BACKGROUND PAPER

Mass Rapid Transportation

Systems in India

1
About the Author

Mr. Rakesh Ranjan is Adviser with NITI Aayog. He has handled

large number of MRTS projects including Delhi Metro Phase-III,
Faridabad Metro, Bengaluru Metro Phase-I &II, Nagpur Metro
etc. and bus funding under Urban Mission during his tenure in
erstwhile Planning Commission and subsequently in NITI Aayog.
(View expressed here are personal.)
 Background Paper for the Lead-up Event on ‘Mass Rapid
Transport Systems for Urban Areas: Opportunities and Challenges’
13 March 2018, Kolkata

Mass Rapid Transportation

Systems in India

Abstract

system including Mass Rapid Transportation System (MRTS) is vital. By and large, MRTS segment,
like the entire urban transport sector remains hopelessly under-invested which is imposing a huge
social cost on this country. However, such basic realizations are often lost in nitty-gritty of project

ironic as India’s Public-Private Partnership (PPP) regime, anchored by Department of Economic

Affairs, especially its arrangement to offer up to 40 per cent of viability Grant Funding is perhaps
one of the most nuanced regulatory and enabling frameworks to attract private investment in the
world. True, the policy governing metro rail has been revised in 2017. Notwithstanding its robust
PPP regime, majority of MRTS projects are funded through budget. However, greater the reliance
on budgetary support, lower the pace of rolling new MRTS projects.
MRTS systems are natural monopoly and hence are regulated. They are capital intensive with
very long gestation period and there are limits to which return on investment can be secured through

as such the sector requires a bouquet of well-structured projects in which the uncertainties are
minimized, risks are properly assigned, public interest is safeguarded while private sector is ensured
a reasonable return. The Business-as-Usual is simply not sustainable. One method of breaking this
logjam is to create an enabling environment so that government entities take recourse to innovative

larger cities have a unique opportunity to generate revenue for infrastructure through land based

Value capture where the laying down of a trunk infrastructure has given rise to an enhancement

The deteriorating environmental condition in larger Indian cities is another concern which

like hyperloop, pods etc., it is raising the share of electric mobility exponentially which is of great

based MRTS systems, including sub-urban rails, like elsewhere in the worlds should be accorded
focus in the emerging agenda of electric mobility.
 Mass Rapid Transportation
Systems in India
1. Introduction

is the key policy objective in India as increasingly being emphasized by the Hon’ble Prime Minister
of India, the state of urban transport infrastructure goes a long way in determining the livability.

making Indian enterprise competitive. Admittedly, Mass Rapid Transportation systems (MRTS)
is one of the modes of urban mobility, its importance, especially when cities are seen as a growth

the state of transport system within a city limit, but its connectivity to its periphery, rather is

development has the potential to inform our decision on prioritizing investment towards MRTS,
a sector which is under-invested.

2. The Urban Context and Desirability of Investment in MRTS

Seen from the global standards, the Indian economy has been on a high growth trajectory
for quite some time now. However, sustained economic development world over is often

of agriculture and allied activities in India’s GDP from 51.45% in 1951 to 16.82% in 2014-15,
per cent of labour force employed in these sectors has almost showed an occupational stasis,
decreasing from 70% to 54.6% only since 1951. For a rapid inclusive growth, a core imperative

some evidence of creation of non-farm employment in rural sector itself, if experience in other
countries undergoing economic transformation is an indicator, much of such opportunities
need to be created in urban sector and therefore cities in India must emerge as an ‘Engine of
Economic Growth’.

at their current level of population. Assuming that the rate of rural- urban migration which
has so far remained muted would accelerate, cities have to create these amenities at a rate

infrastructure adversely affects the ability of cities in attracting investment in this globalized
world. Coping cost, especially due to long commute time or health hazards due to deteriorating
pollution as well as loss of productivity due to absence of an environmentally sustainable

but due to relatively higher living expenses in center of cities, they live on periphery and their
average commute length is much higher. Alain Bertaud, an urbanist, once aptly remarked
that proletariat of today are those who have long commute time.

