Funding roadblock cleared as Centre finally approves Chennai Metro Rail phase-2

CHENNAI: A week after Chief Minister MK Stalin petitioned Prime Minister Narendra Modi to sanction phase II of the Chennai Metro Rail Project, the Union cabinet on Thursday granted its long-delayed approval to the Rs 63,246 crore project, extending the metro rail network by an additional 118.9 km in the state capital.

The project, comprising three corridors – Madhavaram to Sipcot, Lighthouse to Poonamallee and Madhavaram to Sholinganalur – was approved in the meeting of the Union cabinet chaired by Prime Minister Modi, ending the political deadlock between the DMK and BJP over the funding of the project.

The Metro rail network of Chennai would increase to 173 km upon completion of the second phase which consists of 128 stations and commuter-friendly multi-modal integration at 21 locations on the three corridors spread from north to south and east to west of Chennai.

The BJP-led NDA government has obliged the Tamil Nadu government less than a fortnight after Union Finance Minister Nirmala Sitharaman insisted that it was conceived only as a state-sector project. Sitharaman even went on to blame the Tamil Nadu government for not fully utilising the funds already made available for the project through loans.

The project was such a political talking point between the two parties in power that the Union and state finance ministers were engaged in a statement war over the project funding. The lack of promised funds from the Union government was causing financial strain on the state exchequer, Chief Minister Stalin informed Prime Minister Modi in his memorandum.

Pertinently, Tamil Nadu BJP president K Annamalai, busy pursuing a fellowship in the UK, wrote to the Prime Minister a couple of days ago seeking approval for the project, fuelling strong speculation that the Union government was on the brink of sanctioning the phase II project.

As per the project agreement, the Union government would contribute Rs 7,425 crore (Rs 5,407 crore equity and Rs 2,017.50 crore subordinate debt), while the contribution of the Tamil Nadu government would be Rs 22,228 crore (equity and subordinate debt including Rs 13,183 crore subordinate debt for land, RR and taxes). The remaining sum of Rs 33,593 crore would be senior term debt (loan) availed from multilateral agencies. 

The Tamil Nadu government has already released its share of 15.4%, which is 7,424.9 crore, for the project. Now, the CMRL can expect the same contribution from the Government of India. For the remaining 69.2% (Rs 48,443 crore), loans are being procured from various multilateral banks and other agencies.

Besides helping the BJP reduce its unpopularity in the state, the sanctioning of the project could also open a new chapter in the strained relationship between the State and Centre.

It is to be noted that Tamil Nadu is yet to receive financial assistance from the Centre for the 2023 floods in Chennai and seven other districts besides the release of central funds due this year for the implementation of the Samagara Siksha Abhiyan scheme, which along with the CMRL phase II project, was among the the three demands put forth by Chief Minister Stalin during his meeting with Prime Minister Modi last week. 

Meanwhile, speaking to DT Next about the approval, T Archunan, the Director (Projects) said, "This is a big relief. The share from the union government will expedite the Metro rail project and will have a positive impact on the proposed projects within Chennai and in cities like Coimbatore, Madurai, and Tiruchy, as well as on south India’s first interstate Metro line between TN and Karnataka.”