The Union Cabinet has approved a new policy for expanding and regulating metro rail services in cities across India. This is the first such policy document prepared by the Centre since Metro Rail operations began in Delhi in 2002.
The 14-page document approved on Wednesday has seven key points, of which the most significant is the one on funding pattern. The policy gives a big boost to private players by making private participation mandatory for all the three funding options – be it a public-private partnership (PPP) model with central assistance under the Viability Gap Funding scheme of the Finance Ministry, a grant from the Centre under which 10% of the project cost would be given as a lump sum, or a 50:50 equity sharing model between the Central and State governments.
Private participation “either for complete provision of metro rail or for some unbundled components” such as automatic fare collection will form an essential requirement for all metro rail projects seeking central financial assistance.
The policy also seeks to ensure that metro projects are initiated for sound reasons. The Urban Development Ministry recently turned down a metro project proposal from Vijayawada due to lack of passenger traffic, a Ministry official said. “The metro project can be proposed only if it is found to be more cost effective as opposed to other mass transit projects such as tramways, light rail transit, or bus rapid transit system,” the policy states.
“Every proposal for Metro Rail should necessarily include proposals for feeder systems that help to enlarge the catchment area of each metro station to at least 5 km,” the policy adds.
It also stipulates rigorous project evaluation by a third party.
The policy also makes it mandatory for state governments to set up a unified metropolitan transport authority. This would be a statutory body entrusted with preparing a comprehensive mobility plan for the city.
As per the policy, States are required to adopt innovative mechanisms such as ‘value capture financing’ and ‘betterment levy’ to mobilise resources for the project. States will also get a free hand in implementing the projects. In cases where States opt for central assistance of 10% of project cost, the Union government will not concern itself with project execution.
Noting that metro projects should stop turning into white elephants, the policy stipulates an increase in rate of return from the current the 8% to 14%.
