State governments who 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 metro rail policy approved by the Union cabinet on Wednesday requires state governments seeking a metro rail system to set up, within a year, an urban metropolitian transport authority which will prepare comprehensive mobility plants to integrate different transport systems for optimal capacity utilisation.
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. 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.
Briefing the media after the cabinet meeting, Finance Minister Arun Jaitely pointed out that since metro was a costly venture, state governments have to ensure all the clearances—from environment to land to forests. Describing the decision as building an ecosystem, the minister said the idea was to ensure that there was nothing adhoc about granting cities a metro rail.
He said seven cities had 370 kilometres of metro in operation. In a dozen cities, 537 kms of metro rail is under construction. The government is considering proposals for metro rail totaling 600 kms.
In the National Capital Region of Delhi, 381 kms of regional rapid rail was under consideration, he announced. The NCR spans parts of Haryana, Uttar Pradesh and Rajasthan.
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.
Jaitley said many states were are seeking metros to ease the congestion in their cities, necessitating this policy.
Irrigation
106 irrigation projects worth Rs 62,000 crores, stuck from the mid-90s, will be completed by 2019, following a cabinet decision to give them top priority and financial allocation.
Finance Minister Arun Jaitley said while 18 of them had already been completed, 33 would be completed by March 2018, and the remaining the next year. These will irrigate 14 lakh hectares, 18 lakh hectares and 76 lakh hectares respectively. With the completeion of these projects, 3000 additional hectares will be irrigated daily.
NABARD will raise bonds worth Rs 920 crores to partially fund the projects, Jaitley said. The minister said many states have done innovative work to get the schemes going. In many places, pani panchayats were monitoring the schemes.
Tax holidays to continue
The GST regime provides no exemption, but the Modi government has found a way out to ensure that the 10-year tax holidays provided to new industrial units in the northeast and Himalayan states continue. Finance Minister Arun Jaitely explained that the GST has provisions for refund, and so the cabinet had approved the proposal for these units to pay the tax under the GST, and get the refunds.
This, however, will come to an end when each of the 4,284 industrial establishemnts have hit the 10-year period, and by March 31, 2027.
The tax holidays will give these units a benefit of Rs 27,313 crores.