THe Blog

July 19, 2019

Fast Fact: Investing in Public Transit Systems Improves Efficiency of Labour Markets

Figure 1: Urban Expansion in Kozhikode, Kerala, along Transit Lines (1974 versus 2014)

Source: Analysis by IDFC Institute and Urban Expansion Observatory


Figure 1 shows built-up area growth in and around Kozhikode, Kerala between 1974 and 2014. When cities expand and people begin living outside their limits while commuting to work within the city, mass transit systems, such as railways, become critical in connecting the burgeoning peripheries with the city core. Thus mass transit not only ties the sprawl together, thus allowing labour markets to function efficiently, but is also an instrument for guiding expansion since laying down new transit routes opens up more land for development.


As a result of inadequate public transit, however, Indian cities fail to reap such benefits. People living in unplanned peri-urban areas outside city limits continue to depend heavily on state transport buses, cycle rickshaws, and auto rickshaws, often having to switch between several modes of transport to get to city centers where they may work.


Accessible and affordable mass transit systems reduce congestion and pollution in urban areas. When people can get from one place to another without getting stuck in traffic, incurring extra fuel costs, or breathing air of poor quality, they become more productive and efficient. Alain Bertaud, in his 2018 book, Order Without Design: How Markets Shape Cities, asserts that a person becomes less productive with longer commutes, and productivity practically disappears after the 60-minute mark. Public transit can boost productivity by integrating labour markets.


Reforming Urban India”, a new policy document by IDFC Institute, highlights a set of recommendations for investment in and reform of public transport networks to increase mobility in cities.

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