The BJP and DMK have been engaged in a war of words over how much of the funding for Chennai metro rail project came from the Centre.
Published Oct 07, 2024 | 6:34 PM ⚊ Updated Oct 07, 2024 | 6:34 PM
Funding feud between Tamil Nadu and Centre over metro rail project
The allocation of funds for Phase 2 of the Chennai Metro Rail project has sparked a major debate between the DMK government in Tamil Nadu and the BJP-led Union government.
The metro rail project in Chennai began in 2007, with the first phase of services launched in 2015. Currently, metro trains operate from Chennai Central to Parangimalai and from Wimco Nagar to the Airport. Following this, Phase 2 of the Chennai Metro Rail project was launched in 2016, which includes the construction of metro lines on three routes: Madhavaram to Sipcot, Lighthouse to Poonamalli, and Madhavaram to Sholinganallur.
Initially, the central government did not approve the second phase. In light of this, Tamil Nadu Chief Minister MK Stalin met with Prime Minister Modi in Delhi on 27 September to request central funding for the project. Subsequently, the Union Cabinet, chaired by Prime Minister Modi, approved the Phase 2 project during a meeting on 3 October.
The funding structure includes ₹7,425 crore from the central government, ₹22,228 crore from the Tamil Nadu government, and ₹33,593 crore in loan assistance from bilateral and multilateral agencies, bringing the total approved cost to ₹63,246 crore.
After the Centre sanctioned funds for the Chennai Metro rail project, Tamil Nadu BJP Secretary SG Suryah expressed gratitude on social media, claiming, “On behalf of the people of Chennai, we thank Prime Minister Modi for providing ₹63,246 crore for the second phase of the Chennai Metro Rail.”
#சென்னைமெட்ரோ இரண்டாம் கட்டத்திற்கு ₹63,246 கோடி நிதி வழங்கியுள்ள பாரத பிரதமர் திரு.#நரேந்திரமோடி அவர்களுக்கு சென்னைவாசிகள் சார்பாக மனமார்ந்த நன்றிகள்.
Heartfelt thanks to PM @NarendraModi from the people of #Chennai for sanctioning #ChennaiMetro Phase 2 with ₹63,246 funds. pic.twitter.com/pHyxXCKSdj
— Dr.SG Suryah (@SuryahSG) October 3, 2024
Senior BJP leader Tamilisai Soundararajan echoed this sentiment during a press conference on 4 October.
#சென்னைமெட்ரோ இரயில் இரண்டாம் கட்ட திட்டத்திற்கு ரூபாய். ₹63,246 கோடி நிதி வழங்கியுள்ள மாண்புமிகு பாரதப்பிரதமர் திரு.#நரேந்திரமோடி அவர்களுக்கு நன்றி தெரிவித்து சென்னை,கமலாலயத்தில் நடைபெற்ற பத்திரிக்கையாளர் சந்திப்பு நிகழ்ச்சியில்…#PMOIndiaForTamilnadu #ChennaiMetro… pic.twitter.com/2tkZ5x42a7
— Dr Tamilisai Soundararajan (@DrTamilisai4BJP) October 4, 2024
According to the Metro Rail Policy of 2017, the central government is expected to fund 10 percent of the project cost, excluding land and certain material costs.
Contradicting BJP and party leader Tamilisai Soundararajan in particular, Tamil Nadu Fact Check Unit said that the Union government is actually providing only ₹7,425 crore for the second phase, while the Tamil Nadu government will contribute ₹22,228 crore and ₹33,593 crore will come as loans from international financial institutions.
The fact check unit took to X to share the break up of funds and dismissed the Union government’s claims.
சென்னை மெட்ரோவிற்கு ரூ63,246 கோடி நிதி அளித்ததாகப் பொய்!@CMOTamilnadu @TNDIPRNEWS https://t.co/yL6xjdUCM6 pic.twitter.com/fEZnrZKleD
— TN Fact Check (@tn_factcheck) October 4, 2024
Despite that, the Union government, in a recently released press release claimed once again that it helped the state to secure ₹32,548 crore in loans from bilateral and multinational institutions, of which about ₹6,100 crore has already been utilised.
The press release further claimed that, after the latest approval of funds, the central government is now responsible for approximately 65 percent of the estimated cost for Phase 2, including ₹33,593 crore in full debt and ₹7,425 crore in equity and subordinate debt. The state government will cover the remaining 35 percent of the project cost, the release alleged.
This claim by the union government is misleading.
The Centre’s claims are misleading and one careful look at its press release makes it apparent. The press release read, “Loans taken from multilateral and bilateral development agencies will be treated as the loans to the Central Government and will be provided directly to Chennai Metro Rail Limited (CMRL) from the Central Government’s budget.”
The Centre also claimed that, “The Union Cabinet’s approval has freed up budgetary resources of the State Government to finance other development activities to an extent of ₹33,593 crore.”
The part mentioned after this is what contradicts the Union government’s previous claims. It states that loans from international agencies will be treated as central government loans and disbursed directly to Chennai Metro Rail Limited (CMRL).
CMRL is tasked with repaying the loans, typically beginning after a five-year moratorium period following project completion. If CMRL encounters issues in repayment, it falls to the state government to provide financial assistance for the loan during those years,.
The union government’s own press release clearly states that it is the Tamil Nadu government’s responsibility to pay the loan if CMRL fails to do so, not the Union government’s responsibility.
With that caveat, the union government is funding ₹7,425 crore of the total approved cost of ₹63,246 crore and is helping secure loans of ₹33,593 crore which is to be repaid by CMRL, failing which, Tamil Nadu government has to step in to finance the repayment.
(Edited by Neena)
