How effective has the Metro Rail Policy been?

01 Apr 2019 CW Staff

While he views the policy as progressive, Dr E Sreedharan, Principal Advisor, Delhi Metro Rail Corporation (DMRC), points out, “It fails to meet the challenges involved in introducing metros in our cities with a population over 2 million. There will be 35 of them within the next 10 years, for which we have to build metros at the rate of 200 km every year as against the present speed of 25 km per year.” He says the policy does not recognise that metro, being a highly sophisticated rail industry, has to be a central subject, not a state subject. It ring-fences the financial involvement of the Government of India and puts major problems such as raising loans, their payback, sharing of losses, etc, as part of the state’s goals; further, reducing cost and compressing implementation periods are not addressed. “In the transport sector, whether by road, air or water, basic infrastructure facilities are funded by the Government and operators are required to fund only the vehicles and their operation and maintenance costs,” he adds. “But in a rail-based transport system, the operator has to fund the entire cost of infrastructure and the cost of vehicles, operation and maintenance.”

The PPP model aims to lessen the burden on the Central Government in funding metro projects. “This is not the first time the PPP model has been tried in India,” says Nalin Gupta, Managing Director, J Kumar Infraprojects. “The new policy of the Union Cabinet seeks to enable private investments in metro operations to deal with the financial state of the country.” As metros are capital-intensive, it makes it tough for private players to get their return on investment (RoI)—it can only be generated by increasing fares, which comes with its own share of issues.

For his part, Mohammad Athar, Partner, PricewaterhouseCoopers, lists key highlights of the policy:

It provides for rigorous assessment of new metro proposals and proposes independent third-party assessment by agencies.

Taking a note of the substantial social, economic and environmental gains of metro projects, the policy stipulates a shift from the current acceptance criteria for metro projects by MoUD ‘Financial Internal Rate of Return of 8 per cent’ to ‘Economic Internal Rate of Return of 14 per cent’, which is in line with global practices.

The new policy empowers states to make rules and regulations to enable viability drivers; for example, setting up a permanent Fare Fixation Authority for timely revision of fares.

Approved in 2017, the Metro Rail Policy not only makes PPP mandatory but directs states to adopt innovative mechanisms such as value capture financing tools and enable low-cost debt capital by issuing corporate bonds. While he views the policy as progressive, Dr E Sreedharan, Principal Advisor, Delhi Metro Rail Corporation (DMRC), points out, “It fails to meet the challenges involved in introducing metros in our cities with a population over 2 million. There will be 35 of them within the next 10 years, for which we have to build metros at the rate of 200 km every year as against the present speed of 25 km per year.” He says the policy does not recognise that metro, being a highly sophisticated rail industry, has to be a central subject, not a state subject. It ring-fences the financial involvement of the Government of India and puts major problems such as raising loans, their payback, sharing of losses, etc, as part of the state’s goals; further, reducing cost and compressing implementation periods are not addressed. “In the transport sector, whether by road, air or water, basic infrastructure facilities are funded by the Government and operators are required to fund only the vehicles and their operation and maintenance costs,” he adds. “But in a rail-based transport system, the operator has to fund the entire cost of infrastructure and the cost of vehicles, operation and maintenance.”The PPP model aims to lessen the burden on the Central Government in funding metro projects. “This is not the first time the PPP model has been tried in India,” says Nalin Gupta, Managing Director, J Kumar Infraprojects. “The new policy of the Union Cabinet seeks to enable private investments in metro operations to deal with the financial state of the country.” As metros are capital-intensive, it makes it tough for private players to get their return on investment (RoI)—it can only be generated by increasing fares, which comes with its own share of issues.For his part, Mohammad Athar, Partner, PricewaterhouseCoopers, lists key highlights of the policy:It provides for rigorous assessment of new metro proposals and proposes independent third-party assessment by agencies.Taking a note of the substantial social, economic and environmental gains of metro projects, the policy stipulates a shift from the current acceptance criteria for metro projects by MoUD ‘Financial Internal Rate of Return of 8 per cent’ to ‘Economic Internal Rate of Return of 14 per cent’, which is in line with global practices.The new policy empowers states to make rules and regulations to enable viability drivers; for example, setting up a permanent Fare Fixation Authority for timely revision of fares.

Real Estate

05 Dec 2025

RBI Rate Cut Boosts Confidence Across Housing Market

Industry Context and Market DynamicsThe real estate industry has welcomed the RBI’s rate cut as a timely boost to affordability and demand. With home prices having risen steadily across major markets, even a marginal reduction in interest rates meaningfully strengthens purchasing power, especially for first-time and mid-income buyers.Ashish Jerath, President – Sales & Marketing, Smartworld Developers, observes:“The RBI’s 25-basis-point cut, bringing the repo rate down to 5.25%, is a timely boost for the real estate sector. Lower interest rates reduce borrowing costs, enabling homeb..

Infrastructure Transport

05 Dec 2025

BMC Resumes Rs 170 Billion Road Works, Targets 80 per cent By Jan 2026

Following the withdrawal of the southwest monsoon in October, the Brihanmumbai Municipal Corporation (BMC) has restarted work on 645 roads—covering 297.49 kilometres—under its large-scale concretisation programme. Data shows that more than 60 per cent of the resumed works are located in the western suburbs. Officials said the civic body aims to complete concretisation on 80 per cent of the roads where fresh work has begun by January 2026. Launched in 2022, the Rs 170 billion project seeks to concretise 700 kilometres of roads across Mumbai. All civil works were halted during the monsoon ..

Infrastructure Urban

05 Dec 2025

India Pushes Digital Shift In Urban Land Mapping

The Department of Land Resources (DoLR) under the Ministry of Rural Development has convened a National Symposium on NAKSHA – the National Geospatial Knowledge-based Land Survey of Urban Habitations – to advance India’s transition to modern, technology-driven land mapping. Speaking at the inaugural session, Secretary Manoj Joshi underscored the urgent need to move revenue departments away from outdated, tape-based methods and rough hand-drawn sketches. He stressed that adopting latitude–longitude-based digital mapping and GIS-linked registration systems is essential for economic stabi..