1
 As the pressure on natural resources is increasing, sustainability of cities has emerged as a major

reduce energy footprint of the city as well as release of pollutants. Among various modes,
a shift towards rail based electric mobility is amongst a preferred solution, if not an ideal
solution. Environmental sustainability of Indian cities is therefore a major imperative for

3. MRTS and Goal of Inclusive Development

MRTS projects are capital intensive and often earn an unfair criticism of their being elitist. To
Sabka Saath and Sabka
Vikaash, it is important to realise the crucial role that MRTS can play in cities of India which
are far from compact.
One of the biggest developmental challenges and quite contrary to perception held in many
quarters is to address the observed phenomenon of low pace of urbanisation in India. About
377 million Indians comprising of about 31% of the country’s population, lived in urban areas
according to Census 2011. This is a smaller proportion compared to other large developing
countries, e.g. 45 per cent in China, 54 per cent in Indonesia, 78 per cent in Mexico, and 87

is true that between 2001 and 2011, India added more people in urban areas (90.98 million)
than in rural (90.46 million), the annual exponential growth rate (AEGR), which had peaked
during 1971-81 has in fact decelerated in recent decades and has picked up only marginally in
2001-2011. The AEGR of urban population during the 1950s was 3.5%. The 1970s saw a very
high urban growth of 3.8%. The growth rate, however, came down to 3.1% in the 1980s. It went
down further to 2.73% in the 1990s. The corresponding growth rate for 2001-2011 is of 2.76%.
In addition, rural urban migration has played a rather modest role in increase in urban

Census 2011 noted that the number of towns in India increased from 5,161 in
2001 to as many as 7,935 in 2011. It points out that almost all this increase was in the growth
of ‘census’ towns (which increased by 2532) rather than ‘statutory’ towns (which increased by
only 242). ‘Statutory’ towns are towns with municipalities or corporations whereas ‘census’
towns are agglomerations that grow in rural and peri-urban areas and are yet to be declared
urban areas.
The fact that core of large Indian cities are not attracting population to the extent, their growth
potential is symptomatic of a rather exclusionary character to Indian cities, notwithstanding

MRTS has the potential to not only improve the mobility within the city limits but also at regional level.
At this juncture of development where large cities have shown rather exclusionary character and their
core have modest growth rate, largely due to restrictive land use policy, investment in MRTS is crucial

in turn improves the bargaining power of relatively weaker section and leads to a socially desirable
labour market outcome.

2
 major one. In order to correct this imbalance, while in long run, India has to drastically alter

it has to invest heavily in MRTS to provide a reliable, fast and affordable transport to people

4. Category of MRTS, Recent Technological Innovations and Factors

Affecting their Choice

Bus-ways are physically demarcated bus

lanes along the main carriageway with a segregated corridor for movement of buses only.
At the intersections, the buses may be given priority over other modes through a signaling
system. BRTS is an enhanced form of a bus-way which incorporates features such as facilities
for pedestrians, Non-Motorised Vehicles (NMV) and many other associated infrastructures
including operations and control mechanism.
: LRT is generally at-grade rail based mass transit system which is
generally segregated from the main carriageway.
These are at-grade rail based system that are not segregated and often move in

Metro Rail: Metro rail is a fully segregated rail based mass transit system, which could be
at grade, elevated or underground. Due to its physical segregation and system technology,
metro rail can have a very high capacity of 40,000– 80,000 passengers per hour per direction
(PPHPD). Metro systems also include monorails, which, however, has lower capacities and
higher maintenance cost.
Regional Rail: Regional rail caters to passenger services within a larger urban agglomerate or
metropolitan area connecting the outskirts to the centre of the city. The services have greater
number of halts at smaller distances compared to long distance railways but fewer halts and
higher speeds compared to metro rail. Regional rail are common in large metropolitan cities
and help in decongesting the city centre by providing safe, and speedy access to the city centre
for commuters residing in less congested suburbs.

