Vijayawada Metro | Centre refuses to approve the Rs 6,847 crore proposed metro project

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A view of Surat City in Night
A view of Surat City in Night

The Union finance ministry has refused to approve the Rs 6,847 crore proposed Vijayawada Metro Rail project till such time the Centre finalises the Metro rail policy while raising questions whether it is financially viable.

The Andhra Pradesh government is pushing for the Vijayawada Metro project, citing how the city is the gateway to the new capital of Amravati and is expected to see a spurt in population and traffic in the near future. Union urban development minister, M Venkaiah Naidu, who is from the state, is also batting for the project.

Government sources said that finance secretary Ashok Lavasa has raised “concern” over the low financial internal rate of return (FIRR) of the project. FIRR is largely based on cost and returns of the project.

“The FIRR of the Vijayawada Metro is around 3%. Currently, metro projects are cleared if the FIRR is 8%,” said a finance ministry official.

The Vijayawada Metro proposal came up for approval on March 20 at the finance ministry’s Public Investment Board meeting.

It is only after the Public Investment Board – headed by the finance secretary – appraises and gives its green signal, that a project is placed before the cabinet for final approval.

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