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| June 26, 2006 | Monday | Jumadi-ul-Awwal 29, 1427 |
Public private partnership in metro project
THE urban transport infrastructure in India is pathetic, and except for two or three cities, the mass commuter systems are appalling in the rest of the country.
The result: in the absence of a cheap and efficient mass rapid transit system (MRTS), millions of rural migrants who come to cities in search of livelihood are forced to squat on pavements and public land.
Middle-class Indians, who cannot afford to drive to work everyday, are forced to travel in over-crowded buses (and trains, in Mumbai), or pay extortionate rates to taxis and auto-rickshaws. In many cities, auto-rickshaw and taxi charges exceed Rs10 a kilometre.
Squatter colonies have cropped up in all major Indian cities, and the land mafia – in league with some politicians and bureaucrats – have cornered prime land and built up vast slum colonies. Poor migrants are forced to pay rent to slumlords, most of who enjoy police and municipal protection in many cities.
Last week, Prime Minister Manmohan Singh, while laying the foundation for the new Mumbai Metro, referred to this criminal nexus, and called for a cleanup. “People need better urban governance, a more responsive and transparent urban administration,” said Singh. “Urban administration should be freed from the cancer of corruption and the stranglehold of land mafias.”
The prime minister called for new innovative mechanisms to raise resources for efficient and equitable financing of essential municipal public services. The Rs200 billion Mumbai Metro project is one of the most ambitious urban transportation projects being taken up in India.
It also the first major, Public Private Partnership (PPP) in the country, and the first metro to be taken up under this initiative. A consortium led by Reliance Energy Ltd, part of the Anil Dhirubhai Ambani group, has got the Rs23.5 billion contract for the first phase of the project, covering 12 km, and linking two important suburbs, one in the west and the other in the east.
The three phases of Mumbai Metro will cover nearly 150 km, and will provide much needed relief to the city’s harried commuters. The city’s suburban railway system at present carries over six million commuters daily, and many of them travel dangerously, some even on rooftops. Over half a dozen commuters fall off the over-crowded trains daily, and get killed. A few more, especially slum-dwellers, are run over by fast trains, while walking on the tracks.
The Mumbai Metro will have air-conditioned coaches, and for the first time in India, the tracks will be of international standard gauge. This would enable the import of modern new coaches, instead of depending on antiquated ones manufactured by state-owned companies.
Indian Railways had been reluctant to allow the use of standard gauge, and wanted broad gauge tracks to be used. But the Mumbai Metropolitan Region Development Authority (MMRDA), a Maharashtra government agency – which has a 26 per cent stake in the project – insisted on standard gauge.
This would ensure autonomy for the corporation, which would otherwise have to depend on the railway ministry for its finances. Mumbai’s suburban services have seen very little investment from the ministry over the years, despite the fact that it contributes a significant part of the revenues and profits of the Railways.
THE success of the Delhi Metro has triggered off a rush, with other cities eager to have similar MRT systems. Mumbai, Bangalore and Hyderabad are the three cities that have got approval from the federal government.
The Bangalore Metro project was also kicked off last week. The first phase of all the three new metros is expected to become operational by 2009, catering to the needs of millions of commuters.
But considering the enormous backlog in most Indian cities, there is room for a hundred more metros in state capitals and other major cities across the country. Even in Mumbai, for instance, all three phases of the metro will barely be tackling the problems of commuting in the city. There will be vast stretches – especially between the north-west and the north-east – that will remain uncovered, even after the Mumbai Metro becomes operational.
Realising the enormity of the problem, Singh’s government launched the country’s largest urban renewal mission to improve infrastructure in cities. The Jawaharlal Nehru National Urban Renewal Mission – launched last December – envisages a total investment (by the federal and state governments, and civic bodies) of a whopping Rs1 trillion over the next seven years.
Singh last week said in Mumbai that the federal government was committed to invest about Rs500 billion over the next five years for urban renewal. The mission will be investing in upgrading infrastructure, and building new ones, in eight major cities initially. Ultimately, it will cover over 60 cities, each with a population of over one million.
State governments and municipal corporations all over the country have already started salivating at the thought of laying their hands on the billions of rupees that are expected to be available.
The federal government has insisted that city’s should first prepare their development plans, while state governments should liberalise their urban development regulations. This includes scrapping the Urban Land Ceiling (ULC) Act – a regressive legislation introduced in 1976, which has contributed to corruption and urban decay – putting in place new rent laws, and ensuring transparency in the functioning of civic bodies.
The centre’s tough stance on these changes last week forced the Maharashtra government to reconsider its stance on dumping the ULC. Maharashtra is one of the few states that have still not scrapped the act. This has resulted in an acute shortage of space in and around cities like Mumbai. If the state is to receive the expected funding from the national urban mission, it has no alternative other than removing it from the statute books.
WHILE Indian consumers grumble about the growing cost of accessing automated teller machines (ATMs) of other banks, the industry itself is thinking in terms of launching ‘white label’ (or unbranded) ATMs to save costs for individual banks.
The Reserve Bank of India (RBI), the country’s central bank, is learnt to have cleared a proposal to allow ‘white label’ ATMs to be established by third parties. A couple of banks have approached the RBI with their proposals, and plan to unveil a vast network of unbranded ATMs, which can be accessed by customers of other banks.
At present, there are a few consortiums of banks, including the National Financial Switch, which represents nearly a score of banks, that provide shared ATM access to customers. However, many customers are reluctant to pay fees for accessing the ATMs of other banks. Most charges vary between Rs20 and Rs30, but the average Indian bank customer is reluctant to pay such fees.
But banks continue entering into arrangements, enabling their customers to access ATMs of their alliance partners. Last week, for instance, two nationalised banks – State Bank of India (SBI) and Union Bank – decided to share their ATM networks. SBI, the country’s largest commercial bank, has 5,500 ATMs, while Union Bank has around 500 machines.
There are about 22,000 ATMs spread across the country, but mostly in urban areas. Off-site ATMs are also coming up, especially near petrol pumps, railway stations and airports. According to banking industry sources, there are nearly 50 million debit-card holders who can access these ATMs.
RBI is also allowing banks to partner with Indian Railways, and allow customers to buy railway tickets through ATMs. As the number of plastic card holders keeps rising – the figure is expected to touch the 400 million-mark in about 10 years – other organisations and agencies are also planning to tie-up with banks, enabling their customers to access their services.
Recently, India’s leading private airline, Jet Airways, introduced ATM-like machines at Mumbai, Delhi and Bangalore airports, allowing their passengers to automatically check-in. These electronic kiosks allow passengers holding e-tickets – and with no luggage – to walk through after checking in on their own. The entire process takes just a minute.
According to Wolfgang Prock-Schaeur, chief executive officer, Jet Airways, the passenger can also select the seat of his or her choice. Each machine will cost the airline about $10,000, but will improve efficiencies, and also result in cost-savings.
The airline, which sells 20 per cent of its tickets online, expects even travel agents to issue e-tickets to their customers. In due course, a majority of its passengers would be having e-tickets, and can use the kiosks if they do not have any baggage.
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