Metro systems should be viewed not only as mobility or environmental interventions, but also as household balance-sheet stabilisers with implications for credit markets and systemic risk
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Expansion of metro rail network in cities such as Delhi and Hyderabad has changed the household financial behaviour and introduced borrowing discipline, revealed a research paper of Economic Advisory Council to the Prime Minister (PMEAC).
The paper authored by Soumya Kanti Ghosh (part-time member at PMEAC and also Group Chief Economic Advisor at SBI), Pulak Ghosh (part-time member at PMEAC) and Falguni Sinha (economist at SBI) said: “In Hyderabad, households located in metro-connected PIN codes exhibit a 1.7 per cent decline in delinquency incidence and a 1.8 per cent increase in prepayment activity. The effects are even stronger in Bengaluru, where delinquency falls by 2.4 per cent and prepayment rises by 3.5 per cent. Evidence from Delhi points to an even larger 4.42 per cent reduction in mortgage delinquency, alongside a 1.38 per cent increase in prepayments,”
private vehicles
It highlighted that improved access to efficient public transport reduces households’ dependence on private vehicles, thereby lowering recurring transportation expenses. This, in turn, eases the burden of servicing EMIs — among the most significant fixed financial commitments for urban households. It revealed economically meaningful improvements in household financial discipline in metro-served areas.
Further, complementary vehicle registration data indicate that these gains are driven by reduced reliance on private automobiles. Beyond improved repayment behaviour, the results also suggest a broad-based reduction in household indebtedness and a decline in average debt burdens. Overall, 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,” the paper said, while adding the operational metro network expanded from 248 km across five cities in 2014 to over 1,025 km across 20 cities by October 2025, alongside a four-fold increase in daily ridership.
By demonstrating that metro expansion leads to lower mortgage delinquency and higher prepayment rates, the authors show that urban transport infrastructure generates substantial financial spillovers at the household level that are typically overlooked in conventional project appraisal frameworks. These results suggest that metro systems should be viewed not only as mobility or environmental interventions, but also as household balance-sheet stabilisers with implications for credit markets and systemic risk.
According to the paper, the analysis has implications for intergovernmental financing and federal support for urban infrastructure. Since reduction in mortgage defaults and financial instability generate benefits that extend beyond local jurisdictions affecting banks, housing finance companies and macro-financial stability, there is a strong rationale for continued central and multilateral support for metro projects.
Viewing metro investments as instruments that simultaneously advance sustainability, financial resilience and inclusive growth provides a more compelling justification for public funding and policy prioritisation. In sum, “our findings suggest that metro infrastructure should be understood as a multidimensional policy tool, one that not only improves mobility and environmental outcomes, but also strengthens household balance sheets, enhances credit performance and supports financial-sector stability”, the paper said, adding that recognising and incorporating these channels into urban policy design can significantly improve the effectiveness and evaluation of infrastructure investments in India’s cities.
Published on January 16, 2026
