The government has released Rs 1,000 crore out of Rs 4,000 crore sanctioned for

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urban transport system as part of the second stimulus package announced in January.

The money has been released for 14,240 buses in 54 out of 65 cities covered under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and is expected to give a boost to the order books of auto manufacturers, including Ashok Leyland, Tata Motors, Volvo, Swaraj Mazda, Force Motors and Mahindra Automotives.

The Union government is examining another bunch of proposals involving purchase of 5,000 buses for union territories and cities in special category states.

“The proposal require approval from the Union home ministry,” said an official. Though proposals for 14,240 buses in 54 cities have been approved, the cities have expressed difficulty in completing the supply by June 30, citing supply constraints by the manufacturers.

One of the suppliers, Volvo, said it has a present monthly capacity of 60 buses per month, which can be ramped up to 250 buses a month. “But some kind of clarity regarding placement of orders after this scheme is over would be very much helpful, without which ramping up the capacity for a short period only may not be practicable,” a Volvo representative told the government in a recent meeting.

The Society of Indian Automobile Manufacturers (Siam), in a meeting with the urban development ministry in February, had indicated a supply capacity of between 10,310 and 11,810 buses a month.

But now suppliers say it will not be feasible to supply all the buses till June.

The orders are yet to be placed, as many states are not going ahead with the tender process due to the election code of conduct.

If orders are placed in March 2009, the supplies would commence in June or July, and the completion of supply might extend up to March 2010, suppliers said.

Even though the sanctions include 7,825 buses up to 900 mm floor height, most of the tenders issued presently for total of 8,400 buses are primarily for low floor and semi floor buses of 400 mm and 650 mm floor height. Under the project, Hyderabad, Mumbai, Chennai and Bangalore will get 1,000 buses each, while Delhi will get 1,500 buses.

Smaller cities like Madurai, Coimbatore, Pune, Dehradun, Haridwar, Varanasi and Nanital are also included in the programme.