Stage 2 Describing the Starting Point

Assess the External Environment

The external environment of a public transport system is graphically depicted in Figure 2 and each component of the environment is explained in the paragraphs that follow.


Figure 2 Internal/External Environment of a Public Transport System

Demographic Profile:The demographic profile provides a vital input in the optimum design of the transport system. The important parameters are:

  • City population and the historical trends and projections
  • Spatial distribution of population
  • Age structure of population

The city demographics assist with macro-level transport planning. The data can be easily obtained from the Census.

Socio-Economic Profile of the Area: The demographic data should be supplemented by socio-economic data. This assists in estimating the demand for public transport as well as revealing the ‘affordability’ of public transport for the general public. The important parameters are:

  • Income distribution
  • Occupational distribution

The census data gives only limited information on the socio-economic profile. The details should be ascertained from secondary data, or by carrying out sample surveys.

Legal Framework: The regulatory environment for urban public transport is laid down in various Indian laws, regulations, policies and executive orders. Being a Federation, some of these are National, but the majority are State-specific. With the third tier of governance emerging as a strong unit of administration, some regulatory authority is exercised by urban local governments. The distribution of legislative powers between the Union and State is spelt out in the Constitution – Union, State and Concurrent List. ‘Public transport’ as a subject does not figure in any of the lists. However, subjects such as shipping, airways and railways are in the Union List, ‘mechanically propelled vehicles’ is included in the Concurrent List. Communications, that is to say roads, bridges, ferries and other means, are included in the State List. The most important law governing road transport is the Motor Vehicles Act. This is a Central law which:

  • mandates registration of all motor vehicles
  • provides for licensing of drivers
  • stipulates that no public service vehicle can operate without a ‘permit’
  • empowers the state governments to control road transport
  • creates an institutional mechanism to regulate road transport. This mechanism has been placed under the control of the state governments
  • makes provisions for payment of compensation to accident victims
  • regulates the working conditions of drivers (along with the Motor Transport Workers Act).

Besides the Motor Vehicles Act there are state laws, which regulate public transport indirectly. Almost all states have municipal laws, which lay down the structure and powers of the urban local governments. The urban local governments are authorized to regulate traffic within their limits. The states have also enacted the town and country planning acts, which regulate urban planning (transport planning is supposed to be an integral part of this process). The pollution control laws impose limits on vehicular emissions and the police acts and some other laws deal with traffic violations.

Detailed information is required about the following:

  • regulations/guidelines regarding issue of permits for operating public transport vehicles
  • bye-laws/regulations issued by the city government to control movement of vehicles in the city
  • stipulations of labour legislation which affects the transport industry
  • vehicular emission norms

Institutional Framework: The most important institutional framework for controlling public transport is also created under the Motor Vehicles Act. This law creates a hierarchy of institutions – Regional Transport Officer, Regional Transport Authority, State Transport Authority and the State Government. Indeed, the Motor Vehicles Act is implemented under this hierarchy. There is no exclusive institutional mechanism under the Motor Vehicles Act for urban transport, however, there are a number of agencies whose activities impinge on urban transport.

These are:

  • local municipal government – provides roads and infrastructure like bus stands, regulates traffic (along with the police), controls all construction etc.
  • local city development authority – discharges town planning functions
  • the police – regulate traffic offences
  • public works department – responsible for some roads
  • Development Authorities –responsible for city planning
  • pollution control board – enforcing emission norms
  • labour department – enforcing the labour laws
  • tax authorities – imposing and collecting taxes

As the Task Force constituted for improving the bus services would have representation from all these agencies, it should be straight-forward to ascertain the exact role of each. This will help in the distribution of responsibilities once the improvement plan was prepared.

City Development Plan: The transport plan has to be a part of the city development plan. In practice, it has been found that the city development plan often overlooks the transportation requirements. Therefore, the city development plan needs to be prepared with consideration of mobility and the transport plan prepared in accordance with it. If it is found that the city development plan is making transport planning difficult, the city development plan may have to be suitably modified. The details of the city development plan, also referred to as the CDP (Comprehensive Development Plan) are available from the City Development Authorities.

