of January 2004. The existing width and surface conditions of these roads have been presented below. 2/3rd of the road (length) had road width in the range of 9 to 18 meters (m). 81% (by length) of the road was surfaced. While the roads were sufficiently wide, the surface quality of the roads needed to be upgraded. Road Width in IMC > 30m 24-30m 4% 12% Surface Condition of Roads in IMC

Unsurfaced (km), 217, 19%

18-24m 17% 9-18m 67%

Source: CES (2004) Source: CES (2004)

Surfaced (km), 953, 81%

15 of 16
Exhibit 14: Public Transport Modes

IIMA/CIPR0003(A)

There are many ways in which public transport modes have been categorized. These are in terms of: 1. Their technology (bus or rail), which influences aspects of service quality, capacity, the ability to segment market, and cost 2. Right of way exclusivity, which determines speed and reliability 3. Grade-separation, which allows new alignments and strongly influences cost 4. Guidance which may offer new alignment possibilities, and other impacts 5. Operational possibilities, which may offer differing service qualities and flexibility Parameter Technology Right of Way Grade Separation Capacity (PHPDT) 3 Per km of Permanent Way (including traction system in case of railways) Per unit of Rolling Stock System Bus Bus based Non exclusive Not compulsory Up to 10,000 BRTS Bus based Exclusive/non exclusive Not compulsory Up to 12,000 LRT RRT2 Metro Rail based Rail based Rail based Exclusive Exclusive Exclusive

Not Not Compulsory compulsory compulsory 10,00025,000 20,00050,000 40,00060,000

Approx imate Cost (Rs million)

10-20

30-60

100 - 200

150-400

300-600

3-5

3-10

20-40

30-60

40-60

Source: Halcrow Fox (2004), Authors Estimates

Also includes suburban rail transport and mass rapid transport system Capacity may vary depending on the frequency, coach capacity, and other systemic considerations such as number of stops and expected number of commuters boarding and alighting at any stop. PHPDT is peak hour peak direction traffic.

16 of 16
Exhibit 15: Parameters for Comparison

IIMA/CIPR0003(A)

These parameters broadly represent the major demand and supply side issues which affect the transport system and hence are critical towards making a decision. Accessibility Accessibility is an important parameter from the demand side considerations. It can be assessed by estimating the influence zone of the proposed system and the average inter-station distance between two consecutive stations/stops. The influence zone would provide details of the number of potential customers/trips residing within a certain bandwidth of each of the system. For the city we do not have the data at the disaggregate level. However, we can assume that provisioning of service on selected corridor will have lesser commuters in the influence zone as compared to a system which is wider in the terms of network. Multimodal integration will add to the reach. Inter stop distance (number of stops) can be designed to be very similar for different modes. Demand profile and socio-economic status of commuters This parameter considers the travel pattern, and affordability issues related to a transport system. The expenditure pattern gives an idea of what kind of transport system may be affordable for the commuters. Reliability Reliability of the system is also critical from demand side consideration. Reliability can be assessed based on performance of similar systems in other cities. Speed and frequency Speed and frequency are important parameters both from demand and supply perspectives. Faster and frequent service will be a preferred choice as compared to slower and infrequent service. They can be assessed based on similar systems elsewhere. Possibility of level of integration with other modes Level of integration with other modes is important both from demand and supply side considerations. Integration with other modes reduces the impedance for the commuters thereby increasing their desirability to use the system. Along with integration with other public transport modes, transport systems can also provide parking areas at the station so that influence zone of the proposed system becomes larger. Current and future capacities of the proposed system This parameter is from the supply side consideration. It considers the importance of current and future capacities of the proposed system. If the demand is expected to increase rapidly, a system with higher slack capacity may be more desirable. Level of economic/financial gain This parameter assesses the financial implications of providing a transport system. It may be desirable to have a transport system which is financially viable. Implementation difficulties This parameter considers the importance of issues which may crop up during implementation stage and may become a critical issue as far as the success of a transport system is concerned. Land acquisition issues, and number and inertia of various institutions involved in coordination during planning and operation of the proposed system have been assessed to understand the implementation difficulties.