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The financial cost estimated by the Ministry of Urban Development
was INR 4,353.8 billion (approx. USD 87 billion). This estimate covered
87 cities (MoUD 2008). More recent investment requirements as
estimated by the Urban Ministry are given in Table 2.17.
Table 2.17: Financing required for public transport during the Twelfth Five-Year Plan period
(2012–17)
Public transport INR crores USD million (approx.)
Buses 13,759 2,293
Bus rapid transit system 29,603 4,934
Metro rail 130,726 21,787
Commuter/regional rail 19,780 3,296
Bus infrastructure 8,760 1,460
Total 202,628 33,771
Source: MoUD (2011)
The important challenge with respect to finance can be broken into two 3.2
parts. First, figuring out the sources of finance; and second, given that
most of these projects will need substantial amounts of capital, each
project might have multiple sources of financing which in turn would
need co-ordination. This co-ordination has become popular under the
name ‘public–private partnerships’ (PPPs). These two aspects will be
discussed in more detail in the following section.
Traditionally, the urban public transport was funded by the
government. Part of the finance was made available from the central
government and then the state government, and finally the urban local
body. However, this form of financing—a traditional public finance
method—is fast being replaced by PPPs.
Other sources are multilateral agencies like the World Bank,
the Global Environment Fund (GEF), and bilateral agencies like
the Japan International Cooperation Agency (JICA). Of course, the
private sector itself is also a source of finance and predominantly as
an equity player. There has been an increase in structured finance
in this sector, with various financial institutions pitching in with
various financial products like subordinated debt, that is, mezzanine
financing, commercial exploitation of land and air rights over land
used for transport infrastructure, and enhanced levies on real estate
projects near these transport infrastructure projects. All this is to create
a method by which positive externalities can be monetized.
Chapter 2 Innovative Financing for Low Carbon Development 285
was INR 4,353.8 billion (approx. USD 87 billion). This estimate covered
87 cities (MoUD 2008). More recent investment requirements as
estimated by the Urban Ministry are given in Table 2.17.
Table 2.17: Financing required for public transport during the Twelfth Five-Year Plan period
(2012–17)
Public transport INR crores USD million (approx.)
Buses 13,759 2,293
Bus rapid transit system 29,603 4,934
Metro rail 130,726 21,787
Commuter/regional rail 19,780 3,296
Bus infrastructure 8,760 1,460
Total 202,628 33,771
Source: MoUD (2011)
The important challenge with respect to finance can be broken into two 3.2
parts. First, figuring out the sources of finance; and second, given that
most of these projects will need substantial amounts of capital, each
project might have multiple sources of financing which in turn would
need co-ordination. This co-ordination has become popular under the
name ‘public–private partnerships’ (PPPs). These two aspects will be
discussed in more detail in the following section.
Traditionally, the urban public transport was funded by the
government. Part of the finance was made available from the central
government and then the state government, and finally the urban local
body. However, this form of financing—a traditional public finance
method—is fast being replaced by PPPs.
Other sources are multilateral agencies like the World Bank,
the Global Environment Fund (GEF), and bilateral agencies like
the Japan International Cooperation Agency (JICA). Of course, the
private sector itself is also a source of finance and predominantly as
an equity player. There has been an increase in structured finance
in this sector, with various financial institutions pitching in with
various financial products like subordinated debt, that is, mezzanine
financing, commercial exploitation of land and air rights over land
used for transport infrastructure, and enhanced levies on real estate
projects near these transport infrastructure projects. All this is to create
a method by which positive externalities can be monetized.
Chapter 2 Innovative Financing for Low Carbon Development 285
