Metro Rail Policy
16-Aug-2017: Union Cabinet approves new Metro Rail Policy
The Union Cabinet has approved a new Metro Rail Policy that seeks to enable realization of growing metro rail aspirations of a large number of cities but in a responsible manner.
The policy opens a big window for private investments across a range of metro operations making PPP component mandatory for availing central assistance for new metro projects. Private investment and other innovative forms of financing of metro projects have been made compulsory to meet the huge resource demand for capital intensive high capacity metro projects.
“Private participation either for complete provision of metro rail or for some unbundled components (like Automatic Fare Collection, Operation & Maintenance of services etc.) will form an essential requirement for all metro rail projects seeking central financial assistance” says the policy, to capitalize on private resources, expertise and entrepreneurship.
In view of inadequate availability and even absence of last mile connectivity at present, the new policy seeks to ensure it focusing on a catchment area of five kms. on either side of metro stations requiring States to commit in project reports to provide necessary last mile connectivity through feeder services, Non-Motorised Transport infrastructure like walking and cycling pathways and introduction of para-transport facilities. States, proposing new metro projects will be required to indicate in project report the proposals and investments that would be made for such services.
Seeking to ensure that least cost mass transit mode is selected for public transport, the new policy mandates Alternate Analysis, requiring evaluation of other modes of mass transit like BRTS (Bus Rapid Transit System), Light Rail Transit, Tramways, Metro Rail and Regional Rail in terms of demand, capacity, cost and ease of implementation. Setting up of Urban Metropolitan Transport Authority (UMTA) has been made mandatory which is to prepare Comprehensive Mobility Plans for cities for ensuring complete multi-modal integration for optimal utilization of capacities.
The new Metro Rail Policy provides for rigorous assessment of new metro proposals and proposes an independent third party assessment by agencies to be identified by the Government like the Institute of Urban Transport and other such Centres of Excellence whose capacities would be augmented, as required in this regard.
Taking note of substantial social, economic and environmental gains of metro projects, the Policy stipulated a shift from the present ‘Financial Internal Rate of Return of 8%’ to ‘Economic Internal Rate of Return of 14%’ for approving metro projects, in line with global practices.
Noting that urban mass transit projects should not merely be seen as urban transport projects but more as urban transformation projects, the new policy mandates Transit Oriented Development (TOD) to promote compact and dense urban development along metro corridors since TOD reduces travel distances besides enabling efficient land use in urban areas. Under the policy, States need to adopt innovative mechanisms like Value Capture Financing tools to mobilize resources for financing metro projects by capturing a share of increase in the asset values through ‘Betterment Levy’. States would also be required to enable low cost debt capital through issuance of corporate bonds for metro projects.
Seeking to ensure financial viability of metro projects, the new Metro Rail Policy requires the States to clearly indicate in the project report the measures to be taken for commercial/property development at stations and on other urban land and for other means of maximum non-fare revenue generation through advertisements, lease of space etc., backed by statutory support. States are also required to commit to accord all required permissions and approvals.
The new policy empowers States to make rules and regulations and set up permanent Fare Fixation Authority for timely revision of fares. States can take up metro projects exercising any of the three options for availing central assistance. These include; PPP with central assistance under the Viability Gap Funding scheme of the Ministry of Finance, Grant by Government of India under which 10% of the project cost will be given as lump sum central assistance and 50:50 Equity sharing model between central and state governments. Under all these options, private participation, however, is mandatory.
The policy envisages private sector participation in O & M of metro services in different ways. These include:
- Cost plus fee contract: Private operator is paid a monthly/annual payment for O&M of system. This can have a fixed and variable component depending on the quality of service. Operational and revenue risk is borne by the owner.
- Gross Cost Contract: Private operator is paid a fixed sum for the duration of the contract. Operator to bear the O&M risk while the owner bears the revenue risk.
- Net Cost Contract: Operator collects the complete revenue generated for the services provided. If revenue generation is below the O&M cost, the owner may agree to compensate.
At present, metro projects with a total length of 370 kms are operational in 8 cities viz., Delhi (217 kms), Bengaluru (42.30 kms), Kolkata (27.39 kms), Chennai (27.36 kms), Kochi (13.30 kms), Mumbai (Metro Line 1-11.40 km, Mono Rail Phase 1-9.0 km), Jaipur-9.00 kms and Gurugram (Rapid Metro-1.60 km).
Metro Projects with a total length of 537 kms are in progress in 13 cities including the eight mentioned above. New cities acquiring metro services are; Hyderabad (71 kms), Nagpur (38 kms), Ahmedabad (36 kms), Pune (31.25 kms) and Lucknow (23 kms).
Metro projects with a total length of 595 kms in 13 cities including 10 new cities are at various stages of planning and appraisal. These are; Delhi Metro Phase IV- 103.93 km, Delhi & NCR-21.10 km, Vijayawada-26.03 km, Visakhapatnam-42.55 km, Bhopal-27.87 km, Indore-31.55 km, Kochi Metro Phase II-11.20 km, Greater Chandigarh Region Metro Project-37.56 km, Patna-27.88 km, Guwahati-61 km, Varanasi-29.24 km, Thiruvananthapuram & Kozhikode (Light Rail Transport)-35.12 km and Chennai Phase II-107.50 km.
