State government cannot charge Delhi Metro market rate

NEW DELHI: Delhi government's bid to earn Rs 1000 crore from DMRC's third phase by selling it land, owned by various public sector undertakings under it, at market (circle) rates has been foiled by the urban development ministry. Turning down the government's proposal, the ministry has in a letter to chief secretary D M Spolia stated that if accepted, this proposal will lead to similar demands from other entities and states.


The ministry has told Delhi government that if at all it wants these bodies to charge DMRC on the basis of market rates, the state government must compensate DMRC for the additional cost by giving it the amount in the form of either a grant or interest-free debt.

In May this year, following a high-powered meeting chaired by Spolia, Delhi government had proposed to charge DMRC market rates for giving land that's owned by Delhi Urban Shelter Improvement Board (DUSIB), Delhi Jal Board (DJB) and Delhi State Industrial and Infrastructure Development Corporation (DSIIDC) since these bodies have to generate their finances themselves without any support from the government.

"As such in view of the extant policy and practice, which is being followed for all Metro rail projects in the country, it may not be possible for MoUD to support the present contention of the GNCTD asking DMRC to pay (according to) market rate to various PSUs as this would open up similar demands from all other entities as well as states," reads the letter from Sudhir Krishna, secretary, urban development ministry, dated June 27, 2013.

The ministry cited the policy in the case of all Metro rail projects in the country, whether through the government funding route or through PPP. With the exception of Delhi, the entire cost of land is borne by the state government concerned as an interest-free subordinate debt or grant. In Delhi, since a considerable portion of land is owned by the central government, the cost of land for Delhi Metro is shared on a 50:50 basis between the central and state governments.

The PSUs in Delhi have to give their land to DMRC at concessional rates, in compliance with the Centre's orders. For instance, irrespective of the locality of the plot, DUSIB has to allot land on inter-departmental rates approved by MoUD at a rate of Rs 188.19 lakh per acre. However, the new Delhi government proposal had sought application of circle rates. This would have increased the cost of land in "A" category area by up to 35 to 40 times. Sources said DUSIB, which has land in Rajouri Garden that needs to be acquired by DMRC, had already sent the latter a proposal quoting the land price on the basis of circle rates.