Rakesh Ranjan, Adviser, Niti Aayog. Investment opportunities in MRTS March 13, 2018

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Rakesh Ranjan, Adviser, Niti Aayog Investment opportunities in MRTS March 13, 2018

Two Development Narratives India: A fast growing vibrant economy 2

Indian Economy: High Growth but severe development Challenges 3

Aspiration of People is high 4 4

Indian Economy is poised for long terms high growth: Creation of key infrastructure has been accelerated.

Road: Major improvement alike in Highways and Rural Roads National Highways Number of Completed Roads (KMs) Number of Awarded Roads (KMs) 9000 18000 8000 8,231 16000 15,948 7000 14000 6000 6,029 12000 10,098 5000 4,340 10000 7,980 4000 8000 3000 3,118 6000 4,527 4000 2000 2000 1000 0 0 FY 12-14 Average FY 15 FY 16 FY 17 FY 12-14 Average FY 15 FY 16 FY 17

Improvement in laying lines and electrification of railways. New Lines (KMs) Electrification (KMs) 1000 2500 950 900 953 2000 1500 1,375 1,730 2,013 850 800 813 1000 750 500 700 FY 16 FY 17 0 FY 15 FY 16 FY 17

Airports: Passenger Movement Increase by 75 million in Two Years Passenger Movement - Million Passenger Per Annum 300 265 250 224 200 190 150 100 50 0 FY 15 FY 16 FY 17

Ports: Highest Ever Capacity Addition Capacity Added in Major Ports (MTPA) 120 100 94 7% Increase 100.4 80 60 40 20 0 FY 16 FY 17

Power: Unparalleled Pace in Village Electrification Villages Electrification Since FY 12-13 Villages Electrified 8000 7000 7108 6015 6000 5000 4000 3000 2000 2587 1197 1405 1000 0 2012-13 2013-14 2014-15 2015-16 2016-17

Big Jump in Cumulative Installed Capacity for Renewable Energy Cumulative Installed Capacity (GW) 70000 60000 57.3 50000 40000 30000 20000 19.9 24.9 28.1 31.7 35.8 42.7 10000 0 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Continuously Increasing Solar Capacity Installed Cumulative Capacity (GW) 14 12.29 12 10 8 6 4 2 0 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Massive Increase in Cumulative Wind Capacity Installed 25 Cumulative Capacity (GW) 20 20.6 15 15.1 10 5 5.6 7.3 9.4 11.7 0 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Indian Economy is poised for long terms high growth: Vibrant economy Structural transformation is incomplete. Transport including MRTS to play a key role

Structural transformation of economy is far from complete A central task of India economy is to create non-farm jobs 15

Key policy goals Key Policy Goals High growth Rate Inclusive Growth Investment in urban transport is must for all these goals. Sustainable Growth 16

MRTS: Critical role in city + regional transport: Paris Metro rail within city and RER for rapid regional mobility 17

MRTS: Critical Role in city + Regional Transport: Paris Metro rail: Rapid expansion but funding for phase-iv needed. Regional connectivity need major investment RRTS project Sub-urban Rail 18

Investment requirements In Rs. Trillion= Rs. 1 lakh cr Items MGI HPEC Working Group Sprawl Desired urban form Urban Roads 8.90 17.29 12.08 9.17 Transit 17.64 4.49 10.55 5.56 Others 0.50 0.90 0.15 0.27 Total 27.04 22.68 22.78 15.00 Compactness and investment requirements: Raise density by 2500 per sq km: reduces by Rs. 4 trillion. Reduction by 2500, requirement Increases by Rs. 6.5 trillion.

Sub-urban rail Carries 53% of Indian rail passenger Revenue share 7% By 2030, needs additional investment of Rs. 1 trillion. Partnership between State and Centre needed.

Investment requirements till 2030 Average annual requirement for urban transport in India Rs. 1 trillion

Investment in Metro Rail (Govt sector) MRTS segment is hugely underfunded. 0.180 0.167 0.160 0.140 0.117 0.120 0.100 0.080 0.060 0.040 0.020 0.064 0.078 0.000 2013-14 2014-15 2015-16 2016-17 Total Expenditure in Metro Projects (in trillion rupees) 22

Issues for deliberations How to improve investment in MRTS in India? Social benefit of MRTS is very high. Hence huge opportunity cost.

Issues for deliberations MRTS is regulated sector. Why less projects are rolled out? Financial viability of projects have to be improved.

Many positive factors GDP growth Nuanced PPP regime High Population density Metro Policy

Indian GDP growth is improving : 10% 9% 8% 7% 6% Quarterly GDP Growth Rates (%) 9.1% 5.7% 6.5% 7.2% 5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015-16 2016-17 2017-18

Govt is committed to accelerate growth with equity Capex by Government has been high

CAPEX/TE has improved for both Centre and States 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 18.0 18.7 15.6 15.9 14.4 14.1 13.9 11.8 12.0 11.8 2012-13 2013-14 2014-15 2015-16 2016-17 Capex/TE Centre Capex/TE State Quality of Govt. spending improved: Higher Cap-ex/Total expenditure in Govt. (Centre as well as State)

CAPEX/GDP has also improved for both Centre and States Centre and States combined (Rs. lakh crore) 2014-15 2015-16 2016-17 Total 3 years 5.06 6.62 7.84 19.50 In last 3 years, government has made investment worth 19.5 lakh crore 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2.3 2.1 2.5 1.7 1.7 1.6 3.0 3.3 1.9 1.9 2012-13 2013-14 2014-15 2015-16 2016-17 Capex Centre/ GDP Capex State/GDP

Broad contours of enabling framework Headed by the PM, an apex policy making bodyreviews and approves - polices and projects Cabinet Committee on Infrastructure PPP Appraisal Committee and Empowered Institution PPP projects are appraised By a Specialised unit in NITI Aayog VGF Scheme Creation of Institutions to arrange finance Standardisation of Bidding documents: Model Concession Agreements Bidding documents like RFQ and RFP Bidding documents for selection of Transaction Advisers Guidelines and Manuals. EPC Manual 30

Issues for deliberations How to raise viability of projects

Technology Many options available City Morphology and growth potential important MRTS should be brought centre stage of EV mobility paradigm. - Investment in charging - Batteries.

How to improve financial viability? Price sensitivity Limitation of raising user charges Uncertainty due to Price Fixation Committee World over, subsidising MRTS is common.

Institutional arrangements Creation of a MRTS fund Creation of a MRTS corporation Integration of Land and Transport State Governments have to be brought centre stage.

Role of State Raise financial viability Integration of different modes Strategic densification Vary concession period State Governments have to be brought centre stage.

Issues for deliberations: Innovative finances Singapore : variations in FSI are linked to the location of metro stations and to the network of main streets Singapore: densification and metro corridors 8

Issues for deliberations: Innovative finances Mumbai: Need strong institutional arrangement for strategic densification.

Debt Financing: Inter-generational parity Kochi Metro Rail; Rs 651.79 crore Bangalore metro Phase 1: Rs 650 crore Innovative finances possible.

Conclusion High Growth Economy. MRTS- hugely underfunded Govt. and private to come together States have important role Innovative finances possible.

Thank You