Metro policy ignores lesson on private players

Ever since the first metro line was built in Kolkata in the eighties, metro rail systems have become a ‘must have’ feature for our cities. As of now, there are eight cities where metro services are available. Delhi, with a 217-km network, is way ahead of Bengaluru, which currently has only a 42.30-km network, although it is the second largest in the country. Metro rail projects are now in various stages of construction in 13 more cities. The enthusiasm witnessed in Kochi, where Prime Minister Narendra Modi inaugurated the metro, shows how every town wants one. For many states, a metro is a prestige project, rather than a means of mass transport. But unlike many other transport projects, building a metro line is a costly proposition. Delhi Metro became a reality only with liberal financial assistance from Japan. Such foreign funding may not be available for other metros.

It is against this backdrop that the government’s new policy should be seen. The Centre wants participation of the private sector in any metro project in which it invests. Another condition is the readiness of the state concerned to provide the last 5-km connectivity to the passenger. In other words, no metro line should end in a no-man’s land. Perhaps more important is that the Centre wants states to adopt innovative financing ideas. Such a need cannot be over-emphasised because metro projects require heavy capital investment on which commensurate returns may not be possible. For instance, in Delhi the metro fare was recently increased. This was done ostensibly to make Delhi Metro financially stable. The flip side of the increase is that the service is no longer affordable for the poor for whom even the bus fare is on the higher side.

But E Sreedharan, who made the Delhi Metro one of India’s most prestigious projects since Independence, has said that nowhere in the world has a metro system been built and run by a private company. The state will have to continually subsidise metro services. Since profit is the only motive of the private sector, it usually does not find a project of this nature attractive. In pressing for the private public participation (PPP) model before it funds future metro projects, the government may be ignoring an important lesson from the success of Delhi Metro. Private participation has been tried out unsuccessfully in Delhi Metro’s airport line and had to be finally abandoned. The model is faltering in the Mumbai and Hyderabad metro rail projects, too. Given past experience, it is problematic whether any private player would come forward to invest in a metro project.