Metro Rail takeover could deepen Telangana’s fiscal challenges
Despite achieving an impressive ridership of over 5.6 lakh daily passengers at peak last year and 63.5 crore commuters in seven years, Hyderabad Metro Rail has been recording consistent losses of late
Hyderabad: The Congress government’s decision to take over Hyderabad Metro Rail from L&T at a cost of Rs 2,000 crore in equity and an additional Rs 13,000 crore in debt has raised serious concerns over its financial prudence. At a time when the State exchequer is already under pressure from heavy borrowings and mounting welfare expenditure, the move risks pushing the exchequer further into stress.
Despite achieving an impressive ridership of over 5.6 lakh daily passengers at peak last year and 63.5 crore commuters in seven years, Hyderabad Metro Rail has been recording consistent losses of late. The 2024-25 report showed a revenue dip of 21 per cent and losses swelling to Rs 625 crore. The Congress government ignored the repeated requests from the company for support, leading to its exit.
Financial experts argued that instead of shouldering these debts, the State could have extended direct support to improve viability, much like it allocated Rs 4,305 crore for free RTC bus rides under the Mahalakshmi scheme. They pointed out that no efforts were made to reduce the losses incurred by the company. L&T owns 90 per cent of the equity in HMRL. Besides taking over its Rs 13,000 crore loan, the government promised Rs 2,000 crore for L&T’s equity as a one-time settlement.
“Due to poor revenue, the government has to raise market loans and also take over existing debt, which could effectively dent the borrowing limit of the State severely,” a financial expert said.
Critics contend that L&T was forced to exit not due to inefficiency but due to a lack of timely government support, including unresolved compensation claims of nearly Rs 3,000 crore. Now, with the State stepping in, the risks of cost overruns, inefficiency, and political populism loom large.
The Congress government defended the move as necessary to expedite Phase-II expansion. But observers fear that the takeover could strain Telangana’s already fragile fiscal position and set back its infrastructure ambitions. For a State battling rising debt, adding a Rs 15,000 crore burden without a clear revenue roadmap may turn the Metro Rail into a financial trap rather than a transport solution.
