Funding Bengaluru’s Suburban Railways: PPP, or public funds?

There has been renewed hope among some circles in Bengaluru after the Union Railway Minister Mr. Sadananda Gowda made a mention in the Rail Budget about the much delayed Suburban Rail System. The project also found a mention in Siddaramaiah state budget last year. A Special Purpose Vehicle was formed as well by the State Government. This was without the involvement of Railway Board.

Praja RAAG, an online forum, has been pushing for implementation of CRS for the last few years. Unfortunately, they have found little support from political circles or from citizens for this project. This is not surprising considering that people in Bangalore are not aware of the differences between a Suburban Rail and a Metro System. A metro system proposes to create a new network for transport and runs overhead or underground. A Suburban Rail uses the existing Rail Infrastructure to ferry commuters and runs at ground level.

The argument in favour of a Suburban Rail System is necessitated as the proposed implementation of Phase Two of Metro would only cover areas till Kengeri in West and Whitefield in East. Similarly, it would stop with Electronics City in the South and Hebbal in the North. Most people don’t seem to realize that Bangalore has grown way beyond these localities. They also seem to be oblivious to the fact that implementation of Metro would cover only 108 kilometres and cost Rs. 26,000 crores. On the other hand Namma Railu could cover a network of 400 kilometres with an investment of Rs.10,000 crores. Most cities globally have a minimum of two rail networks.

Who will benefit from Commuter Railways?

Bangalore with a population of over a crore needs to have a Suburban rail network with a Metro system. Metro shall take of transportation needs within the city and suburbs or satellite towns can be covered through the Suburban rail network. Some citizen groups who could benefit through a full fledged Suburban Rail System in Bangalore:

(1) Workers and staff of Narasapura Industrial Estate. The Estate has big names like Honda, Triumph, Scania and Mahindra Aerospace. Naraspura Industrial Estate has grown as an Automobile hub in recent years because of its location on Bangalore – Chennai highway and its easy accessibility to the Chennai Port. Connectivity to Kolar can be boosted by providing a bypass much before Bangarpet. Currently, there is only one train, which runs from Bangalore Cantonment to Kolar.
(2) BEML in KGF
(3) Workers and staff of Toyota Plant in Bidadi and workers from Bosch. Bosch is to be shifted to Bidadi.
(4) Workers and Staff from Kumbalgodu Industrial Estate. Major companies here include Wipro, Brittania and Pepsi.
(6) Students from major Engineering Colleges on Mysore Road and from institutes like National Law School, BU and Indian Statistical Institute – Bangalore Chapter. All these institutes are located off Mysore Road.
(7) Workers and Staff of ACC’s grinding Unit in Thondebhavi. Precot Meridian, Raymonds, United Motors are some other names in Chikkaballapur.
(8) Workers of the Textile Park in Doddaballapur
(9) Workers of UB’s brewery in Nelamangala

New trains to help, but network essential

The involvement of Indian Railways in at least running the operations is crucial as this system proposes to use the existing rail infrastructure to ferry over One Lakh commuters. A few local trains have been introduced in the budget, which means that the Central and State Governments have finally woken up to the idea of a Suburban rail for Bangalore. Some new trains, which have been introduced as part of the budget, are:

  1. Yesvantpur – Tumkur Passenger (daily) – DEMU Trains

  2. Bengaluru – Ramanagaram 6 days a week (3 pairs) – MEMU Trains

  3. Bengaluru – Nelamangala (daily)- DEMU Trains

  4. Yesvantpur- Hosur (6 days a week) – DEMU Trains

Whilst these moves are welcome, there is no clarity on how the Suburban rail is likely to be funded or run. Mumbai’s CRS system is run by an SPV (Maharashtra Rail Vikas Corporation). Hyderabad has its CRS run by the South Western Railways directly, which explains its inefficiency. There is also a complete lack of safety particularly for women on CRS in Hyderabad. If we are to obtain clock life efficiency for Bangalore’s CRS we need the formation of an SPV for the same.

Implications of private participation

The biggest impediment here is poor state of finances in railways. The railways is not in the best possible position to fund a project of this magnitude. Therefore, it may not be a bad idea to bring in Private Participation through the Equity or Debt route. However, the equity route is not without its pitfalls:

  1. Private participation might not necessarily mean the Suburban Rail in Bangalore shall be affordable. Equity form of investment is often the most expensive form of finance as the investors usually look for the highest possible returns of investment.

