Metro projects in various stages of execution across the country would need to keep revising fares to stay viable, said experts at a key session on the subject organised by the Asian Infrastructure Investment Bank (AIIB) in Kolkata on Tuesday.
KV Pratap, joint secretary (infrastructure) in the finance ministry, said he was concerned that infrastructure constraint could become a “binding constraint for the Indian economy unless there was adequate provisions made for recovery of operational costs from the projects”. Delhi Metro has been under fire for raising the prices of its ticket sharply in 2017 to Rs 50 one way from Rs 40 for distances above 21 kms, the most preferred distance travelled by its 2.5 million commuters.
Mangu Singh, managing director of Delhi Metro Rail Corporation, said costs had to be ploughed in for other sectors to develop. Delhi Metro had been shown to have an internal rate of return of 23 per cent based on cost returns, he said. This means despite the mega loans secured by the corporations, each segment of the Delhi Metro would be able to pay back the investment in approximately four years.
“This shows why a realistic pricing of metro services was so necessary,” he said.Speaking from the experience of metros abroad, Soon- Sik Lee, senior investment operations specialist at the AIIB, said this underscored the importance of bringing all stakeholders of the metro project to the “same room” to work out costs. It should include real estate promoters too since they enjoyed the value addition of a metro project, he added.
According to Bandana Preyashi, director in the finance ministry, since India was suddenly in the middle of constructing metros in several cities (more than a dozen), it would be important to share the experience of investors to ensure that best practices got most traction in the sector. Pradeep Singh Kharola, chairman of Air India, said some of the challenges of urban mobility could be effectively tackled through multi-modal integration.