Metro rail projects in various stages of implementation across India will give a significant push to the country's construction sector, even as private sector investments are languishing. A note by ratings agency ICRA has estimated the cost of approved metro projects at Rs 2.5 lakh crore, according to a report in the Economic Times.
The daily said, quoting from the note, that apart from the above-mentioned projects, metro rail initiatives worth another Rs 2 lakh crore are on the way, with approvals that are in various stages and expected to be up for bidding in the coming five years.
Currently, nine cities have fully or partly-operational metro rail services such as Kochi, Jaipur, Delhi, Kolkata and Bengaluru while another five are implementing these projects in cities that include Nagpur, Pune and Lucknow.
"Roads and urban infrastructure, including Metro Rails are two key segments which have witnessed robust order inflows for the construction companies. Further, with sizeable pipeline of projects in these segments, the construction sector is expected to have sufficient order inflows and companies with strong track record and healthy balance sheet are expected to exhibit strong growth going forward," the Economic Times quoted K. Ravichandran, Senior Vice-President and Group-Head, Corporate Ratings, ICRA, as saying.
Metro rail projects have also boosted the topline of public sector undertaking BEML that supplies the specially-desgined cars (coaches). The recent order won by the listed entity was valued at Rs 1,421 crore that entailed the supply of 150 sets of intermediate metro cars. The supplies would commence from June 2018 and end by December 2019.
Two months ago, Venkiah Naidu, who holds the union urban development porfolio, among other responsibilities, had said that the Modi government would soon announce a metro rail policy. "The Centre is formulating a new Metro Rail policy to enable innovative finance such as land value capture, transit- oriented development for new Metro Rail projects," news agency PTI quoted him as saying in Chenai on May 14.
The impetus to the economy is largely coming from the government since fresh investments have remained sluggish, falling to a 25-year-low in 2016-17. The combined capital expenditure by India's top 1,000 non-financial companies grew at 5.8 percent during the year, the slowest since 1992, according to the SmartInvestor.in.
"It's in line with a near-collapse in banks' credit growth in the last fiscal year. Public sector banks have put a virtual freeze on fresh lending to risky projects, fearing bad loans hitting funding for large industrial projects," the website quoted G Chokkalingam, founder & managing director, Equinomics Research & Advisory, as saying.