For improving regional mobility in NCR region, projects of linking cities in NCR region across three
major axes: Delhi –Meerut; Delhi –Panipat and Delhi-Alwar are under consideration of the government
of India and State Government. These projects which are designed for faster transit to Delhi from these
cities are expected to de-congest Delhi and generate economic stimuli to the entire area falling under

3
of the city and importantly, aspiration of people revealed through political demand, as a general
guideline, the Ministry of Urban Development (MoUD) has proposed following criteria:

Mode Choices Criteria Value Remarks

i) Metro Rail Peak Hour Peak >=20,000 by 2030 Trunk infrastructure like MRTS
can be built in a city with a linear
(PHPDT) on the morphology at a much lower
proposed corridor PHPDT. Such criteria which
become part of the policy document
Population of >=2 million as per
should at best be used for guidance
the city/urban 2001 census
and should not be seen as binding
agglomeration
constraints in case the economic
Average Trip More than 7-8 potential of the city is evident
Length kms
projected in relatively short run.
ii) Light Rail Transit PHPDT <20,000 in 2031
(LRT) primarily at availability of land on the Right of
grade Population >1 million as per
2001 Census
Average Trip
length More than 7-8 km
iii) Monorail PHPDT <20,000 in 2031 Suitable for narrow right of way
with high rise buildings on the
Population >2 million as per sides as well as sharp curves. Has
2001 Census almost same cost of construction
Average Trip as elevated metro with less than
Length About 5-6 km half the carrying capacity and high
maintenance cost. Can be used as
feeder network.
iv) Bus Rapid Transit PHPDT >4,000 and Can be provided for higher PHPDT
System also with overtaking lanes. For
Upto 20,000 in smaller cities also, BRTS may
2031 generally. be provided if the ridership on
Population certain corridors is high and transit
> 1 million as per oriented development is planned.
2001 Census

Average Trip
Length
More than 5 km

v) Personal Rapid PHPDT <5,000 in 2031

Transit development globally. So it can
Population 1 million be taken up only as a pilot in one
or two cities and based on the
Average Trip 5 km experience gained, further decision
Length can be taken.

4
5. Financing and Structuring of MRTS Project

Projection of investment requirement in urban transport in general and MRTS in particular is

portfolio of cities as well as compactness of the city which again is, to a large extent determined
by the urban planning and attendant land use regulations. Since capital intensity per passenger
kilometer of different modes of urban transport varies, the investment estimates are dependent
on choice of mode of urban transport. In addition, if cities emerge as hubs of economic activity,
serving the region around it, urban transport requirement would have to cater for mobility
in the region and not simply within the limits of the cities or the metropolitan area, but the

A further complexity is added due to the critical role played by urban transport in the economy
of the country. Firstly, cities in India contribute more than 60% of its GDP. Secondly, urban

the urban transport sector itself and secondly, it being an enabling condition for large number
of economic enterprises in a city.

requirement of the transport infrastructure against an acceptable service level benchmark, and
then make addition to the enabling role of urban transport in increasing economic productivity
as well as the potential of a suitable mass rapid transit system to impart sustainability to
city from environmental point of view, i.e. its investment decision ought to be based on the

reduction in congestion, saving of commute time, reduction in pollution as well as energy

Rate of Return ( FIRR).

Given these limitations, one can indeed argue against any attempt to make investment
projection. However, even with these complexities an estimate helps in understanding the
order of the investment required which itself can give rise to policy implications. In recent
years, while there are different estimates, due to paucity of space, one may refer to following:
The National Transport Development Policy Committee (NTDPC)-2014 constituted

under three scenarios:

Scenario
Urban Transport
A) Business As Usual Rs. 27 trillion
B) Between a desired sustainable scenario and Business as Usual Rs. 17 trillion
C) Desired scenario (Sustainable urban transport scenario Rs. 15 trillion.

