Urban Rail - India's Great Opportunity for Sustainable Urban Development

Urban Rail - India's Great Opportunity for Sustainable Urban Development


Rohit Sharma, Curtin University Sustainability Policy (CUSP) Institute, Curtin University, WA, Australia, Prof. Peter Newman, Curtin University Sustainability Policy (CUSP) Institute, Curtin University, WA, Australia, Dr. Annie Matan, Curtin University Su


Discuss how urban rail may aid sustainable urban development in India, compares financing of 2 Indian and 3 global best practices and potential of land value capture to finance urban rail and draws synthesis for a financially sustainable urban rail.


Sustainable urban development will be the key element for the inevitably rising centrality of the urban economy and enabling India’s aspirations for economic growth. Within this process urban rail can be the axis around which sustainable development can be created. It can help shape the city as well as mitigating auto‐centric travel behaviour resulting in congestion and the sheer magnitude of resultant carbon emissions. The Government of India (GoI) is supporting urban rail in cities with 2 million plus population (since 2011). Currently, urban rail is operational in 9 Indian cities, another 7 cities are constructing urban rail and a further 14 cities are planning for it. In 2014, GoI has proposed to reduce the population norm for urban rail implementation to 1 million, which would make another 16 cities (no. may increase with urban agglomeration) eligible for urban rail. India will have 87 ‘million plus’ cities by 2031 from the 50 in 2011.

Urban rail transit systems play a central role in catalysing sustainable cities, but all systems share the same problem – how to cover the high costs of construction, operation, maintenance and renewal. Urban rail systems are highly capital intensive and being circumscribed as a social sector project they are difficult to increase the fares beyond a point. Therefore, fare box revenue alone is insufficient for a project's financial viability. The only urban rail projects that are financially viable across the world involve alternative financing schemes based on land development. India is beginning to utilise some of these innovative non-fare financing mechanisms.

This paper will assess the socio-economic benefits of urban rail in aiding sustainable urban development, by documenting a brief case study on Delhi Metro. It will discuss the improved accessibility, exchequer savings due to taking petrol and diesel vehicles off the roads, carbon credits for reducing Green House Gas emissions, efficient use of energy and use of renewable energy, improved public transport share, reliability and safety. It will further review and compare the financing of existing urban rail transit systems in India, by studying the case of Delhi Metro (Government Owned system operating in Delhi and 3 adjacent cities) and Rapid Metro Gurgaon (Privately Owned system operating in Gurgaon). Financing of both Indian case studies will be compared with three global best practices for the innovative financing of Urban Rail, i.e. Hong Kong Metro, New York Subway and London Underground. The operating non-fare box revenue for Delhi Metro was about 4% (2013-14), whilst in the past Hong Kong Metro has made 63% and New York Subway has made 30% from non-fare revenue.

The non-fare box revenue principally includes development of land and the increasingly acceptable land value capture (LVC) mechanisms. The papers will briefly discuss LVC and its documented potential to finance urban rail. LVC focuses on realizing some portion of the increase in land value that stems from urban rail, as public revenue (through taxes, fees) and also by active mechanism involving direct government investment in rail-adjacent properties. LVC mechanisms provide a huge untapped resource for developing nations, especially in India, where the property market is less rigid and very profitable and can sustain healthy density and ridership/facility usage. The conclusions will be drawn as the synthesis of the lessons learnt from the case studies with suggestions as to what best works for a financially sustainable urban transit system.


Association for European Transport