Rapid metro rail expansion in the country translated into stronger household liquidity management: EAC-PM Working Paper

Improved access to efficient public transport reduces households’ dependence on private vehicles, thereby lowering recurring transportation expenses, a working paper by the Economic Advisory Council to the PM (EAC-PM) said.

“This, in turn, eases the burden of servicing EMIs, among the most significant fixed financial commitments for urban households,” the paper, co-authored by Soumya Kanti Ghosh and Pulak Ghosh, both part-time members at EAC-PM, and Falguni Sinha, economist at SBI said.

According to the paper, investments in urban mobility infrastructure over the last decade, particularly metro rail expansion, have translated into stronger household liquidity management and more disciplined borrowing.


“These behavioural improvements form a critical foundation for household financial resilience and contribute meaningfully to broader financial stability,” it said.

Citing the examples from Hyderabad, Bengaluru and Delhi, the paper said there are economically meaningful improvements in household financial discipline in metro-served areas.

As per the paper, households located in metro-connected PIN codes in Hyderabad exhibit a 1.7% decline in delinquency incidence and a 1.8% increase in prepayment activity.

The effects are even stronger in Bengaluru, where delinquency falls by 2.4% and prepayment rises by 3.5% and in Delhi where an even larger 4.42% reduction in mortgage delinquency alongside a 1.38% increase in prepayments has been seen.

“Complementary vehicle registration data indicate that these gains are driven by reduced reliance on private automobiles,” it said, adding that the results also suggest a broad-based reduction in household indebtedness and a decline in average debt burdens.

The paper, further, suggests that metro systems should be viewed not only as mobility or environmental interventions, but also as household balance-sheet stabilizers with implications for credit markets and systemic risk.

“Evidence suggests that sustainable urban transport investments can strengthen household financial resilience and have direct implications for housing finance policy and lender risk assessment,” it said.

“The findings underscore the importance of integrating transport planning with housing and financial-sector policy and strengthen the case for revisiting cost–benefit analysis frameworks used to evaluate urban infrastructure projects besides having implications for intergovernmental financing and federal support for urban infrastructure.