( Rs. 1 trillion = Rs. 100, 000 cr)

assuming total transport volume and split the same with different modes under a set of
assumptions including some guidance from global benchmark. It then worked out three
different scenarios by varying assumptions regarding FAR (Floor Area Ratio.) it further

5
 made certain set of assumptions regarding provision of MRTS with cities of certain size
(assuming provision of rail based MRTS in 35 top cities and BRTS in all million plus cities).
The High Powered Expert Committee ( HPEC-2011) in its report on investment
requirements for Indian urban infrastructure included sub-local and local roads and

HPEC used population density by highlighting that an increase of population density by

2500 per sq km reduces the investment requirement of urban transport including urban
roads by Rs. 4 trillion whereas a reduction in density increases it by about Rs. 6.5 trillion.

Items MGI HPEC Working Group

Desired
Urban Form
Urban Roads 8.90 17.29 12.08 9.17
Transit 17.64 4.49 10.55 5.56
Others 0.50 0.90 0.15 0.27
Total 27.04 22.68 22.78 15.00
(Rs. 1 trillion- Rs. 1 lakh cr)

and Kolkata. Its role would continue to be relevant. From the railways point of view, the foremost
concern stems from the operational losses suffered in these services. They contribute roughly 53

share in 2010-11 was just about 7%, a scenario which has not changed in last 7-8 years. The NTDPC
report projected an investment requirement of about Rs. 1 trillion over the next 20 years.

6
 International experience can be broadly divided under three areas:

Choice of technology
Pricing arrangements

c.1 Structuring and Financing of the MRTS Project

resources, the sector would remain under-funded. As brought out, such under-investment
imposes opportunity cost on the economy especially for a country which is in the midst of
structural changes. It is axiomatic that countries seeking reform in the sector would seek larger
private investment. Reforms in this sector, which is often a natural monopoly and has been the

of view (especially where operation and maintenance contract has been awarded to private
entities) but more often due to desirability of seeking more investment. Operation of urban
and sub-urban rail systems has been taken over by the private sector, in whole or in part in
many countries but with varying degree of success.
There are indeed many variations, depending on the appetite of the private sector to
assume risk but also on the competence as well as the willingness of the regulatory
authorities to roll out projects. The models differ from entrusting only service provision
to private entities to assumption of entire commercial risk. Another variant has been to

However, there is a general consensus that international experience offers less optimism

syndrome, as bidders overreach themselves in order to win contracts. Unrealistic bids

may occur because of excessive optimism of bidders.

International experience indicates that renegotiation is problematical whether the pressure

to renegotiate arises from unforeseen changes of circumstances or from gaming behavior. First,
any renegotiation will tend to undermine the integrity of the contract process and are open to be
challenged in the courts. Second, allowing a relief during adverse circumstances may encourage
disincentive to control costs.

Long- Period Concession of Capital Intensive Projects

The extant protocol of designing contract in different countries greatly determines the success with
which a MRTS can be structured to attract private investment. MRTS projects are capital intensive with

unforeseen circumstances. In such case, there is a general demand for creating a mechanism for re-
negotiation. The Vijay Kelkar Committee which went in to the entire gamut of factors that are affecting
the PPP projects cautiously recommended making such provision but added that desired safeguards are
built into this provision to prevent misuse against gaming behavior of initially quoting lesser bid and

made during contract by either the bidder and/or the Authorities.

7
 An alternative approach is to make broad provisions regarding many of these circumstances
in the concession agreement itself, say for instance providing of a clause pertaining to change in
law where the Authority has to insulate the concessionaire against the adverse effect of any abrupt

(generally not exceeding 20% of the project cost) during concession period. To prevent windfall
gains accruing to the concessionaire, the approach has been to insert clause pertaining to value
share in case the project revenue exceeds a threshold per cent. Yet another approach applied
internationally is to vary concession period (Malaysia), in case it is not expedient to raise the user
charges or the commercial return in the project is less than a threshold.

c.2 Choice of Technology

Rail based public transport has been a focus area in many parts of the world but their varied
circumstances that ultimately determines the affordability has dictated their choice of technology.
For instance, there is a near resurgence of tramways in many cities in the developed nations.
Higher per capita paying capacity, attachment of higher value to environmentally sustainable
transport solution and the desirability of improving the livability in cities, especially from the
point of view of keeping them as favorite tourist destination have implied that major investment
has been made in tramways and other mode of the LRT in addition to metro rails and regional
sub-urban rails. Another important trend has been to equip the MRTS with IT-enabled services
and ensure seamless integration of different modes of public and private transport. These have not

