New bus orders dry up as states fail to utilise funds

The urban development ministry has decided to withdraw release funds with interest from states that have not placed orders

Of the sanctioned 12,000 buses to be purchased over a period of time, under the erstwhile Jawaharlal Nehru National Urban Renewal Mission (JNNURM), states have purchased only 2,288 or 19 per cent so far, with many struggling to meet their side of funding.

After receiving the purchasing order, the urban development ministry had released the first instalment of Rs 884.21 crore for 7,509 buses to 18 states covering 114 cities in 2014-15. However, only 11 states reverted to the ministry with information on procurement of 2,288 buses. These states include West Bengal, Karnataka and Maharashtra.

Senior officials of two of India’s largest bus makers, Ashok Leyland and Tata Motors, have said new bus orders from state transport undertakings (STUs) have nearly come to a standstill for about a year.

“Bus orders from STUs for the past year has shown a remarkable drop. Except for states in the northeast, all others are struggling to meet the funding requirement for new bus purchases,” said a senior official from Chennai-based Leyland.

According to data provided by the Society of Indian Automobile Manufacturers, sales of medium and heavy buses fell 22 per cent last year to 36,837 units, against 46,913 units sold in 2012-13. Sales to STUs form a critical part of the overall demand equation, otherwise reliant on private companies.

Ravindra Pisharody, executive director (commercial vehicles) at Tata Motors, said: “Barring the northeastern states or Himachal Pradesh where they are getting 90-100 per cent funding (from the Centre), many of the bigger states are getting only 35 per cent funding. So today, none of them are in good shape.”

Mumbai-based Tata Motors, which surpassed Leyland to become the country’s biggest medium and heavy bus manufacturer, witnessed a slight decline of three per cent in bus sales to 15,004 units last year against 15,528 units in 2013-14. Leyland saw a decline of 12 per cent during the same period at 13,151 units against 14,951 units sold in 2013-14.

“Tata Motors bagged an order for 3,400 buses under JNNURM-II and is in the process of delivering them. So far, we have delivered 1,700 buses under the scheme,” said a company spokesperson.

The ministry further noted that with the exception of cities of West Bengal, none of the other cities have given the mandatory quarterly progress report and status of procurement and operationalisation of buses, despite a year since the release of grants.

“The government of India has taken it seriously, as funds/grants meant for the welfare of people of India has been kept unutilised for the past one year. Hence, it has been decided that funds already released may be withdrawn with interest and sanction may be cancelled in case the state governments do not furnish the status report regarding procurement,” the urban development ministry said in a letter to all managing directors of state road transport corporations.

Last year, the Cabinet had given approval to the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), a remodelled version of the JNNURM. Soon after, concerns were raised over the continuation of bus orders under the new scheme given the change of government at the Centre.

“There was confusion about JNNURM getting cancelled and going on to AMRUT and it was not clear whether funds would be made available (but) that is clear now, the funds (from the Centre) will be made available but the states are moving slowly. We have the orders but the implementation, the pick-up in sending the inspector to look at the vehicle is a bit tardy,” added Pisharody.

SIAM SAYS

• Sales of medium & heavy buses fell 22% last year to 36,837 units   against 46,913 units sold in FY13
   
• Tata Motors witnessed a slight decline of 3% in bus sales to 15,004 units last year against 15,528 units sold in FY14
  

 

Ashok Leyland saw a decline of 12% during the same period at 13,151 units against 14,951 units sold in FY14