Raise taxes to fund Metro, says Centre

May 11, 2012, 09:04 IST | Sukirt D Gumaste

Union Ministry of Urban Development writes to state govts, Metro Rail firms and local bodies, suggests 'innovative' financing methods such as more taxes

Uncertainty is dogging the path of the Metro and the decision whether to have an elevated track or an underground one is suddenly only a minor issue for the state government. Now, the Centre has expressed its inability to provide funds for the project, and the Ministry of Urban Development (MUD) recently conveyed this through a letter stating cities should generate funds for mass rapid transit systems (MRTS) like the Metro through innovative financing methods like giving additional FSI and “dedicated taxes”.

Do it yourself: The cost of the proposed elevated Metro in the city is Rs 150 crore per kilometre. The Centre says funds should be generated by allowing more FSI along the corridor and higher taxes. representation pic

The MUD sent the letter to all state governments, Metro Rail companies and local bodies on April 16.

The Pune Municipal Corporation (PMC) and the state government are yet to get down to discussing the contents of the letter and taking the matter forward.

In the letter, the MUD says: “The resources through budget are highly limited and cannot be concentrated in few cities alone. As such, there is an urgent need to resort to innovative financing mechanism for all MRTS projects. In fact, it should be possible to finance major cost of the project through exploitation of city’s land resources. The Metro Rail Projects specially are highly capital intensive. Furthermore, being social sector projects, it is not possible to increase the fares beyond a point and accordingly fare box revenue alone cannot make these projects financially viable. The only way out is to resort to innovative financing mechanism using land as a resource as well as other dedicated taxes.”

The letter goes on: “Inevitably, there is a huge spurt in the prices of property (sale as well as rental) especially along the MRTS corridor in the catchments area (which may be defined as maximum 10 min walking distance from the metro station). Presently, all these benefits go primarily to the private parties even though the same is caused only on account of Government investment. As such, there is a strong case for the Government to en-cash the increased property value (sale/rental) in the catchments area of MRTS corridor as well as the increased FSI. A vacant land tax, not only on land but also on unutilized FSl, is to ensure time bound densification along with MRTS corridor. Vacant land tax must be very strictly levied and should be quite steep.

“In addition to the above sources, generate funds out of rationalization of parking-fee, advertisement revenue on transit corridors, employment tax etc. At the State level, additional sales tax on petrol, additional registration fee on four-wheelers and two wheelers, high registration fee for personal vehicles running on diesel, annual renewal fee on driving license and vehicle registration, congestion tax, green tax etc. may be used to draw sources for the Dedicated Urban Transport Fund.”

State governments, metro rail companies and local bodies are advised to urgently implement the measures suggested in the letter.

“The note fails to mention the problems related to densification, such as burden on the already stressed civic infrastructure and services, including open or public spaces per capita, and how this will be resolved,” Ranjit Gadgil, project director of Parisar, said. “The bottom line is that we, the residents of Pune, will have to pay a high price for the Metro, one way or another. We should carefully consider this as well as whether other solutions should be considered, and what is the priority for the Metro and whether it will actually solve our transport problems. We should also consider the current planning capacity of the city and whether the solution — land exploitation — will turn out to be a boon or a bane.”

Civil activist Advocate Aruna Nafde said additional FSI would be disastrous. “In the current FSI, people are facing water problems, shortage of electricity and waste management issues. Additional FSI will only disturb the city structure. The proposed Metro route from Vanaj to Ramvadi is already very crowded and a high-density area. Additional construction will be disastrous for the city and will not solve the traffic problem,” Nafde said.

Fact file
w Metro Route: Vanaj to Ramvadi (14.92 km)
w Stations on route: Anand Nagar, Ideal Colony, Nal Stop, Garware College, Deccan, Shivajinagar court, Mangalwar Peth, Pune station, Ruby hall Clinic, Bundgarden, Yerawada and Kalyani Nagar.
w Cost of the project:
Rs 150 crore to Rs 160 crore
per kilometre (in case of elevated Metro)  

Go to top