Another important trend has been to improve the regional connectivity. Attractiveness of a
typical metro rail project gets greatly reduced on longer stretches as the train must stop at large
number of stations. For such mobility, the approach has been to integrate the rapid regional
transport services to city based slow moving metro rails. The NTDPC report points out that for
smaller stretches, the speed of the movement of the rolling stock is not a critical factor as the actual
ride on a train is just a part of the overall trip time, the other part being approach to the terminal

8
and the time taken in the MRTS stations. However, for a longer regional transport system, speed
as well as lesser number of stoppages is critical to make them attractive. Cities in developed
nations, especially with relatively larger population like Paris, Amsterdam have a network of
metro rail (having many stoppages) interspersed with fast moving regional rail while ensuring
inter-modal integration. A major implication for large metropolitan cities in India is therefore

or Regional Rapid Transit Systems).

c.3. Pricing Arrangements

cities that attach larger values of keeping their cities attractive from tourist point of view, or have

system and mere revenue realization has not been the goal of such city governments.

6. Pricing Arrangements and Lessons for India

Recent protest in Delhi and difference in view between the SPV partners that own DMRC,
i.e., Government of India and Govt. of National Capital Territory of Delhi clearly brings

would result in shift away from the metro rail to buses as well as non-motorized transport.

cost, they also constrain the cities in many ways, a drop in attractiveness of city and choking

the ridership through ensuring modal shift as well as through medium terms and long-

infrastructure is a preferred course of action. In addition, non-fare box revenue, whether in

terms of rentals from spaces in stations and other commercial property developed on project

7. Technology in MRTS
7.1. The market is buzz with new technology. Prototypes of many new technologies are in
various stages of development. They broadly promise two sets of improvements over the existing

pollutants and lesser energy footprint per passenger km. Secondly, they claim to offer better quality
ride. Some of the much talked about technologies are enlisted below. However, it is important
to note that many of them are not proven for large scale commercial adoption and secondly,
affordability of many of these systems, at least at present juncture is issue. Also, the focus of the
conference is mass rapid transit whereas good numbers of them are in the segment of personalized
transport. Hence a very brief mention is made of them:

9
7.1.a. Hyper Loop
It envisages a series of pod inside an evacuated tube. Reduced wind resistance inside the tube
promises the speed to exceed 750 miles per hour. However, at this stage, its commercial prototype
is not ready.

7.1.b. Pod Taxi System

On an elevated rail, pods having capacity of about 5-6 passengers is claimed to be an ideal
replacement of cars. However, since the capacity of pod is just 5-6 passengers, it is not suitable
for trunk transport infrastructure like buses or metro rail unless one imagines a series of pods. As

where number of passenger at a time is less. However, the Indian cities have high population
density which can support transport systems requiring greater number of passengers with a much
affordable rate of passenger km.

7.1.c. Electric/Hybrid Vehicle

It is important to realize that MRTS (including the conventional metro rail systems and sub-urban
railways) are one of the mainstays of electric mobility in a city and region though much of the
attention in public perception is given to desirability of replacing the Internal Combustion Engine
(ICE) bus system by hybrid or fully electric buses and/or promotion of electric cars or two wheelers.
Since the focus of the paper is MRTS, only general issues are noted: Firstly, at this stage, the cost

city governments, especially in India would continue to pose a serious constraint in adopting
this technology. Secondly, adoption of large scale electric buses (as well as cars) would require:

Reduction in battery cost and production of same in India.

Lead based batteries, the technologies are yet to stabilize and unless they are affordable,
their attraction for municipal government would remain limited. At the same time, in
personal car segment, they have good potential.

