six changes needed for better transportation

July 24, 2014

It is just a welcome coincidence that a single party majority government has come in the centre at the time when the country just laid out its National Transport Development Policy for the next 20 years. As per the policy, if India has to grow its GDP at 8-9%, it needs to increase its investment in infrastructure six times from current USD 45 billion to USD 250 billion by 2032. This translates increasing the investment in infrastructure from 5.8% of GDP (during 11th FYP) to 8% of GDP by the end of 2031-32
Investment of this scale would not only require significant government funding, but also building enabling environment to attract private capital, domestically as well as foreign. This would require government to take quick, planned and timely reforms across levels – policy, operational, institutional and capacity.
Urgent need for investment

According to the Global Competitiveness Report 2013-14 of World Economic Forum, India stands at 85th and 61st position in the global ranking of infrastructure and transport, respectively amongst group of 148 countries.

Since, investment in infrastructure sector, particularly transportation has multiplier effect on the economic growth; there is an urgent need for investment in these sectors to bring back economy on high growth trajectory. Hence, when the new government will table its first budget in July, 2014, it will have to strike balance between the prevailing inflation and long waiting reforms to remobilize funds in the transportation sector, which shall lay foundation for a long-term growth. For example in highways, there is an immediate need to rebalance the concession agreements, to move the struck projects and attract private sector interest in the upcoming projects.
Concept of revenue guarantees, as being used in some of the Latin American and developed countries, where government shares with private sector, both upside potential and downside risk of traffic, beyond a threshold, should be brought in to attract investor confidence and lender’s comfort.

At the same time it is important for NHAI, if it is moving to EPC model, to build its own pool of resources. For this purpose, fast tracking implementation of electronic toll collection to maximize toll revenues and raising funds through long-term bonds and capitalize its toll revenue earnings for interest and principal repayments, can be explored. In fact, India can learn from experience of Japanese Expressway Holding and Debt Repayment Agency, which used bond funds to develop expressways in Japan. These bonds were duly backed by government guarantees to provide security to bond subscriber.

Special Projects for Rural Development
To increase penetration in villages, particularly for effective implementation of food security, it is critical to continue fillip programs like Pradhan Mantri Gram Sadak Yojana (PMGSY-II), which are critical for farm to market linkages and connectivity to rural growth centres.

An Integrated Transport System

Probably, it is right time for the government to think transport as an integrated system and all its components (rail, road, port and airways) should work in a holistic manner. Different modes of transport between two nodes should be developed based on the principles of demand-supply and balance between time and fuel cost. For instance, if time is not a constraint (non-perishable goods), goods can be transported using IWT or coastal shipping.To achieve this, coastal terminals at select ports and deeper stretches of the rivers (LAD) can be developed. For other routes, rail and road connectivity with ports should be enhanced on PPP basis.

Develop low-cost Airports

Similarly, low-cost airports in tier-II and tier-III cities can be developed which can be integrated with high speed rails at select stretches. This will provide faster connectivity to the entire country and thereby unlock growth potential .To move goods through airport, similar to inland ports and container depots, off-airport cargo processing facilities can be developed.

Moreover, these facilities to be ably augmented by cold chains in the vicinity of low cost airports, which can facilitate warehousing and dispatching cargo of perishable goods. This will help reduce congestion and delays at airports. Development of such off-airport facilities can be defined as infrastructure and the respective benefits should be extended accordingly.

E-vehicles to Boost Urban Transportation

There is also a need to boost urban transport within the cities. In this regard, recent announcement of government to treat e-rickshaws with motor power of 650mw as non-motorised vehicles in the NCR is a welcome step. However, government will have to be mindful that although e-rickshaws are environment friendly, their use should not go out of proportions to increase congestion in already cramped up roads.

Hence, government should promote setting up of state level funding agencies to finance urban transport projects. Central government should facilitate states setting up such bodies and providing government guarantees to securing funds from international financial institutions.

