- Why in news
- On 17 March 2026, the Minister of State for Heavy Industries told the Lok Sabha how the PM e-Bus Sewa Payment Security Mechanism (PSM) scheme is progressing, including the Direct Debit Mandates given by 19 States/UTs.
- What it is
- PM-eBus Sewa is a Ministry of Housing and Urban Affairs scheme to deploy 10,000 electric buses in cities, run on a Gross Cost Contract model. The Payment Security Mechanism is a linked scheme of the Ministry of Heavy Industries. It sets up a fund so that bus operators get paid on time even if a city transport authority defaults.
- Implementing agency
- Convergence Energy Services Ltd (CESL) is the Central Implementing Agency. It manages the Payment Security Fund and verifies payment claims.
- Coverage period
- PSM gives payment security for up to 12 years for each bus deployed under the scheme.
- Default recovery
- If a transport authority does not repay the fund with Late Payment Surcharge within 90 days, MHI asks RBI to invoke the Direct Debit Mandate. RBI then debits the State/UT account.
- First tranche
- Rs 500 crore was given to CESL in FY 2025-26 to set up the PSM Fund.
- Implementing ministry
- The scheme is implemented by the Ministry of Housing and Urban Affairs, not by the Ministry of Heavy Industries.
- Target cities
- Cities with 3 to 40 lakh population, plus state capitals and capitals of North Eastern and hilly regions with under 3 lakh people.
- Infrastructure support
- The scheme gives 100% financial support for Behind-the-Meter power infrastructure.
- Coverage
- 10,000 buses are sanctioned across 116 cities in 20 States and 6 UTs.
- Infrastructure money
- Rs 1254.38 crore sanctioned and Rs 483.70 crore spent on BTM and civil depot infrastructure till December 2025.
- Jobs estimate
- Estimated 45,000 to 55,000 direct jobs during the scheme; actual jobs are not tracked by MoHUA.
Don’t confuse with PM-eBus Sewa vs PM E-DRIVE: PM-eBus Sewa is a MoHUA scheme for 10,000 city buses. PM E-DRIVE is a Ministry of Heavy Industries scheme. PSM covers buses under both.
Schemes: 52 Prelims questions since 2013, 10 in Prelims 2026 alone. They test features, the period and who funds it. In Mains, 33 news-triggered questions, mostly GS3.
Why it matters
- Payment security lowers the risk for bus operators, so more of them may bid and tender prices may fall.
- It supports organised public transport and cleaner urban mobility.
- Helps smaller cities set up organised public transport and move to e-mobility.
- Supports cleaner urban air and lower fuel use.
Problems
- Weak finances of city transport authorities may lead to defaults and a drain on state accounts.
- Buses are still being deployed, so the mechanism is untested.
- Spending lags sanctions: Rs 483.70 crore spent against Rs 1254.38 crore sanctioned.
- Operations are run by cities, so job and performance data are not tracked centrally.
Way forward
- Speed up deployment after tenders and awards, and keep the fund adequate.
- Improve fare and non-fare revenue of transport authorities so they can pay operators.
- Speed up depot and power works so sanctioned buses actually run.
- Track operations and jobs through a central data system.
Put in your answer
Payment default safeguard: The PSM uses a fund and an RBI Direct Debit Mandate to protect operators from state payment default. It is a useful example of a credit enhancement tool.
Scheme scale: 10,000 buses sanctioned across 116 cities in 20 States and 6 UTs.
Jobs potential: Estimated 45,000-55,000 direct jobs during the scheme tenure.
- 2014Mains GS3 · Q8Critically assess government strategies for 'moving people' under the National Urban Transport Policy.
- 2019Mains GS1 · Q16How efficient, affordable urban mass transport drives India's rapid economic development.
- 2024Prelims Q37Exhaust emission from hydrogen-powered fuel cell electric vehicles
- 2025Prelims Q41Identify how many listed battery and hydrogen electric vehicle types exist
- 2025Prelims Q43Which EV battery elements among cobalt, graphite, lithium, nickel?
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Pairs
Ours, not from a UPSC paper
Consider the following pairs about the PM-eBus Sewa Scheme:
- 1.Implementing ministry — Ministry of Housing and Urban Affairs
- 2.Support for Behind-the-Meter power infrastructure — 100% financial support
- 3.Spread of sanctioned buses — 116 cities in 20 States and 6 UTs
How many of the pairs given above are correctly matched?
True or false?
1 of 7
Statements the way Prelims prints them. Say first, then see the fact.
1.PM-eBus Sewa Scheme is implemented by the Ministry of Housing and Urban Affairs.
True. MoHUA implements the scheme.
2.The scheme aims to deploy 10,000 air-conditioned electric buses.
True. Target is 10,000 AC electric buses.
3.The scheme covers only cities with a population above 40 lakhs.
False. It targets cities of 3-40 lakh population, plus certain capitals of smaller size.
4.Under the scheme, 100% financial support is given for Behind-the-Meter power infrastructure.
True. BTM power infrastructure gets 100% support.
5.The 10,000 buses sanctioned under the scheme are spread over 116 cities in 20 States and 6 UTs.
True. 116 cities, 20 States, 6 UTs.
6.Till December 2025, the amount spent on infrastructure under the scheme exceeded the amount sanctioned.
False. Rs 483.70 crore was spent against Rs 1254.38 crore sanctioned.
7.MoHUA's data system records the exact number of jobs created under the scheme.
False. MoHUA does not maintain job numbers; it only estimates 45,000-55,000 direct jobs.
Written by us from the release, not by UPSC; checked by a second model.
Worth revising until Prelims 2027: most news questions come within two years of the event.