A booming GDP growth rate is expected to push the bottom lines of auto companies including bus makers like Tata Motors and Ashok Leyland up. The bus makers should up their plant capacity as a buoyant GDP growth rate of 8.5-9%, as targeted by the government to achieve by 2012, is expected to increase the demand for buses to 18,636,35 by the end of the 11 th Plan period.

According to official estimates the growth in billion passenger kilometre (BPKM) is projected to increase by 67% during 2008-09 and 2011-12 if the GDP grows at 8.5%. The BPKM would increase by almost 72% during the same period if the GDP growth rate of 9% as expected by the government.

Assuming that a bus is in good running condition for about 15 years, it is projected that during the 11th Plan at least 26,000 buses would need to be replaced every year.

To cope up with the huge demand for buses, the Planning Commission has suggested delicensing of investment, lifting of quantitative restrictions (QRs) on imports, reduction in peak custom duty rates and these being further reduced to ASEAN levels to provide options to buyers to choose between imports and domestically produced commercial vehicles to meet the projected passenger traffic scenario.

Delhi alone is estimated to require at least 4500 more buses to add to its fleet of DTC buses to take the number up to 6000 by March 31, 2009.

The share of the private sector in the total number of buses has increased from 57% in 1980-81 to 85% in 2003-04. Over the years the modal split in passenger movement between rail and road (by bus mode) has skewed in favour of the latter. The share of bus transport in passenger movement which was around 15% in 1950-51 has increased to around 87% while that of railways has fallen from around 85 % to barely 13 % over the same period.

Despite good performance of the road transport sector it is beset with slow technological development, low energy efficiency, pollution and slow movement of freight and passenger traffic. The step-up in freight and passenger road traffic during the 11th Plan in consonance with alternate growth paths provides an opportunity for technological up gradation, capacity augmentation and replacement of over aged rolling stock, the Commission said.