Free bus schemes help, but rural India pays more to travel

The Hindu

6 hours ago

The latest World Bank report has commended India for pulling 171 million people out of poverty. Using the formulation of $2.15 a day as the poverty line, it has said that extreme poverty fell from 16.2% in 2011-12 to 2.3% in 2022-23. However, how has the consumption basket of India changed?
The Household Consumption Expenditure Survey (HCES) provides an understanding of where and how India is consuming. As of 2023-24, the per capita household expenditure was ₹4,122 in rural India, and ₹6,996 in urban India. The total consumption expenditure for a household can be broadly categorised into food and non-food. In 2023-24, food accounted for 47% of expenditure in rural India, and 39% in urban India. When compared to earlier years, the share of food expenditure is lower. It is interesting to understand which non-food items account for a higher share of the consumer's wallet. All expenditures in the story are per capita, unless mentioned otherwise.
Expenditure on conveyance formed the biggest share of non-food expenditure for an average Indian consumer. Conveyance includes bus, metro, flights and other modes. The conveyance expenditure accounts for 14% of total non-food expenditure across rural and urban India. Of these, bus expenditure contributed to 20% of the total conveyance expenditure. Given the lower per capita income in rural India, households are largely reliant on buses as their primary mode of transport.
Across all major States, bus travel accounts for a higher share of conveyance expenditure in rural areas when compared to urban ones. The share of bus expenditure out of total conveyance expenditure is 20.6% in rural India, but only 16.2% in urban India as shown in the below chart.
One reason is the availability of other modes of transportation in urban areas. Moreover, there is significant State-wise variation in the share of bus expenditure. For instance, rural households in Tamil Nadu, and Kerala spend 25% of the total conveyance expenditure on bus travel while in Uttar Pradesh, Odisha, Karnataka and Haryana the spend is less than 20%.
Underscoring the importance of bus travel as a mode of transportation, certain State governments have provided free bus services for women. In 2019, Delhi became the first State to offer this. As of 2025, Delhi, Tamil Nadu, Karnataka, Kerala, Telangana, Punjab and, Jammu & Kashmir are the seven States that offer this for women. However, there is mixed evidence of the impact of the scheme on household consumption expenditure on buses. For Delhi, Karnataka, and Telangana, there has been a decline in bus expenditure in rural and urban areas. However, in Tamil Nadu and Kerala, household bus expenditure has increased from 2022-23 to 2023-24. At an all-India level, while bus expenditure has decreased by 4% in urban India, it has increased by 0.6% in rural India as shown in the chart below.
Thus, the effect of the transport policies is less pronounced in rural areas. This data is a wake-up call for policymakers to improve the transportation infrastructure, especially in rural India, and provide greater accessibility and affordability.
Moreover, while one would expect that lower-income households rely more on buses than higher-income households, data suggest the opposite. The share of bus expenditure to conveyance expenditure is greater among higher income households than lower-income households. One possible explanation is that lower-income households are engaged in the agricultural sector, where transportation requirements are minimal. On the contrary, higher-income households might avail bus services more frequently due to work commute. To understand this further, we assess the association between non-agricultural workforce participation and the share of bus expenditure to the total conveyance expenditure in urban India. The analysis suggests that there is no significant association as shown in the table below.
Hence, this implies that per-capita bus expenditure is not associated with non-agricultural workforce participation. This tends to suggest that urban households are not using bus services just for labour market opportunities alone — a point that policymakers should take into account.
Policies and infrastructure should be developed to cushion the cost of conveyance expenditure. First, States should transition from Internal Combustion Engine buses to electric buses. This will reduces the cost for the transportation department, leading to lower ticket prices.
Second, the supply of buses should increase. India has only 1.5 lakh buses, with an average of only 17 buses per one lakh people. The Ministry of Housing and Urban Affairs recommends 60 buses per one lakh people, yet many cities have fewer than 10. While Tamil Nadu, Karnataka, and Telangana have approximately 30 buses per one lakh population, Punjab, Uttar Pradesh, and Odisha have fewer than 10.
Third, it is imperative that the quality of buses is improved, alongside better affordability. Reducing the conveyance expenditure for households, will allow them to repurpose this share of expenditure into other categories that will improve the overall quality of livelihood.
Cledwyn Fernandez is a research fellow at The Indian Council for Research on International Economic Relations (ICRIER). Mohd. Tahoor was a research intern at ICRIER and is currently a student of Economics at Azim Premji University