Finance Minister Arun Jaitley’s announcement to provide financial support to metro rail projects in the Budget speech has been welcomed by transport specialists and industry experts. They feel that such rail systems will not only address problems of urban transport but provide large orders to equipment suppliers in the long run.

Manish Agarwal, Leader of Infrastructure practice at PwC India, said that while metro rail systems are much required for urban areas in India, the current Public Private Partnerships (PPP) models are not suitable. These projects are based on 20-40 per cent viability gap funding and real estate development as a project component have high risk, “We need new customised PPP models for developing metro rail projects,” he said.

No impact Agarwal added that there would be no immediate impact on the companies supplying equipment to the metro rail projects. The equipment supply to ongoing projects is tied up, or under procurement, and new projects could take up to three years to reach the procurement stage. “If more cities are able to arrange finances, larger volumes of orders could start coming up in the next five to ten years,” he said.

Currently metro rail projects are under construction in eight States and 200 km are under planning and implementation. Global engineering and transport majors such as Hyundai, Bombardier and Siemens are already working with metro project developers.

Former World Bank Specialist Arun Mokashi said the emerging transport scenario in some cities is frightening. Therefore the first requirement is effective institutional coordination between various agencies. He also said that the the days of mid-size funding for urban transport projects are over.

Large investment of over ₹4,500 crore will be required, which the transport users themselves can raise through user charges. City planners have already started debating the possibility of setting up a Dedicated Urban Transport Fund to ensure sustainability of resources required for building large-sized transport projects in the coming years, he said.

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