Over 400 cities have no organised urban bus service; fleet needs to rise 10-fold to 6.71 lakh by 2047
India’s urban bus transport system is facing a severe capacity and funding crisis, with more than 400 cities having no organised urban bus service and the country facing a 70 per cent deficit in urban transit, according to a new study by the Centre for Science and Environment (CSE) and CITIES Forum.
The study, The Economics of Bus Transformations: A Roadmap for Viksit Bharat 2047, estimates that India will need to expand its organised urban bus fleet nearly 10-fold — from around 65,000 buses currently to 6.71 lakh by 2047.
The transformation will require an estimated Rs 14.2 lakh crore in capital expenditure over the next two decades, including investments in buses, depots, electricity-grid infrastructure and charging facilities.
The study comes as India’s urban population is projected to increase from 490 million in FY2026 to 763 million by FY2047, adding around 270 million urban residents.
“Transforming bus transit is a critical imperative for clean air, energy security and climate action under Viksit Bharat 2047,” says Anumita Roychowdhury, Executive Director of Research and Advocacy at CSE. “Buses are the prime movers of this transition, capable of taking 40 to 50 private cars off the roads per bus to secure a 70-75 per cent public transport share. Achieving this requires a clear view of transition costs, financial requirements, grid needs and sector reforms. This study seeks launching of a Bus Mission and offers a comprehensive roadmap to deploy fiscal instruments and shift toward results-based financing that guarantees verifiable, high-quality service and full fleet electrification for every city with over 500,000 residents,” she added.
Just 65,000 organised urban buses:
Of the 14.5 lakh buses registered across the country and 2.9 lakh State Transport Undertaking (STU) stage-carriage buses, only around 65,000 operate as organised urban city buses, the study said.
This translates into only 13.3-13.8 buses per lakh urban population, against the government benchmark of 44 buses per lakh — a shortfall of around 70 per cent.More than 400 cities with populations between 1 lakh and 10 lakh have no organised bus transit system at all.The shortage is particularly concentrated in five states — Madhya Pradesh, West Bengal, Uttar Pradesh, Maharashtra and Karnataka — which together account for around 55 per cent of the active national urban bus fleet.The existing fleet is also ageing rapidly. Around 40,000 urban buses currently in service have crossed their 15-year statutory life. Such buses consume 20-30 per cent more fuel and incur maintenance costs of Rs 15-20 per kilometre, according to the report.The study estimates that around 5.8 lakh buses across categories will reach the end of their operational life between FY2026 and FY2030.Financial distress among STUs is another major challenge, with accumulated losses in several undertakings exceeding their annual operating revenues because of weak cost-recovery mechanisms.
Procurement needs to rise 17-fold:
India will need to increase annual urban bus procurement nearly 17-fold, from around 2,500 buses currently to an average of 41,500 buses a year, the study said.The procurement would take place in three phases.The Catch-Up phase, from FY2027-31, would require 44,000-50,000 buses annually to clear existing backlogs.The Stabilisation phase, covering FY2032-41, would require 9,000-36,000 buses annually to accommodate population growth.
The Replacement phase, from FY2042-46, could see annual procurement rise to 71,000-78,000 buses as the first generation of newly procured buses reaches the end of its 15-year statutory life.
Electric transition:
The study recommends that India achieve a 100 per cent electric share in new urban bus procurements by FY2039-40, resulting in around 6.04 lakh electric urban buses in service by 2047.The fleet would require around 121 GWh of active battery capacity and approximately 37,000 million units of electricity annually.The report estimates that this would account for only around 1.8 per cent of India’s total electricity generation in 2024, indicating that the additional power requirement would be manageable with adequate planning.
India’s bus manufacturing sector, however, would need to significantly scale up production. The top five original equipment manufacturers currently have a nominal annual electric bus manufacturing capacity of around 40,500 units, but utilisation is below 10 per cent.
Three investment scenarios:
The study has outlined three scenarios for expanding India’s urban bus system.Under the conservative scenario, India would reach 44 buses per lakh population by 2047, operating 3.36 lakh buses through around 4.2 lakh procurements at a capital cost of Rs 6.55 lakh crore.The accelerated scenario would meet MoHUA benchmarks by 2030 and increase availability to 60 buses per lakh population by 2040. It would require an operational fleet of 4.58 lakh buses, 6.8 lakh procurements and Rs 10.55 lakh crore in capital expenditure.
The recommended target scenario aims for 88 buses per lakh population by 2047. It would result in an operational fleet of 6.71 lakh buses, with 90 per cent of the fleet electric, requiring around 9.1 lakh procurements and Rs 14.2 lakh crore in capital expenditure.
National Urban Bus Mission proposed:
The study said existing fragmented financing schemes would not be sufficient to meet the scale of investment required.
With central funding expected to cover around 30 per cent of capital expenditure, a funding gap of nearly Rs 9.9 lakh crore would have to be mobilised through state budgets, private equity under Gross Cost Contracts, commercial banks, green bonds and multilateral institutions.It has proposed a National Urban Bus Mission (NUBM) backed by a National Urban Bus Electrification Fund (NUBEF) to create a more coordinated financing architecture.NUBEF would provide first-loss guarantees, concessional debt at 4-5 per cent and credit enhancement. The framework would also use Green Bus Bonds, targeted Viability Gap Funding and results-based financing linked to verified outcomes.
Fare reform, STU restructuring:
The report said financing must be accompanied by reforms to improve the financial viability of bus operators and STUs.It recommended independent fare authorities with automatic fare revisions linked to inflation and fuel and electricity costs, while ensuring affordability for passengers.The study also proposed standardised Gross Cost Contracts for deployments exceeding 100 buses, with public authorities taking demand risk while operators are held accountable for service-level performance.Financially distressed STUs should undergo restructuring with the aim of achieving investment-grade ratings by FY2030, it said.The report also called for stronger urban transport governance through Unified Metropolitan Transport Authorities and statutory City Mobility Plans, along with greater integration of private bus operators.
Tax rationalisation and Green Bus Bonds:
Among other measures, the study recommended replacing seating-based taxes with flat fees, eliminating passenger taxes and extending the 5 per cent concessional GST rate to depot charging infrastructure.
It also sought access to Input Tax Credit and legal classification of electricity as a “fuel equivalent” under Gross Cost Contracts to enable concessional GST rates.
The report proposed a national regulatory framework for state-guaranteed Green Bus Bonds and recommended 2-MW high-tension power supplies for bus depots along with smart-charging tariffs through distribution companies.
It further called for all new urban bus purchases to be 100 per cent electric by FY2039-40, with the overall fleet reaching 90 per cent electrification by 2047.
Operational subsidies, it said, should progressively shift to performance-linked financing based on verified kilometres operated, ridership growth, passenger satisfaction and avoided emissions.
The study said the next five years would be critical for India’s urban bus sector, with the upcoming fleet retirement cycle offering an opportunity to accelerate investment, electrification and reforms.
A mission-mode replacement of ageing buses, combined with a coordinated financing mechanism and operational reforms, could put India on a path towards a larger, financially sustainable and zero-emission urban bus system by 2047.
(Inputs from CSE)
