Metro Rail Expansion Implications for Urban Land Use

How the metro rail projects are evolving in India?

1.        The Government of India has laid down the goal of metro rail corporations projects covering up to 50 cities in India.

2.        The question of the financial viability of metro systems is of core concern.

3.        Recent policy shifts in India indicate a thrust on the greater involvement of private actors in financing and developing these projects.

4.        Private entities are likely to join such projects only if it gives them profits in return for their investments.

Which features of the project make it non-viable?

1.        Modern metro rail-based transport systems are technology intensive and one of the most expansive forms of mass rapid transit systems.

2.        They require large-scale infrastructure projects and long-term financial projects.

3.        State governments in India have adopted a mix of public and private financing to generate revenues for metro rail projects.

4.        Metro projects have high operational costs and low returns.

5.        The ability of metro systems to optimally cater to public transportation needs for all kinds of cities is debatable. Other cheaper modes of transportation may be available.

6.        Metro rail projects also lead to significant changes in patterns of urban land use.

7.        Metro corridors often become profit-generating real estate development projects when they are undertaken through public-private partnerships.

8.        So, metro rail systems projects also carry vested business interests.

What the new metro policy advocates?

1.        Until 2017, metro rail projects were mainly guided by a framework put forward by the Ministry of Urban Development.

2.        This framework had set its preference for executing metro rail projects primarily through government funding. It emphasized not to covert transport project into a real estate project and to include real estate only as a minor component.

3.        But a new metro policy in 2017 has emphasized on mandatory incorporation of private sector participation in metro rail projects.

4.        This is aimed at lower down government’s own financial role in funding metro projects by roping in the private sector.

Why are PPPs not conducive?

1.        PPPs are advocated to bring in managerial efficiencies and to encourage competition in service delivery of infrastructure projects.

2.        However, many of the PPP deals for metro projects have run into disputes of land encroachment and have inadequacy in the bidding process that hamper competition and encourage corruption.

3.        The metro projects become grounds for real estate deals between the state and business interest groups.

4.        The PPP model, then, instead of bringing in private investments to fulfill public projects, lead to a drain of the public resources to private entities.

5.        Involving private players in such projects can lead to the conversion of land in urban and semi-urban areas for consumer-oriented use.

Where the solution lies?

1.        Unhindered private sector participation in metro projects without adequate regulatory projects can lead to diversion of public resources into the hands of a few private players.

2.        There must be an assessment of the efficacy and benefits of increasing private sector participation in these projects.

3.        The PPP model has to be implemented with proper regulations.