Delhi government’s demand rejected from the centre

The Delhi Metro’s proposed 104 km Phase IV network for six new lines is delayed because of differences between the Centre and the city’s Aam Aadmi Party (AAP) government over the funding mechanism.

The city government approved the ~50,000-crore project this January but sought exemption from paying its share of the subordinate debt for central taxes that amounts to ~3,098 crore. Or, it wanted Delhi’s share of state taxes for the project written off.

Union urban development minister M Venkaiah Naidu rejected the Delhi government’s demand.

A subordinated debt is a loan or security. The Centre and state equally share the taxes to be paid for loans from foreign institutions for Metro projects. That means each of them will pay ~3,098 crore in Delhi’s case.

This is in addition to the state’s share of taxes to be paid for the loan, which for Delhi is ~2,121 crore. The AAP government wants one of these waived, but the Centre declined.

“I would like to inform you that the proposal sent by the Government of NCT of Delhi regarding the Delhi Metro Phase IV project is not in conformity with the existing framework of funding pattern for metro rail projects wherein central taxes are shared equally by the Central and State governments as subordinate debt,” Union minister Naidu wrote to chief minister Arvind Kejriwal on June 8.

“This pattern is being followed for all Metro projects under 50:50 equity sharing model.”

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source: http://paper.hindustantimes.com

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