The Delhi Metro’s proposed 104km Phase IV network for six new lines is delayed because of differences between the Centre and the city’s Aam Aadmi Party (AAP) government over the funding mechanism.
The city government approved the Rs 50,000-crore project this January but sought exemption from paying its share of the subordinate debt for central taxes that amounts to Rs 3,098 crore. Or, it wanted Delhi’s share of state taxes for the project written off.
Union urban development minister M Venkaiah Naidu rejected the Delhi government’s demand.
A subordinated debt is a loan or security. The Centre and state equally share the taxes to be paid for loans from foreign institutions for Metro projects. That means each of them will pay ~3,098 crore in Delhi’s case.
This is in addition to the state’s share of taxes to be paid for the loan, which for Delhi is ~2,121 crore. The AAP government wants one of these waived, but the Centre declined.
“I would like to inform you that the proposal sent by the Government of NCT of Delhi regarding the Delhi Metro Phase IV project is not in conformity with the existing framework of funding pattern for metro rail projects wherein central taxes are shared equally by the Central and State governments as subordinate debt,” Union minister Naidu wrote to chief minister Arvind Kejriwal on June 8.
“This pattern is being followed for all Metro projects under 50:50 equity sharing model.”
The tussle has delayed the project, which was to begin this year with a completion target of 2022. The project will connect the Capital’s outskirts, airport and the southern parts with an estimated daily ridership of 850,000 people.
“Usually 70% of the funds come through loan and the remaining 30% cost is borne equally by the Delhi government and the Centre,” an official in the Union ministry said.
“All states having Metro projects are following similar rules. There is no reason why Delhi should be given exceptional treatment,” he said.
Naidu also asked Kejriwal
to review the financing plan of the Phase-IV project and send a modified proposal “in tune with the existing framework”.
But the AAP government has decided to stand by its proposal.
Transport minister Kailash Gahlot said: “Delhi being a Union Territory is not getting the proportionate revenue share of central taxes from the Centre, while other states are getting huge amounts of money. Our demand is justified because the 50:50 share of equity must be maintained on all counts.”
He said the government will write to the ministry to accept either of the two demands.
Besides, the new goods and services tax (GST) regime has complicated the division of state and central taxes. “The share of the two governments under GST is not clear,” Gahlot said.
The disagreement could escalate costs as contractors working on Phase III project, which is nearing completion, will “wind up their workforce and machinery”.
“Engaging fresh teams could take six months more, thereby delaying initiation of the Phase IV project,” a Metro official said.
The 140km Phase III network’s main corridors – the colour-coded pink and magenta lines – will open for commuters by next March.