The public transport infrastructure in key cities of Uttar Pradesh, long considered a weak link in the state's developing ecosystem, is set for a major overhaul. Determined to bring a turnaround within the 17 cities governed by municipal corporations—with Firozabad and Saharanpur also expected to be brought under the fold within a year—the state government has set the ball rolling to augment the fleet of existing 743 air-conditioned electric buses to 2,468 buses.
Current State of City Bus Services
Many commuters are unaware that 65% of their travel expenses are covered by the state government, with passengers paying only 35% of the actual cost as fare. According to the recommendations of the Ministry of Housing and Urban Affairs, at least 40 to 60 buses should be available for every one lakh people. However, currently, only three buses are available per one lakh population in urban areas of Uttar Pradesh. With the planned expansion, this proportion will increase from three to ten buses per one lakh urban population.
The wide gap between income and expenditure while operating the existing fleet of 743 air-conditioned electric buses has been a major hurdle preventing the state from adding more buses. City bus services are currently active in 15 municipal corporation cities: Lucknow, Kanpur, Agra, Mathura, Ghaziabad, Meerut, Jhansi, Moradabad, Bareilly, Gorakhpur, Shahjahanpur, Ayodhya, Varanasi, and Aligarh.
Financial Challenges and Viability Gap
In May 2026, approximately 25.26 lakh commuters used buses across these 15 cities, generating Rs 6.15 crore in ticket fare revenue. However, the total operational expenditure for the buses was around Rs 17.12 crore. To bridge this gap, the state government periodically provides viability gap funding of Rs 16 crore to Rs 18 crore to the Directorate of Urban Transport, which operates the city buses independently through the Unified Metropolitan Transport Authority established in 2009.
A senior officer explained, "Public transport is a welfare activity for the state. All metropolitan cities in India, such as Delhi, Mumbai, and Bengaluru, operate city bus transport services at a loss. In our state, the per-kilometer expense for a commuter is Rs 70, while the income per kilometer from a passenger is only Rs 24 to Rs 25. Without reducing operational expenses, sustaining transport services in the long run becomes a huge challenge."
New Procurement Model: Gross Cost Contract
Mahendra Bahadur Singh, Director of Urban Transport Services in Uttar Pradesh, announced, "Within a few weeks, we will float the tender document for procuring 1,725 electric buses. This time, we will adopt a gross cost contract, a public-private partnership model under which the shortlisted entity will handle end-to-end operations of the buses and associated infrastructure by quoting a fixed cost per kilometer. The government will cover the viability gap according to the terms and conditions." The additional buses are expected to be rolled out across the 17 cities within a year.
Although the urban transport directorate first floated the requirement for additional buses in May 2023, the tender did not attract any takers interested in procuring and operating them. The forthcoming tender document will include revised terms and conditions deemed necessary to improve the financial viability of the deal.
Capital Subsidy to Attract Private Players
In a cabinet meeting on June 3, the state government agreed to provide a capital subsidy of Rs 35 lakh for a 9-meter-long bus and Rs 40 lakh for a 12-meter-long bus to private players who come forward in the next round. The estimated cost of these two bus types is Rs 1.2 crore and Rs 1.5 crore, respectively.
Varying Performance Across Cities
Analysis of daily operations reveals that city bus operators in Mathura, Ghaziabad, and Prayagraj generate higher daily income compared to the remaining 13 cities, owing to a larger number of tourists and floating population. In contrast, severe losses are incurred in Aligarh, Bareilly, and Moradabad, where average occupancy during non-peak hours remains between 30% and 35%.