Electric Mobility in India

For large Indian cities, struggling to address level of pollutants, electric mobility is of increasing

great promise to answer some of the nagging problem of addressing the problem of ensuring last mile
connectivity and thereby increasing the ridership of trunk transport infrastructure like metro rail and

promising.
However, for large scale adoption, charging facilities as well as production of Lithium batteries is
required. Though they are challenges, at the same time, they also indicate huge investment opportunities.
 SPV having 50:50 equity partnerships between central and concerned State Governments. The
Delhi Metro Rail Corporation and metro rail projects in Mumbai Line-3, Chennai, Bengaluru,
Nagpur, Lucknow, Kochi and Ahmedabad are structured in this pattern.
Full funding by the central government. Kolkata metro rail by Indian Railways, followed by

of India (Railways and Urban Development Ministries).

Funding by state government; Metro rail in Jaipur and Monorail in Mumbai are structured
under this mode.
Public Private Partnership (PPP). Mumbai Metro Line- 1 and Hyderabad metro rail have been
taken up with Viability Gap Funding
(VGF) from Government of India.
Full funding by private entity: The Rapid Metro in Gurugram in Haryana is fully funded by
the private Concessionaire.

Under the Viability Gap Funding (VGF) Scheme of Government of India, any project falling under
the approved list of infrastructure (Urban transport projects are included in the list) are eligible
for 20% of the Total Project Cost (TPC) as viability gap funding from the Project Authorities and
another 20% of the TPC from Government of India provided the project is bid out to a private

Committee (PPPAC) headed by Secretary, Department of Economic Affairs.

Pune Metro Phase-III

Pune Metro Phase-III – a 21 km long project connecting IT part to Pune city is being envisaged to
be developed through PPP (Design, Build, Finance Operate and Transfer-DBFOT) mode. The project
involves investment of about Rs. 6,200 cr.

Urban transport in general and MRTS projects are quite complex. Firstly, given their ridership
and capital intensity, they are natural monopoly and hence need to be regulated. This has
many implications for private investment:

to, despite a felt need of the project, the authority may roll out much lesser number of
them. This can emerge as a serious constraint and explain relative absence of projects

envisaged through land based instrument like allowing the concessionaire development
rights. This is so because these instruments often involve permanent or even partial or
temporary alienation of urban land. Since urban land markets are either non-existent

a private entity. Since any estimated value assumed during contract can be questioned

long concession period, there is an in-built disincentive for the Authority to assume this

11
 risk whose incidence fall in their individual capacity. Such risk especially for the project
authorities exposes them to transparency agency in the post award period of project.
Regulation of price and issue of technical price versus actual price: reasons for relative
success in attracting private investment in road project include a clear articulation of
formula based toll policy. If the policy objective is to ensure that the private entities
can bear the revenue risk (this provision helps in weeding out underserving project a
slack of bid in such project clearly implies that the project is not market worthy), it is
utmost importance that for the contract to be successful, avoidable uncertainties should
be eliminated. A careful evaluation of the project by a bidder can reduce much of the

project. The extant legal provision in the acts governing metro rail in India provides for

private investment is to determine a technical fare with a formula based escalation. If

the contract can provide that any variance between actual and technical fare is to be
compensated by the respective parties, much of this problem can be sorted out.

of State Government: Importance of sub-urban rails in improving mobility in large

Indian cities can hardly be over-emphasized. However as pointed out earlier, despite
sub-urban railways contributing roughly 53 percent in number of passengers over the
re of around 7% implies that

remain under-funded.
There is a great deal of opportunity here, if the Centre and States come as a partner for creating

Development.

For ensuring that much better investment climate is created in MRTS project, it is

complex subject, a little bit of elaboration is in order:

complex and capital intensive. The extant Metro Rail Policy 2017 stipulates that all metro projects
should be taken up under Metro Act. To an extent, this clear articulation of policy put to rest
confusion in the sector. Bringing all Metro rail under a uniform legal cover has following advantage:
i : with expansion of MRTS network,
particularly metro rail, the domestic demand for components of network and rolling stock is likely

these products which are high on value chain. Besides meeting domestic demand, they may have
export potential. For this to happen, we need to ensure:
a) There is standardization in components of network and rolling stocks. (This has in turn
implication for mode of execution which is given in subsequent section.)

