Leveraging transit-oriented development to build productive cities

Transport infrastructure is a prime driver of economic activity. As a case study of Bengaluru shows, improving accessibility to jobs, through safe and efficient transport modes, could significantly enhance workforce productivity

Indian cities are on the brink of a transportation revolution, with a projected expenditure of ₹3 trillion (between 2022–2027) set to be spent on approved metro rail projects. These investments will not only enhance urban mobility but can also unlock vast economic potential.

Studies reveal that investment in public transportation can generate thousands of jobs and deliver economic returns 5-7 times greater than the initial outlay. To leverage investments in mass transit and maximise the economic benefits as well as improve quality of life in cities, the Government of India approved the National Transit Oriented Development (TOD) Policy and Metro Rail Policy in 2017, encouraging the adoption of TOD as a key urban planning and growth management strategy. With this national policy and funding push, 27 Indian cities are building metro rail systems, and many others are building other forms of rail- and bus-based mass rapid transit systems.

To improve accessibility to jobs

Public policies and land market conditions drive the development of economic centres in suburban and peri-urban areas, and public transport systems struggle to keep up with this outward sprawl. The resulting longer work–home commutes, and the congestion and pollution arising from greater private vehicular use, are hampering access to jobs and labour markets, productivity and liveability. Bengaluru, for instance, is among the world’s most traffic-congested cities, with the social cost estimated to be ₹38,000 crore annually (5% of the city’s GDP) as per 2018 figures.

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TOD presents a promising approach to address these challenges, while contributing positively to India’s low-carbon growth ambitions. Premised on the principle of land use–transport integration, TOD promotes compact, mixed-use development and sustainable transport modes, like walking, cycling and mass transit, effectively decoupling density from congestion and economic growth from resource use and carbon emissions. WRI India’s recent publication titled ‘Jobs near metro rail transit in Bengaluru: Enabling an accessible and productive city’ underscores the critical need for integrated spatio-economic planning and bringing jobs closer to transit through TOD, given its significant benefits and co-benefits.

Improving accessibility to jobs, through safe and efficient transport modes, can significantly enhance workforce productivity and participation. Workplace proximity and higher job densities drive transit rider-ship more effectively than residential density. Clustering job growth near transit creates an agglomeration effect that boosts innovation, productivity, and competitiveness — far more than dispersed job growth. Apart from expanding worker and customer catchments for businesses, it also spurs local economic and real estate development, leading to increased revenues for public agencies, which can be reinvested into infrastructure and service upgrades revitalising city neighbourhoods.

Key findings

WRI India’s study examines the spatial distribution of jobs associated with registered factories (manufacturing enterprises) and shops and commercial establishments (service enterprises) in the Bengaluru Metropolitan Area (BMA).

The study also assesses current job proximity and density along the city’s operational and under-construction metro network which are Phases 1, 2, and 2A-2B, and offers insights into the locational considerations for businesses and the benefits, trade-offs, and market or regulatory challenges they face in locating near metro stations.

The paper provides actionable recommendations for enabling job growth near mass transit stations.

The research indicates there are about 0.2 million registered enterprises in the BMA, employing close to 4.6 million workers, with service enterprises accounting for the bulk of it. Notably, large enterprises (100+ employees) constitute only 2% of all enterprises but contribute 60% of all jobs. Owing largely to the service sector, average job densities are highest in inner-city areas within the Outer Ring Road (ORR) and decrease further away. Peak job densities range from about 25,000 jobs/sq. km in large industrial clusters to 58,000 to 1,09,000 jobs/sq. km in hi-tech clusters such as Whitefield and Electronic City.

Once the ongoing metro phases are completed (172 kms), 28% of the total mapped jobs in the BMA will be within 500 m of the nearest metro station, 59% within 1 km, and 85% within 2 km. Some large job clusters however remain disconnected, and most jobs currently lie beyond a comfortable walking distance (500 m) from metro stations, emphasising the need for pedestrian infrastructure, and feeder services, particularly in the 1-3 km range.

Market linkages and agglomeration economics drive enterprises of certain sizes and types to be located near each other, with large businesses anchoring smaller ones around them, collectively gaining from the benefits of agglomeration. The study found that service enterprises, especially those benefiting from enhanced catchments and accessibility for employees and customers, prefer to locate and cluster near the metro. However, the metro has little impact on the location choice of manufacturing enterprises. Most blue-collar workers tend to live in surrounding areas and either walk, cycle, or use public buses or informal transport to commute to work. The study corroborates other research findings that suggest that the metro has boosted real estate development nearby, especially the growth of service enterprises.

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The main barriers discouraging large businesses from locating near metro stations include the lack of suitable properties, unfavourable development regulations, and inadequate infrastructure levels.

Developed inner-city areas have limited land availability for large-scale commercial businesses and are packed with buildings that often do not meet their requirements, for instance, legally compliant Grade-A buildings. Moreover, small plot sizes and other regulations pertaining to access road widths, setback, ground coverage and parking norms, hinder higher-density (re)development. Also, plot amalgamation processes involving multiple owners can be difficult, risky and costly.

Higher property prices near metro stations however tend to dissuade smaller businesses, more than larger established ones. Market saturation and community resistance to greater commercialisation in station areas also pose a challenge for businesses seeking to locate there.

The way forward

High-functioning global cities like Hong-Kong have 57% of jobs within 500 m of a transit station, 84% within 1 km, and 96% within 2 km as per LSE 2013 data. The city has one of the highest levels of transit use (90% of motorised trips) and one of the lowest levels of car ownership (56 cars per 1,000 people). This has enabled its Gross Value Added per capita to increase by 50% between 1993 and 2011, while fuel consumption and carbon emissions per capita decreased by 10%.

In Bengaluru, the impending revision of the city’s master plan provides a valuable opportunity to set aspirational targets for jobs near transit and strategise transit network extensions to connect existing and emerging high-density job clusters.

To optimise resource and economic efficiencies, the plan should also identify and prioritise areas served by transit where job densities can be increased through renewal and densification, balancing market demand with environmental and community goals.

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Public policies can stipulate location-efficient incentives such as additional development rights or fee/tax subsidies to encourage businesses to locate near transit or in economically depressed areas. Apart from conventional funding sources, the government can explore public-private partnerships and value capture financing mechanisms that can be ring-fenced for station area improvements. It should also designate a nodal agency to facilitate interactions between multiple stakeholders and coordinate TOD planning and implementation.

The private sector (businesses, developers, financing institutions) can play a significant role in directing commercial and industrial investments, near transit stations.

Additionally, proactive partnerships, between the private and public sector, can enable catalytic developments with augmented amenities, public realm enhancement, and provision of last-mile connectivity between workplaces and transit stations.

Transport infrastructure is a prime driver of economic activity and a developing country like India will continue to invest in it. For our metropolitan cities to become, and remain, globally competitive, the government needs to prioritise job densities near transit in policy-planning-regulatory frameworks. This must encompass the upgradation of public infrastructure, and institutionalising coordinated action to shape inclusive, low carbon, compact and connected growth.

Radha Chanchani is Senior Manager and Jaya Dhindaw is Executive Director with the Sustainable Cities program at WRI India.

Published - September 24, 2024 08:30 am IST