Global Foreign Exchange Committee (GFXC)
9-Jul-2017: India to join Global Foreign Exchange Committee.
India will soon get a seat on the Global Foreign Exchange Committee (GFXC), a newly-constituted forum of central bankers and experts working towards promotion of a robust and transparent forex market. The newly expanded and formalised GFXC, which will meet regularly, replaces a similar but more informal organisation of eight foreign exchange committees — namely those from Australia, Canada, Euro area, Hong Kong, Japan, Singapore, UK and the US. The GFXC will also now include representatives from existing, or soon to be established, foreign exchange committees or similar structures in Brazil, China, India, Korea, Mexico, South Africa, Sweden and Switzerland.
The Global Foreign Exchange Committee (GFXC) was established in May 2017 as a forum bringing together central banks and private sector participants with the aim to promote a robust, liquid, open, and appropriately transparent foreign exchange market in which a diverse set of participants, supported by resilient infrastructure, are able to confidently and effectively transact at competitive prices that reflect available information and in a manner that conforms to acceptable standards of behaviour. The committee has been set up under the guidance of the Bank for International Settlements (BIS), an international financial organisation owned by 60 member central banks, representing countries from around the world.
Objectives of the GFXC are: To promote collaboration and communication among the local foreign exchange committees (FXCs) and non-GFXC jurisdictions with significant FX markets; To exchange views on trends and developments in global FX markets, including on the structure and functioning of those markets, drawing on information gathered at the various FXCs; and To promote, maintain and update on a regular basis the FX Global Code (the Code) and to consider good practices regarding effective mechanisms to support adherence.
UN Tax Trust Fund
3-Jul-2018: India contributes US$100,000 for fund to ensure developing countries’ role in international cooperation on critical tax matters
India delivered a voluntary contribution of US $100,000 to promote the participation of developing countries in the work of a key UN committee on tax matters that looks at key issues that could mobilize resources for sustainable development.
India’s contribution is a response to the call of the Addis Ababa Action Agenda, which was adopted at the Third International Conference on Financing for Development in 2015, to further resource mobilization in support of sustainable development and which reiterated a request for countries to make contributions to the UN Tax Trust Fund. This is the second year India has contributed to the fund and is still the only country that has contributed so fair.
The UN Tax Trust Fund aims to support the work of the UN Tax Committee. The UN Tax Committee, a subsidiary body of the UN Economic and Social Council (ESOSOC), tackles key issues that could help developing countries to unleash their potential to achieve sustainable development through technical support on areas such as double taxation treaties, transfer pricing (profit shifting) taxation of the extractive industries and taxation of services.
In Addis Ababa, UN Member States committed to work together to enhance the UN Tax Committee’s resources to strengthen its effectiveness and operational capacity. The Addis Agenda also specifically called on the Member States to support the UN Tax Committee and its subsidiary bodies through the voluntary Trust Fund, supporting the increased participation of developing country experts at subcommittee meetings.
27-Jun-2017: India makes first voluntary contribution to UN Tax Trust Fund
The United Nations Trust Fund for International Cooperation in Tax Matters (the UN Tax Fund), set up to help developing countries actively participate in the discussion of tax issues, received its first financial voluntary contribution from the Government of India.
The UN Tax Trust Fund aims to support the work of the Committee of Experts on International Cooperation in Tax Matters (the UN Tax Committee). Voluntary contributions for the Trust Fund have been called for by the UN and the Tax Committee since its establishment in 2006. The call for contributions was also emphasized in the Addis Ababa Action Agenda adopted at the Third International Conference on Financing for Development in 2015.
India has become the first country to respond to the call with an initial contribution of US$ 100,000. This voluntary contribution will be dedicated towards ensuring greater support for developing country participation in the subcommittee meetings of the UN Tax Committee, which are currently unfunded.
The UN Tax Committee, a subsidiary body of the UN Economic and Social Council (ESOSOC), has provided guidance on current issues such as double taxation treaties, transfer pricing (profit shifting) taxation of the extractive industries and taxation of services. The Committee also provides a framework for dialogues with a view to enhancing and promoting international tax cooperation among national tax authorities, while making recommendations on capacity-building and the provision of technical assistance to developing counties and countries with economies in transition.
Handing over a cheque to the Financing for Development Office, the Government of India expressed hope that other countries will similarly contribute to the UN Tax Trust Fund to advance developing country participation on taxation issues. Through the Trust Fund, they also expect that more developing countries will draw upon the best practice of other bodies, ensuring that global tax cooperation norms and rules will work more effectively and efficiently for all countries and all stakeholders.
About the Addis Ababa Action Agenda and the UN Tax Trust Fund
The Addis Agenda provides a global framework to ensure the effective mobilization of resources at the national and international level for sustainable development. Implementation of the Addis Agenda supports the implementation of the Sustainable Development Goals (SDGs) and is an integral part of the 2030 Agenda for Sustainable Development, the historic and transformational agenda that countries unanimously adopted in 2015.
In Addis Ababa, UN Member States committed to work together to enhance the UN Tax Committee’s resources to strengthen its effectiveness and operational capacity. The Addis Agenda also specifically called on the Member States to support the UN Tax Committee and its subsidiary bodies through the voluntary Trust Fund, supporting the increased participation of developing country experts at subcommittee meetings.