12
b) Policy framework to foster innovation in these products is put in place so that India can emerge
as technology leader in long run.

Investment Opportunity in Component of MRTS

whole but there are ample avenues for investment in manufacture and maintenance of rolling stock,
signaling equipment’s and other such infrastructure.

Issue of safety: This can hardly be over-emphasized. For a Central project the procedure for

mechanism for central over sight is needed to be developed.

d) At the same time, an effective policy stance should enable integration of following:
Multi-modal integration and common mobility smart card: an MRTS project is a trunk
infrastructure. Its viability is critically dependent on integration of secondary and tertiary transport
networks like buses, auto-rickshaw, taxi systems, feeder services etc. These services are State
subject.
Despite an excellent track record of metro operation in India, especially that of the Delhi Metro
Rail Corporation, its success in integrating it to various mode to reap full potential of capacity
of metro rail has remain limited. On the other hand, available technology today allows a much
simpler and better integration than cities that have effected such integration decades ago.

Multi-Modal Integration
Viability of a trunk infrastructure is critically dependent on last mile connectivity. Like MRTS,

mile connectivity to this trunk infrastructure. Similarly, smart card and creation and integration of data
bases of different modes would also generate avenues for private investment.

Singapore offers perhaps best example of raising

of Metro rail project. The policy instrument here is the variation of Floor Area Ratio (FAR) which,
in simple words means the extent of construction allowed on a given plot. ( Higher FAR permits
adding more storeys.) Performance of Indian cities to raise the FAR in a granular manner along

infrastructure as the city

As against the effective use of FAR variation to strategically densify the city as well as create
a sense of space, the Indian cities have placed restriction on raising FAR.
It is readily admitted that using plot by plot variation of FAR as a planning instrument in
Indian cities at current juncture is easier said than done as it requires a paradigm shift in Indian

Transport Authority.

13
Source th
Five year Plan

Source th
Five year Plan

Land Use Planning and Funding of Metro Rail Project

Urban transport which includes MRTS in India is heavily under-invested sector. Lack of resources

Indeed there are parcel of Government land located in prime location which are either unutilized or
under utilized. Changing the land use pattern and commercially exploiting these lands can generate

14
portion of urban land, especially because of restrictive planning are under-utilized or are vacant.

that Government commercially exploit such land by suitably varying its permitted use for public

in the heart of cities. There are indeed resistance from within as listing of vacant or under-utilized
land has been a challenge. This instrument, essentially leads of transfer of resources from those
who held land at periphery and speculate to Government which commercially exploit its land
located in prime locations as demand for land or real estate in the periphery decreases. However,
this would require a major commitment by the concerned State Governments as land is a state
subject.

Indian detail project reports!) is becoming essential feature of fund arrangement, however, the
country has a potential of altogether different order, especially when the MRTS is traversing
through inter-city in any economic region. For example, out of about Rs. 35,000 cr of investment
in about 100 km of Delhi metro phase-III, the contribution from Delhi Development Authority
is a paltry Rs. 1500 cr. It is only in PPP projects where contracts are made viable due to upfront
provision of provision of land on long term lease for commercially utilization ( The concessionaire
of Hyderabad Metro rail project is permitted to develop 18.5 million square feet of project land
for real estate development which forms more than 40% of the projected revenue.)

Urgent Need to Make States as Drivers of MRTS Projects

Given the huge capex requirement of MRTS projects and limited availability of budgetary support
as compared to requirement, private investment under PPP framework holds the key. However, there
is a limit to which return to private investment can be provided through user charges. This implies that
both at construction as well as operation and maintenance stage, such projects would required to be
supported. States are better placed to not only structure the project by allowing commercial exploitation
of project land ( land being a state subject), they have the incentive to change the land use pattern in the

being developed. Seen from this perspective, it is important that if a State want to develop a metro rail
project on its own, it may be allowed to do so as a state subject, while stipulating the safety and other
norms as per laid down standards.