Implementation through Fiscal Incentives

However, to effectively execute the above ideas, it is also important to back them by suitable fiscal incentives. Some of these include:

- relaxation of ECB norms for borrowing by infrastructure companies,

- extension of tax incentives on major augmentation of existing infrastructure, in particular Maintenance, Repair and Overhaul (‘MRO’) services in airlines,

- extension of depreciation on expenditure incurred to develop public assets on BOT, which is not owned by

private sector, even for the sector other than roads

- exemption of MAT for infrastructure sector during 80IA period.

At the outset, there is a lot to be done, which poses a big challenge, but also presents an opportunity for the government for creating much needed transport infrastructure for doing business. Although, industry expects government to respond timely on the above hard-pressed reforms, in the upcoming budget Government will have to strike balance between its

revenues and easing of complex net of regulations and approvals to enhance the value-addition process and making us more competitive. .

Source:The Economic Times

Vélib’ – A Success Story on Bike-Sharing in Paris

July 7, 2014

By Albert Asseraf, Vice President of Strategy, Research and Marketing at JCDecaux


Note: This is part of a series featuring 2012 FT/Citi Ingenuity Award winners. Vélib’ won in the infrastructure category.

Vélib’ is the world’s third-largest bike-sharing program, the largest outside of China, offering a way to experience the “City of Light” on two wheels. Launched in Paris in 2007, Vélib’ is now widely regarded not just as a business success, but also as a social phenomenon and is credited with inspiring other major European cities to start their own bike-shares.

However, the bike-sharing concept is not new. JCDecaux, the company behind Vélib’, first inaugurated the self-service bicycle rental system in Vienna in 2003, it was followed by several other European self-service bike projects before Vélib’ launched six years ago. Our service is now widely spread, with bikes available in Dublin, Seville, Brussels, and even as far as Toyama in Japan.

The economic model that guided JCDecaux in conceptualizing and operationalizing the Vélib’ system is the same as our business foundation for the past half a century which made us No. 1 in our industry: providing cities with state-of-the-art out-of-home products and public services, funded by first-class advertising displays on street furniture. Most importantly, this model allows for the delivery of quality services that benefit the community. In the case of the self-service bicycles, users pay only a modest daily or annual fee.

With 250,000 subscribers and about 30 million rentals annually, Vélib’ has established itself as a means of daily transport for hundreds of thousands of Parisians and locals in Ile de France. Vélib’ has also become a unique way for many tourists and visitors to discover Paris.

Beyond the sustainable concept itself, Vélib’s success is guaranteed by excellent operational standards and by our mechanics, regulators, engineers, supervisors and customer advisors. There are nearly 400 employees engaged in maintaining the service 24/7, without a single interruption over the years.

Vélib’ also had to face questions from some skeptical Parisians:

• Why did the City of Paris want to bring 20,600 bicycles to the streets of Paris, when the supply of public and private transport was already quite significant?

• Was it not just a contraption for the benefit of a handful of Parisians who were adept cyclists?

• Why clutter precious public space with potentially unnecessary docking stations positioned every 300 meters?

• Why make life difficult for motorists already confronted with regular traffic jams and parking problems?

• Why suddenly place these stations in front of stores and shops which would cause both noise and visual pollution?

All these questions were answered in the first few months by the tidal wave of public enthusiasm for the system. It provided users with an economic mode of transportation, with autonomy, convenience, and a way to spend leisure time and, socialize – all in an environmentally friendly way. In short, the system was embraced as a truly enjoyable and simple way to move around in a major world capital.

You have to experience Vélib’ to fully appreciate everything it offers, which goes far beyond the simple process of cycling. Vélib’ is now a Paris landmark. All research shows that this innovative idea is popular with Parisians and visitors alike. Vélib’ is becoming a symbol and its popularity is growing -within the past few weeks Parisian outlets started carrying branded merchandise (notebooks, mugs, key rings ). Above all these products indicate a social phenomenon with an exceptional impact.

Vélib’ has also been the subject of many sociological and scientific studies in recent years, including one case study taught at Harvard University.

Self-service bicycles are revolutionizing urban mobility, and can and must find their place in more major cities around the world.

New York has made this choice on the basis of a different economic model than the one proposed by JCDecaux, but with a similar ambition. We wish them success.