The Union government is likely to bring about a new scheme to provide financial assistance to operate about 10,500 buses in 108 cities.

The initiative will run for eight years, and cities with a population of 5 lakh to 40 lakh will qualify to obtain the incentives.

An inter-ministerial panel has given its nod to the Rs 18,000 crore scheme. The Union Ministry of Housing and Urban Affairs will now circulate a proposal regarding the same to get the approval of the Union Cabinet.

Each eligible city can bring 100 buses under the project. However, the Union Finance Ministry believes that this number can be enhanced if a need arises for the same.

The centre will roll out this financial assistance under the operational expenditure (OPEX) model. Accordingly, the nodal ministry will be giving a share of the payment that the cities will pay the private operators to run these buses.

The states will invite bids from private bus operators who will quote the contract price for a fixed period. They will get paid on a per-kilometre basis.

The centre will give 25 per cent of the contractor value for cities having a population between 20 lakhs-40 lakhs. For cities will lesser population, the central government will account for 35 per cent of the value of the contract, reports The Economic Times.

Cities starting the bus service for the first time will obtain an additional 5 per cent of the payment. They will receive a further 2 per cent assistance for choosing CNG buses.

Union Finance Minister Nirmala Sitharaman announced this Rs 18,000 crore scheme in her budget speech on 1st February 2021. She had claimed that the centre would expand the Metro rail network and augment the city bus service to increase the share of public transport in urban areas.