New metro rail policy moud

Key points of metro rail policy 2017

• The metro rail policy 2017 focuses on giving clarity on project creation, collaborations, participation, standardizing standards, funding, and building a procurement procedure to guarantee projects are completed properly.
• According to the new policy, Metro rail projects will only be approved and aided by the central government if private participation is present and the projects offer passengers a last-mile link.
• The new metro rail strategy allows each state government to set its own rules and regulations, as well as permanent fare fixing authorities. This is widely considered to be one of the best practices. It will destabilize the current system, which is predicated on an internal rate of return of 8%, and a new ‘Economic Internal Rate of Return of 14%’ will be used for approving metro projects, in line with global practices.
• The new metro rail policy specifies three models:
  • Public-Private Collaboration: Union Government assistance will be included in the Union Finance Ministry’s viability gap financing strategy.
  • The Central Government would provide a lump sum payment of 10% of the Metro project cost.
  • The Centre and the state utilize a 50-50 equity sharing system.
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  New Metro Rail Policy- Operation and Maintenance of Metro Stations

  • The Union Ministry of Urban Development proposed Metro Rail Policy 2017, which provides templates for states seeking to develop Metro projects with Centre help.
  • Because metro projects need large funding, they are frequently supported by the Centre and governments through equity and grants. In the case of the Delhi Metro, certain funds are typically obtained through investment groups, such as the Japan International Cooperation Agency.
  • However, the new metro rail strategy requires governments to come up with innovative revenue-raising strategies, such as value capture finance options.

  Components of the new metro rail policy

  • low-cost loan financing
  • last mile connection
  • provide feeder services via feeders, sidewalks, paths, and paratransit systems.
  • Ensure the financial sustainability of metro developments.
  • issue corporate bonds to fund urban development

  Conditions for States

  • The new Metro Rail Policy requires states to clearly indicate in the project report the measures to be taken for commercial/property development at stations and on other urban lands, as well as other means of maximum non-fare revenue generation through advertisements, lease of space, and so on, which must be backed up by statutory support.
  • The new policy gives states the authority to enact rules and regulations, as well as establish permanent Fare Fixation Authorities to ensure timely fare revisions.
  • States can pursue metro developments using any of the three approaches for obtaining federal funding. States must also commit to provide the necessary licenses and clearances.
  • These include;
    • PPP with central aid under the Ministry of Finance’s Viability Gap Funding programme,
    • Grant by the Government of India under which 10% of the project cost will be given as lump sum central assistance
    • Model of equity sharing between the federal and state governments that is 50:50.

    

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    Making PPP Mandatory in Metro Projects

    As states seek contemporary modes of mass transportation, the Union Cabinet adopted Metro Rail Policy 2017, which aims to integrate a Public-Private Partnership(PPP) component into the sector by making it necessary when requesting central support.

    What is PPP Model?

    • A Public Private Partnerships (PPP) is a finance strategy for public infrastructure projects and initiatives such as a new telecommunications system, public transit system, airport, or power plant.
    • Public-private partnerships can be used to raise private capital for the construction of large-scale government projects like roads, bridges, or hospitals.
    • When private sector technology and creativity are combined with public sector incentives to finish work on time and under budget, these collaborations perform effectively.

    PPP as Part of new metro rail policy

    • The PPP model, as part of the new metro rail policy, aims to minimize the burden on the Central Government in terms of supporting metro expansions.
    • The method of collaboration has previously been explored in airports in New Delhi, Mumbai, and Hyderabad. However, all three efforts were a failure. Reliance Infrastructure was the country’s first private firm to participate in the programme, however, it was forced to exit due to enormous losses.
    • Money was borrowed from Japan for the PPP models in Chennai and Delhi, however, the cost could not be reached despite high fares.
    • The Union Cabinet’s new metro rail strategy aims to encourage private investment in metro operations in order to address the country’s overall financial situation. The government has made it necessary for state governments to seek private partners in the implementation and operation of the systems under the new strategy.
    • The present 50:50 Joint Venture model, which is primarily the principal option available for funding and organizational structure, began with Delhi Metro.

    Issues with the PPP model in Indian Scenario

    • Many PPP projects in the infrastructure sector are operated by “politically linked corporations” that have won contracts through political ties.
    • Tariffs can be designed to maximise cost recovery (an important factor in a PPP) while reducing the burden on the poor.
    • Customers in informal and frequently remote settlements are less likely to be served by the formal supplier for transportation, power, or water, and must thus rely on alternative unofficial providers.
    • Poor people are frequently supplied by low-quality services that do not fulfil safety or public health requirements.
    • Engineering and quality standards may be in place that were adapted from standards developed elsewhere in the globe, with little regard for local relevance or promoting access to the poor.
    • Long-term financing for PPP projects has dried up due to the country’s over-reliance on banks and absence of a functioning corporate bond market. Banks are even more pressured as a result of significant NPAs and governance difficulties.
    • In PPP, service delivery may be contingent on having an address, which may not be present in informal settlements.

    Importance of Central government to fund metro railway projects

    • Metro is never a successful endeavour for private parties, therefore the government must spend on it to keep things running smoothly.
    • The government completely funds the Mumbai metro train project. The government funds metro train projects in other states as well.
    • If the recent several decades in India are studied, it can be seen that metro airports have been created under PPP in cities such as Hyderabad, Bangalore, Mumbai, and Delhi.
    • The operation of container trains on railways follows the public-private partnership paradigm as well.
    • As the need for urban transportation grows, having a mass urban transit system in cities becomes increasingly important.
    • To ensure successful urban mass transportation, existing problems such as procuring land, obtaining regulatory approvals, technical/engineering concerns, and so on must be addressed.
    • The government must guarantee that all major routes are linked by road, rail, or Metro.
    • The present public transit infrastructure must also be modernized to give respite to commuters and alleviate overcrowding.
    • The expansion of India’s mass urban transit networks may be sustained by maintaining competent, financially stable, and resilient institutions that are transparent and accountable, and are in charge of effective public transportation and efficient connections.

    In this article, we analyzed in detail the structure and features of the new metro rail policy. Aspirants can study more topics from the Indian Polity for UPSC with the Testbook App !

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    New metro rail policy FAQs

    What are the advantages of Metro Rail?

    The Metro Rail System has shown to be the most efficient in terms of space occupancy, energy consumption, and passenger transit.

    What are the key points of Metro Rail Policy 2017?

    . The New Metro Rail Policy emphasizes compact urban growth, cost savings, and multi-modal integration. The plan attempts to sustainably achieve the expanding metro rail aspirations of numerous cities.

    Who introduced metro in India?

    On December 24, 2002, Atal Bihari Vajpayee, India's then-Prime Minister, opened the Red Line of the Delhi Metro.

    What is the new metro rail policy?

    The Union Cabinet adopted the new Metro Rail Policy, which focuses on providing clarity on project development, finance, and the establishment of a procurement process to ensure that projects are completed properly.

    When was the metro rail policy introduced in India?

    In August 2017, the Union Cabinet adopted the New Metro Rail Policy, which focuses on compact urban growth, cost reduction, and multi-modal integration.