With the Union Cabinet on Wednesday approving the new “Metro Rail Policy-2017,” the detailed project reports of 15 metro rail proposals will have to be revised as the State Governments, which want metros in their cities, will have to “earn” them with a lot of ground work and clear commitments on a range of issues. The new policy will also promote 'Make in India' initiative in metro rail projects.
The new metro policy requires State Governments seeking a metro rail system to set up, within a year, an urban metropolitian transport authority that will prepare comprehensive mobility plants to integrate different transport systems for optimal capacity utilisation. In the new policy, it would be difficult for cities to get sanction of new metro projects in future. The new policy makes PPP (Public Private Partnership) component mandatory for availing central assistance for new metro projects.
In the new policy, the State Governments are expected to take charge of urban development along 500 metres on either side of the metro corridor, by way of 'Transit Oriented Development (TOD) to promote compact and dense urban development along metro corridors since TOD reduces travel distances besides enabling efficient land use in urban areas.
They have to adopt innovative funding mechanisms like value capturing, by which they have to mobilise resources through these valuable assets. A “betterment levy” was one example given. The State Governments will also be required to commit with regard to passenger security, law and order, and last mile connectivity. The States are also required to commit to accord all required permissions and approvals. The new policy also empowers State Governments to make rules and regulations and set up fare fixation authority for timely revision of fares.
The new policy expects the States to undertake analysis of alternate modes of transport like bus rapid transport system, light rail, mono rail, tram rail etc. The three models of funding mentioned are the viability gap funding (in practice now), a State Government funding with the Centre chipping in 10 per cent by way of grant and a 50-50 model. It also mentions indigenisation of components under the Make in India plan, permits issuance of bonds, increases the cost benefit to go up to 14 per cent by way of “economic internal rate of return”. Currently, this stands at 8 per cent.
The policy makes a shift from the present 'Financial Internal Rate of Return of 8 per cent” to “Economic Internal Rate of Return of 14 per cent” for approving metro projects, in line with global practices.
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. At present, metro rail services are operational in seven cities covering an area of 370 kilometers in the country. As many as 537 kilometres in 12 cities are under construction and proposals for as much as 600 kilometres are under consideration.