Experts pay back Gowda in kind

Experts pay back Gowda in kind
The Times of India

Bangalore: JD(S) chief Deve Gowda’s argument that Metro Rail is a financially unviable project has been countered by experts.
The funding is so structured that the project starts operating with revenue surplus. Only in the second year there will be a meagre deficit of Rs 11 crore. Calculations by Bangalore Mass Rapid Transit Ltd (now Bangalore Metro Rail Corporation) show the deficit will be easily offset by profits in the subsequent years. To achieve and maintain the required ridership, a plan to integrate different modes of traffic, like bus feeder service for every Metro section, is being worked out.

The total project cost put earlier at Rs 6,207 crore, has now been reworked to slightly less than Rs 6,000 crore following assurance from one of the promoters, the central government, that it will be able to contribute to the first three-and-a-half years of construction. This has also brought down the interest burden.

Like the Delhi Metro project, 60 per cent of the funding will be from a loan (Japan Bank Investment Corporation in the case of Delhi Metro).
Karnataka’s contribution year after year will be exactly the share of BMRTL in the annual infrastructure cess collected, which is 28 per cent of the total collection. Over Rs 800 crore has been collected, and over the next five years the cess amount collected will be passed on. The total amount required by Karnataka government is only about Rs 1,700 crore. Central government contribution will be an equal amount. The entire amount of the state’s contribution will come from the cess collected from Bangaloreans. With the present trend of cess collection, there is a buoyancy of 15% tax collection and hence it will meet the government’s financial obligations. A high court order of November 18, 2004, states clearly that the cess collected has to be passed on for the Metro Rail project.

Delays galore: Sources said a file pertaining to private land acquisition had been kept pending for over two months by industries and finance minister P G R Sindhia. A mandate to acquire land for BMRTL was given to the KIADB. An agreement was signed in June 2005 after the KIADB Board approved it. The proposal was then sent to the commerce and industries department. But Sindhia sent back the file asking for a re-examination of the alignments. But both the alignments were approved by the Karnataka government: one on September 19, 2002 and the second on October 19, 2002.