Metro Act which is a Central Act, there are many important arguments in favour of giving State
a major role. The issue therefore needs re-visiting. Following arrangement may be put in place.
Metro Railways transcending more than one municipal area or built outside municipal areas
would ordinarily fall within the jurisdiction of the central Government. However, where a
State Government want to construct a metro transcending more than one municipal area, they

form of VGF for PPP project or outright grant equivalent to admissible VGF in case the project
is being executed by an agency including an SPV within the control of the State Government.
It would be open to the central government to build a Metro railway within a municipal area if
the project is treated as a railway subject. This will get covered under List I of the Constitution.

15
 Government should be in the form of VGF for PPP project or outright grant equivalent to
admissible VGF in case the project is being executed by an agency including an SPV within the
control of the State Government. In such project, central Government should not take equity.

9. Issue of Elevated Vs. Underground Corridor in a Metro Rail Project

manageable limits has seemingly resulted in a preference towards elevated corridors.

Suggested approach: MRTS projects have a very long project life. Hence, cost calculation as
above, may be specious, as they do not take into account the long term opportunity cost of the
land as elevated structures are more land intensive. Besides, underground metros have the
advantage in keeping the city landscape more aesthetic. Hence as far as possible, especially

corridor. For this decision, the cost of land used in case of elevated corridor should be compared
with the escalated cost of underground corridor.

1. Innovation, capacity building and general supervision - Formation of India MRTS

Corporation
Lack of capacity in different states in conceptualizing and executing the projects can pose a serious
constraint in faster expansion of MRTS network in Indian cities. Currently, practically all the DPRs
for various metro projects are being prepared by DMRC which itself is facing scarcity of trained
personnel. At national level we do not have expert body which can suggest choice of technology,
thrust of innovation effort, best international practices and safety measures.

Suggested approach
An Indian MRTS Corporation (IMC) - a fully owned Government Company under Ministry
of Urban Development may be constituted whose function may inter alia include:
Careful examination of a MRTS proposal in accordance with the guidelines suggested in
section A.

Land Use Planning and Funding of Metro Rail Project

Urban transport which includes MRTS in India is heavily under-invested sector. Lack of resources

Indeed there are parcel of Government land located in prime location which are either unutilized or
under utilized. Changing the land use pattern and commercially exploiting these lands can generate

To encourage and supervise research for indigenization and cost saving innovation in MRTS
projects, especially metro rails. To disseminate best practice documents.

16
 Creation of pool of trained personnel for implementation and operation of metro projects. For
this, IMC may collaborate with Ministry of Railways and Institutes of Excellence to use their
existing facilities and create their own facilities wherever shortfall emerges.
To function as a nodal agency to ensure that metro projects across the country have access to
professional project and transaction adviser.
To function as a body for technical evaluation of DPR of a MRTS Project.
To examine and evaluate the City Mobility Plan.
To recommend optimal utilization of Urban dedicated MRTS Fund.
To aid MoUD, MoR and State urban Planning bodies to integrate land use pattern with
transport Planning.

2. Funding of construction of MRTS project in Government sector- creation of a

Dedicated MRTS Fund:
For next 10 years, a dedicated urban infrastructure fund for taking up projects of urban
infrastructure including MRTS should be created:

Suggested Approach
During budgetary allocations exercise, MRTS projects, in view of their huge social return be
given priority. In addition, soft loan for the project should be facilitated by Govt. of India.

guidelines mentioned in section above. Possibility of meeting urban transport requirement

through encouraging cheaper modes like BRTS, non-motorized modes should be exhausted
before contemplating a project like metro.
Budgetary provision for a project should be supplemented by contribution from a dedicated
urban Transport Fund to be set up at State level in consultation with MoUD through levy of
dedicated taxes /levies, capturing the increased land and property value as well as increased
FAR along the metro corridors.
Success of this strategy would critically depend on aligning the land use regulations along the

structures. This should become part of the conditions for sanctioning of a project.

of Government land and receives the revenue out of regulation of its use. (For instance, DDA).

appropriate institution of Central Government and with the State Governments

17