Cabinet Approves New Metro Rail Policy

The Policy opens a big window for private investments in metro operations

The Union Cabinet, chaired by Prime Minister Narendra Modi today approved a new Metro Rail Policy, paving the road for private investment and participation in metro operations.

The 14 page policy, has made PPP component mandatory for availing central assistance for new metro projects. Private investments and other innovative forms of financing of metro projects have been made compulsory to meet the huge resource demand for capital intensive high capacity metro projects.

“Private participation either for complete provision of metro rail or for some unbundled components (like Automatic Fare Collection, Operation & Maintenance of services) will form an essential requirement for all metro rail projects seeking central financial assistance” says the policy.

The new policy seeks to ensure it focusing on a catchment area of five kms. on either side of metro stations requiring States to commit in project reports to provide necessary last mile connectivity through feeder services, Non-Motorised Transport infrastructure like walking and cycling pathways and introduction of para-transport facilities. States, proposing new metro projects will be required to indicate in project report the proposals and investments that would be made for such services.

Setting up of Unified  Metropolitan Transport Authority (UMTA) has been made mandatory which is to prepare Comprehensive Mobility Plans for cities for ensuring complete multi-modal integration for optimal utilization of capacities.

The new Metro Rail Policy requires the states to clearly indicate in the project report the measures to be taken for commercial development at stations and on other urban land for non-fare revenue generation through advertisements, lease of space etc, backed by statutory support. States are also required to commit to accord all required permissions and approvals.

The new policy empowers States to make rules and regulations and set up permanent Fare Fixation Authority for timely revision of fares. States can take up metro projects exercising any of the three options for availing central assistance. These include; PPP with central assistance under the Viability Gap Funding scheme of the Ministry of Finance, Grant by Government of India under which 10 per cent of the project cost will be given as lump sum central assistance and 50:50 Equity sharing model between central and state governments. Under all these options, private participation, however, is mandatory.

At present, metro projects with  a total length of 370  kms are operational in 8 cities, project of total length of 537 kms are in progress in 13 cities and projects with  a total length of 595 kms in 13 cities including 10 new cities are at various stages of planning and appraisal.