Infrastructure: The operation of any public transport system is dependent on the road infrastructure. In a city, the road infrastructure is provided by different agencies, such as the city government, the Public Works Department and the City Development Authorities. Besides roads, different modes of transport require different types of infrastructure – pedestrians require properly designed sidewalks, road crossings; cyclists require bicycle tracks; para-transit modes require certain specific facilities; buses require well planned bus stops etc. Information on all these will help in ascertaining the bottlenecks in the system, which need to be addressed. Information about the following parameters would be particularly useful:

  • Road right of way, length, bottlenecks.
  • Facilities for pedestrians, cyclists and other modes of transport.
  • Existing plans for expansion/upgrading of these facilities.

The Fiscal Regime: The financial viability of public transport operations is a major issue. By and large, urban public transport services in the country are not financially viable. Although viability can be improved by increasing efficiency, there are limits to any such improvement. A major component of the cost is the taxes and levies of the Union, State and local governments. The activities of a public transport organization, whether in the public or private sector, are subject to taxes by various agencies. The important levies are:

  • Taxes related to capital acquisitions
    • Tax on land acquisition (Stamp Duty-levied by the State Government)
    • Property tax (levied by the Municipal Body)
    • Tax on acquisition of movable property i.e., the buses
      • Value Added Tax (State Government)
      • Central Excise (Union Government)
      • Customs Duty in case of imports (Union Government)
      • Entry Tax/Octroi (Octroi of the Municipal Authority and Entry Tax of the State Government)
  • Taxes related to operations
    • Value Added Tax on consumables (State Government)
    • Excise Duty on consumables (Union Government)
  • Tax on transport revenue i.e. on use of passenger transport vehicles.
    • Motor Vehicles Tax (State Government)
  • Other levies:
    • Advertising Tax (local governments).

Apart from the taxes levied by various agencies, the state government exercises full control over the fare levels of all public transport service providers. The state governments sometimes also mandate dispensations for special categories of travel (e.g. students pay a nominal fare). Information on these levies is important in undertaking financial and economic analysis of a transport improvement plan.

Competition: Although the terms of competition are defined by the regulatory framework, the cost efficiency of other modes of transport has a direct impact on the bus system. Information on the cost of travel on other modes, such as personalized modes, para-transit modes etc. provides certain benchmarks for the efficiency of the bus system.

The situation in India varies from city to city and a comparison with the situation in developed countries is difficult. However, there are some outstanding characteristics. Understanding the comparison is important because improvement models/tools used in developed countries have to be suitably modified to succeed in Indian conditions.

Table 1 Comparison of External Environment of Public Transport Systems in Foreign and Indian Cases

Parameter Cases in Developed Countries Indian Cases
Legal Framework The city governments are strong units of administration. City public transport is by and large their responsibility. e.g., the reputed Curitiba (Brazil) model was conceived and implemented by the city Mayor The city governments traditionally have not enjoyed as much autonomy as their western counterparts. City transport generally does not fall within the purview of the city governments (Maharashtra and Gujarat being exceptions). This has led to diffused responsibility and multiplicity of agencies
Effectiveness of enforcement measures The regime is generally that of compliance with rules and laws The enforcement of laws and rules is generally not strict
Institutional Framework- Competition Generally buses are operated by private concessionaires Generally buses are operated by government managed companies
Financial support Generally the provincial government or the national government covers the viability gap The situation varies from state to state. In some cases the state government provides financial support and in some cases it does not
Taxation scenario Public transport is taxed at a reasonable rate There are multiple taxes on public transport
Socio-economic conditions High per capita incomes allows fares to be substantially higher Low per capita income imposes an upper ceiling on fares
City development Land use within the city is well defined Land use within the city is mixed and heterogeneous
Diversity of traffic conditions Traffic is by and large homogeneous Traffic is very diverse
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