New Metro policy gets Cabinet nod

AT PRESENT, METRO PROJECTS WITH A TOTAL LENGTH OF 370 KM

ARE OPERATIONAL IN EIGHT CITIES AND ANOTHER 537 KM ARE ONGOING IN 13 CITIES

The Union cabinet on Wednesday approved the new Metro policy, which will promote private investments in a big way in all the future projects while also ensuring that cities get to construct Metro rail only after they have explored all other measures to de-congest.

“The policy makes the PPP (public private partnership) component mandatory for availing central assistance in new Metro projects. Private participation either for complete provisioning of Metro rail or for some unbundled components will form an essential requirement,” said DS Mishra, secretary, Union housing and urban affairs ministry.

Wary that many such Metro projects — which are hugely capital intensive — may not be financially viable and can end up burning a big hole in the government exchequer, the ministry is tightening the norms for appraising proposals sent by states. The new policy will allow Centre to approve only those projects that ensure a 14% return on investment. Currently, the Centre clears projects offering an 8 % financial internal rate of return (FIRR). “Any project where the EIRR (Economic Internal Rate of Return) is less than 14% will not be considered,” said Mishra.

Also, states will have to ensure last mile connectivity for up to 5 km on either side of metro stations. The policy also mandates that states will have to come up with innovative financing mechanism to make the project viable. This includes floating bonds and commercially exploiting the land around projects. The government has decided to extend the duty exemption scheme for businesses operating in Himalayan and Northeastern states for 10 years till March 31, 2027. The decision was taken by the cabinet committee on economic affairs chaired by Prime Minister.