The Union Cabinet on Wednesday approved its Metro Rail Policy 2017 focusing on compact urban development, cost reduction and multi-modal integration, Union Finance Minister Arun Jaitley said.

Jaitley said the new policy has been formulated to enable realisation of growing metro rail aspirations of a large number of cities in a responsible manner.

He said private investment and other innovative forms of financing of Metro projects have been made compulsory to meet the huge resource demand for capital-intensive high-capacity Metro rail projects.

As per the new policy “private participation either for complete provision of Metro rail or for some unbundled components like automatic fare collection, operation and maintenance of services will form an essential requirement for all Metro projects seeking central financial assistance”.

The government said the move is aimed at capitalising on private resources, expertise, and entrepreneurship.

States proposing new Metro projects will be required to indicate in their project report the proposals and investments that would be made for ensuring the last-mile connectivity up to five km on either side of a Metro station through feeder services, mon-motorised transport.

It also requires the states to clearly indicate in the project report the measures to be taken for commercial property development at stations and on other urban land, and for other means of maximum non-fare revenue generation through advertisements, and lease of space.

The states are also required to commit to accord all required permissions and approvals.

The new policy also empowers state governments to make rules and regulations and set up fare fixation authority for timely revision of fares.

The three models for availing central assistance is under the Viability Gap Funding scheme; grant by the Centre under which 10 per cent of the project cost will be given as lump sum central assistance; and 50:50 equity sharing model between central and state governments.

Under all these options, private participation is mandatory.

At present, Metro projects with a total length of 370 km are operational in eight cities — Delhi (217 km), Bengaluru (42.30 km), Kolkata (27.39 km), Chennai (27.36 km), Kochi (13.30 km), Mumbai (Metro Line 1-11.40 km, Mono Rail Phase 1-9.0 km), Jaipur (9 km) and Gurugram (Rapid Metro-1.60 km).

Metro projects with a total length of 595 km in 13 cities, including 10 new cities, are in various stages of planning and appraisal, Jaitley said.