Alternate Instruments for Financing MRTS: The Case of Indore BRTS

As India becomes rapidly urbanised, the demand for providing urban infrastructure also rises rapidly. Large cities, in particular, are in the dire need of Mass Rapid Transportation Systems (MRTS); but the development of such MRTS has technical as well as financial constraints. Although the technological options of MRTS have become wider in the recent past, the financing of MRTS in urban areas is still a major issue of concern. Therefore, it is increasingly sought to use some innovative methods for addressing the financing issue of infrastructure (Mohanty, 2003). There is a realisation now that the traditional approach of financing MRTS operations based on ‘fare-box revenue’ is becoming constrained, as the users/consumers could switch to other transportation options if the MRTS fare is excessively high. One potential means of filling the revenue-expenditure gap of MRTS operation is the utilisation of alternate instruments, the potential of which is not widely known. However, some of the recent MRTS projects have made some attempts to tap the potential and they stand out as examples worth replication. This paper showcases the potential of alternate instruments as one such example through the case study of the Bus Rapid Transit System (BRTS) in Indore. The Indore BRTS proposes to utilise the ‘physical space’ generated by the BRTS through awarding the leasing rights of ‘advertisement’, which is expected to give sufficient revenues to fill the revenue-expenditure gap. The revenue estimates of Indore BRTS made under two different scenarios - Scenario I and II - indicate that the traditional ‘fare-box revenue’ shows limitation of revenue vis-a-vis operations expenditure, especially in the Scenario II. The potential of exploiting revenue through ‘advertisement rights’ in the BRTS that has been estimated in this case study, when included in total revenue estimates, shows that the potential revenue-expenditure gap diminishes; and even becomes positive.