Can Telangana fund Metro Phase II alone? Concerns grow over State’s claims

The takeover of Hyderabad Metro Rail Phase I has triggered political debate, with doubts cast on the Telangana government’s assertion that it can independently execute Metro Phase II despite mounting financial pressures.

Hyderabad: With the takeover of Hyderabad Metro Rail Phase I acquiring political overtones, questions are being raised about the State government’s claim that it can execute the Metro Phase II project on its own, particularly in view of its financial constraints.

Chief Minister A Revanth Reddy has repeatedly acknowledged the financial challenges facing the State in implementing welfare and development programmes. On a few occasions, he has stated that the government was finding it difficult to spend even Rs 500 crore a month on capital expenditure.

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He has also maintained that Telangana’s monthly revenue stands at Rs 18,500 crore. Of this, around Rs 6,500 crore is spent on salaries and pensions, while another Rs 6,500 crore goes towards loan repayments and interest payments. This leaves about Rs 5,500 crore for welfare and development activities.

Despite these constraints, the State government has expressed its willingness to take up Metro Phase II on its own. It has already submitted proposals for the project, which comprises seven corridors spanning 122.9 km at an estimated cost of Rs 38,595 crore. The Telangana government had requested the Centre to sanction Metro Phase II as a 50:50 joint venture.

However, in a letter addressed to Union Minister G Kishan Reddy on Tuesday, the Chief Minister stated that if approval for the project as a 50:50 joint venture was delayed, the State government was prepared to proceed using its own resources and institutional financing arrangements. He urged the Centre to grant the required approvals at the earliest so that implementation could begin without further delay.

Meanwhile, the delay in the release of the Rs 13,527 crore loan from the Indian Railway Finance Corporation (IRFC) has affected the State government’s plans to take over Metro Phase I. Although the agreement was signed three weeks ago, the loan amount has not yet been released.

The Centre has also made seamless integration of the privately operated Phase I network with the proposed Phase II network a mandatory condition. Until the takeover of Phase I is completed, the Phase II project cannot move forward. If the Centre permits the State government to execute Phase II independently, Telangana would also have to bear the share that would otherwise be contributed by the Union government. This would increase the financial burden further.

Another challenge could be securing loans at the four per cent interest rate cited by the Chief Minister for implementation of the project. When the previous BRS government executed the Metro project, the cost of developing one kilometre was around Rs 230 crore. That figure has now risen to nearly Rs 320 crore per kilometre.

Given these factors, concerns are being raised in various quarters about the State government’s claim that it can execute Metro Phase II on its own.