Redrawing the metro policy map
In a new bill passed on Wednesday, the Union Cabinet made it compulsory for all Metro projects to present an appropriate Private-Public Partnership for procuring Central government funds in investment related to the construction of Metro rails. This marks a major shift in urban policy making wherein the infrastructure and operation of large-scale affordable, public transport systems such as the metro rails, has been diverged from being limited to state control. The New Metro Rail policy, states that "private participation either for complete provisioning of metro rail or for some unbundled components will form an essential requirement for all metro rail project proposals seeking Central financial assistance." Detailing three broad Private-Public-Partnership (PPP) models, the Cabinet said that private assistance for infrastructure maintenance and upgradation, direct installation of services, and procurement of rolling stock would be sought for. Prior to this new PPP model, metro transportation followed a joint equity system with the Central and State governments holding equal equity, now, the Centre would provide 10 per cent equity and the rest must be procured by states in association with private investors. The urban development of India has largely coincided with the growth of Metro rails. The first track was inaugurated in Kolkata, 1984 by Prime Minister Indira Gandhi, and only after 22-years was the second track flagged off in Delhi in 2002 under the leadership of Atal Behari Vajpayee. Since then, Chennai, Bangalore, Mumbai, Jaipur, Kochi have all laid their tracks for the metro rail, which has eased conveyance by easing traffic witnessed in most cities at peak hours. Several more cities, such as Nagpur, Navi Mumbai, Lucknow, and Hyderabad, are scheduled to be equipped with their own metro lines, as construction has already commenced. Metro rail projects being capital intensive, while also fetching low rates of return, had so forth been left within the domain of Centre-State partnership, with additional assistance from multilateral agencies like European Investment Bank (EIB) and Japan International Cooperation Agency (JICA). However, with this move, Finance Minister Arun Jaitley said that states must offer low-cost debt capital in the form of issuing corporate bonds for Metro projects. This policy will lay a large amount of emphasis on "innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software" to create jobs locally, added Jaitley. Taking forward the Make in India initiative, the Government is seeking to propel private players to participate in large-scale projects that would also directly contribute to India's urban growth. With a proliferating population and land mass that is not enough to sustain individuals, coupled with their private vehicles, public transport forms the backbone of India's growing democracy.
A respectable public transport system is reflective of an economy's health. This policy which seeks to mend the quality of public transport while catering to the needs of India's economy has raised eyebrows across corridors. It is alleged that private partnership has never been successful in projects such as the metro rail initiative given the abysmal rate of return on investments. It has led to private players making an optimistic plunge, but withdrawing mid-way due to lack of profitable returns. This is where Jaitley's emphasis on adopting innovative measures and reducing the cost of debt-capital comes into play—a possible way to attract more earnest players while also securing their interests. The policy underlies two other compulsions. All project recommendations must contain a report highlighting last-mile connectivity for users, an area which could be largely tapped by private players by providing feeder services, non-motorised transport infrastructure like walking and cycling pathways and para-transport facilities, for the 5km connectivity requirement. There has also been a shift in requirements of Internal Rate of Return. Earlier there had been a prescription of 8 per cent Financial Internal Rate of Return, which has now be redefined at a requirement of 14 per cent Economic Internal Rate of Return (EIRR). The EIRR while considering financial returns also takes into account non-financial returns, such as benefits to the community in form of CO2 savings, reduced traffic, and containing pollution. While many including Vinayak Chatterjee, chairman of Feedback Infra, applauded the move saying that PPP, along with the shift to EIRR, and the emphasis on last mile connectivity would provide the required furnishing to existing and future metro rail services. Some others such as E Sreedharan who headed DMRC raised concerns regarding private ownership, stating that private players cannot display perseverance required in large-scale public benefit projects as was witnessed with Reliance Industries withdrawing during the Airport Line metro construction in Delhi. To avail their desired rate of return, which will never match the ground rate of return, public transports are bound to become overpriced, which beats the primary notion of providing equal facilities to Indians across all sections of society. Union Urban Development Secretary Durga Shankar Mishra also said that the thirteen cities who had submitted their detailed project reports (DPR) would now have to submit new DPRs, fulfilling all new criteria of investment and infrastructure services. The move comes at a time of rising demand for metro rail services across the country. The government's motives could shell out well if a distinction is made in levels of assignment. Perhaps the role of initial infrastructure development should be left to the state, as it involves immense potential risk to civic management. Private investment could be comfortably roped in for growth and maintenance of the projects. The task of the states while presenting their project proposals will be to find a balanced ground between public and private players to ensure that projects are not stalled, as that would beat the larger purpose of delivering the demands of timely, urban growth. The ruling BJP-government came with promises of providing seamless development while nurturing opportunities for citizens of the country. Keeping both in mind, this new initiative could speed up processes while also improving the overall quality of services. However, a price-cap must be brought into deliberation at some point of time, to ensure that private players do not attempt to accrue profits which backfire on the average citizen's spending on public transport. Professor Anwarul Hooda raised another pertinent rationalisation which suggested that strict financial clauses would prohibit unnecessary projects from being undertaken. "The government has done this in a situation of high demand and less resources. This is to match the available resources for the projects that have been taken up," he said. Since the inception of the first metro line in Kolkata in 1984, a second line has not yet been successfully functional. Since physical construction began in 2009, the project has faced several setbacks in land acquisition, slum relocation, and route alignment. Initially scheduled for 2012, it has been pushed for June 2018, closing down on almost a decade. While many welcome private investments hoping it would speed up processes and ensure a check on competency, others remain jittery as private players have been witnessed to lack accountability to public well-being, an aspect many feel should be left in the ropes of the government. Time will spell the success of this move, but yet again, the BJP-government has managed to shift gears from the ordinary by opening doors to innovative ideas. This, for the ordinary citizen's sake, shouldn't backfire, leaving most nauseated in jam-packed roads with half-constructed overhead rail-lines, which, while promising a dream, always hold the possibility of crumbling down upon our democracy.