FinMin raises concerns on MoHUA proposal to amend Metro Act
FinMin raises concerns on MoHUA proposal to amend Metro Act

NEW DELHI: The Ministry of Housing & Urban Affairs (MoHUA) has been recommended by the Department of Economic Affairs, Ministry of Finance, that the impact of the proposed modification be evaluated on the rights of lenders as well as concessionaires under other laws.

As per the Department of Economic Affairs, the proposed changes could affect other Metro Act requirements and, further, they might change how lenders perceive metro projects because they might not be given access to the projects' revenue streams.

In order to protect the interests of the Government of India in the event that Metros owed money to the Government of India itself that would otherwise be impossible to recover, the Department of Expenditure (Ministry of Finance) has also sought safeguards. Numerous Central ministries have been asked to comment on the proposed change to the Metro Act by Ministry of Housing & Urban Affairs .

In addition to suppliers and contractors, the proposed modification would likely deter foreign and local finance agencies from investing in the Indian infrastructure market. The amendment creates more problems than it attempts to solve.

The Ministry of Housing & Urban Affairs' (MoHUA) only goal is to protect Metro Rail assets from execution actions in accordance with arbitral judgements and civil court orders, regardless of the consequences.

It would have avoided raising as many concerns if MoHUA had simultaneously proposed a solution for decree holders to be paid up, whether by the Government of India itself or by any other workable alternative. Simply put, the proposed change forbids decree holders from taking legal action, including in the case of decrees issued by the Indian Supreme Court.

Even government-run businesses (like IRCON and NBCC) who take part in Metro Rail companies' tenders would suffer. If orders against metro rail firms are made unenforceable, most public financial institutions and banks would suffer as well because they would not be able to recoup their money for metro projects.

India's rating in the ease of doing business might be badly impacted by the modification to the Metro Act.

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