  2. The investors might not look at running trains on routes, which are not profitable.

  3. There may be very few Indian companies, which have the capability to run a full fledged Suburban railway system.  One might argue that L&T is in charge of the Metro system in Hyderabad but what we need to understand the Suburban network has a much larger sprawl. Issues like security, safety, speed, land acquisition are a lot more complicated as this network would cover urban, semi urban and rural areas.

  4. Railways might not be open to the idea of private player for a CRS as it involves use of their infrastructure

If the new government is indeed looking at Private Participation through the Equity Route for Namma Railu then it needs to pay heed to these following issues:

  1. The bidding process for this project needs to be absolutely transparent with no hidden benefits to the party, which ultimately is selected as the Equity Partner.

  2. The SPV so formed needs to look at alternative sources of revenue such as real estate, advertising etc so that commuters are not burdened and Namma Railu still remains a profitable affair.

  3. Transparency in revenue-sharing between the private partner, railways and the government should be ensured before CRS becomes a reality.

BMTC could have been a partner!

An idea was mooted to make BMTC part of the SPV. However, the financial position in the last one year has become dicey. Therefore, this is unlikely to become a reality. This would have yielded the following benefits to the commuter:

  1. Better Integration between Rail and Bus. This would have resulted in transport in Bangalore becoming truly multi-nodal.

  2. BMTC would not have had to run long routes because of the presence of long distance trains. This has actually resulted in the Corporation making losses. A case in example, would be the route 500KE, which is run from Kengeri to Whitefield. A local train along with this route would obviate the necessity for this route.

An alternative way to fund this project would be to replicate the Konkan Railway Model. The SPV for Konkan Railway Project was formed through the participation of the Union Government and the State Governments of Karnataka, Kerala, Maharashtra and Goa. Most of the funding of this project was done through the issue of Tax Free Bonds. A small portion was raised through a public issue as well.

The Indian railways is not in a position to leverage its balance sheet any longer and the idea of PPP in Railways in India might be met with stiff opposition from rail employees and politicians. Given all these impediments a more pragmatic approach would be to replicate the Konkan Model and see to it that Bangalore indeed gets its much delayed Suburban Railway System.

Related Articles

Commuter rail: Just a few miles more to start
Sadananda Gowda gifts more trains to Bengaluru, to boost suburban network
Commuter Rail to be a reality in Bangalore: CM
Commuter rail plans going nowhere?

About Amith Subramanian Pallavoor 0 Articles
Amith Subramanian Pallavoor is a Freelance Management Consultant and writer, based in Bengaluru.

8 Comments

  1. I actually meant that a local train from Kengeri to Whitefield would obviate the necessity for 500KE.

  2. We met Mr. Ananth Kumar, the Honourable Union Chemicals and Fertilizer Minister on this Sunday. He has been extremely supportive of this project. Bangaloreans need to rally behind this project and get this for our city. Public Support is all the more crucial since the Railway Minister is from Bangalore.

  3. I agree with the author, it is the right time BMTC starts involving in mass transit system like railways..

    1. long distance route will disappear once metro is operational in another 6 months for ex vijaynagar line.. some of these buses will be realigned with feeder routes..

    2. they will have more employees with less work,, they need to plan..

    3. if you agree or not they know the logistics better of the city, as they are single largest operators..

  4. Introduction of suburban trains beyond Bangalore was mooted way back when Mr. JH Patel was CM of Karnataka (thru suggestions from Public/Associations etc. to improve Bangalore infrastructure based on Advt. given by Govt. of Karnataka) to help commuters who work outside Bangalore as well as general public. The present traffic could have been reduced largely before Software Companies came to Bangalore. Unfortunately it has taken more than 15 years to come to a proper shape. This can be implemented by both State Govt as well as Central Govt. on a sharing basis as well as on JNNURM funds. Only will power is required by Govt. to implement irrespective which party rule the State or Centre.

  5. The SPV could pay a certain sum of money to SWR (Indian Railways) for using their infrastructure and not involve the Railways as a stake holder in the SPV. In such a scenario, this expense would go as a line item on SPV’s P&L account.
    Railways, The State Government and the Union Government jointly operate the Suburban railway system sharing the profits so emerging.
    In both these cases, the SPV must look to maximize alternative sources of revenue such as rentals, advertisement income etc so that commuters are assured of an affordable means of transport.

  6. Corrigendum
    The Suburban Rail in Hyderabad is run by South Central Railway in partnership with the Government of Telangana.
    Apologies for the error.

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