"Union Cabinet Approves ₹63,246 Crore for Chennai Metro Phase II, Bringing Relief to TN"

Tamil Nadu received a major boost on Thursday as the Union Cabinet approved ₹63,246 crore for the second phase of the Chennai Metro project, addressing a long-standing demand from the State government. This decision follows a meeting between Tamil Nadu Chief Minister MK Stalin and Prime Minister Narendra Modi, where the Chief Minister urged the Centre to release its share of the funding for the project.

Expressing his gratitude on social media, Chief Minister Stalin said, "Thank you, Hon’ble PM @narendramodi, for accepting our request during my last meeting with you and approving the second phase of the Chennai Metro Rail Project. This long-pending demand of the people of Tamil Nadu has been addressed, and we are confident of completing the project at the earliest!"

Until now, the Centre had maintained that the Chennai Metro was a State project and that Tamil Nadu was responsible for managing it. Union Finance Minister Nirmala Sitharaman had also previously stated that any equity contribution from the Centre for Phase II would likely be around ₹7,400 crore, and that the project had been classified as a State sector initiative by the Tamil Nadu government in 2018. The Centre's role, she noted, was to assist in securing international loans for the project.

The approval marks a turning point, especially after the fiscal constraints faced by the State government had caused delays in the project's progress. Last year, Tamil Nadu had to slow down work on the Metro, reducing the project’s budget from ₹10,000 crore to ₹9,000 crore due to financial limitations. This slowdown pushed the completion timeline from December 2027 to December 2028, leading to cost overruns and delays in commissioning various stages of the project.

For Phase II, the Chennai Metro Rail Limited (CMRL) is required to secure a principal debt of ₹33,593 crore and a subordinate debt of ₹17,434 crore. Without adequate equity contributions, this could result in an unsustainable debt-to-equity ratio for CMRL.

In his memorandum to the Prime Minister, Stalin highlighted the financial pressures faced by the State and requested the Centre to approve a 50:50 equity sharing model between the Government of India and the Government of Tamil Nadu, similar to the arrangement for Phase I. The request echoed calls made by Tamil Nadu BJP President K Annamalai earlier this week, who urged the Prime Minister to support the 50:50 equity sharing for the project.

HBL