Funding of Public Passenger Transport in Developing Countries - A Case of India

Abstract

The funding problems of land passenger transport in developing countries are different and more complicated. The paper brings out the present scenario of financial performance and funding arrangements in the Railways and the Roadways carrying passengers in a country like India which represents developing nations of the world. Since mobility of people within the country and particularly in the cities is considered as a public utility function of the governments and local bodies, the funding of capital is mainly through the General Exchequer. This is supported by internal generation of funds within and borrowing from Financial Institutions. These measures of funding being very inadequate, new methods of attracting private capital in passenger transport sector have been proposed. Since the liberalized economic policies have been recently introduced in the country, encouragement for the private capital participation in projects under BOOT has been an important issue for consideration. Taxing the direct and the indirect beneficiaries of new transport projects to be undertaken, inviting participation of general and institutional investors in the capital formation are some other measures suggested. Commercial exploitation of transport land, commercial outlook for transport organizations and freedom to fix passenger fares will also strengthen the funding operations of capital projects in land passenger transport in India.