Centre to clear Chennai Metro Rail funding soon

Chennai: The Centre will clear the funding for the Rs 14,600-crore Chennai Metro Rail project and the second desalination plant for Chennai, according to Mr Jaipal Reddy, Urban Development Minister.

Addressing the seminar on affordable housing, Mr Reddy was responding to the demand for strengthening the infrastructure, including public transport, in urban centres.

He said the Cabinet would clear in the next two weeks the 20 per cent funds including 15 per cent equity and 5 per cent subordinate debt for the 46-km Chennai Metro Rail project.

The Central Government and the State Government are to contribute 40 per cent for the project. The State Government brought in its share in November 2007 when the work on the project was initiated. The balance would be in the form of debt for which the Centre has entered into an agreement with the Japan International Cooperation Agency (JICA) in November.

The Centre will also clear the grant of Rs 870 crore for the second desalination plant to come up to the south of Chennai at Nemili. The total project cost for the 100-million-litre-a-day plant is Rs 900 crore, he said.

At the seminar organised by the Confederation of Indian Industry and the Confederation of Real Estate Developers Association of India, he said the Centre is examining various options to support the housing requirements of the urban poor. The private sector has an important role to play in creating affordable housing with the support of the public sector.

Cities in the South should emulate the example set by the National Capital Region which has satellite towns that have grown as big as New Delhi. Southern cities too need to develop satellite towns.

The developers are to be blamed for the problems being faced by the real estate sector. They have created a huge stock of built-up space catering to the top-end of the luxury segment. But there is a huge market represented by the middle class when the Delhi Development Authority called for applications from buyers for 5,000 apartments ranging from Rs 7 lakh to Rs 77 lakh the authority received over six lakh applications.

The developers were overplaying a crisis where none really existed. The present market conditions actually pose an opportunity.

Where is the crisis when developers have sold 43 per cent more apartments in the Rs 75 lakh-plus range as compared to last year. “Do not see more ghosts than there really are,” the Minister cautioned.

The real estate sector should take up a “reality check,” he said.

The Centre put in place significant support package for the real estate sector by improving liquidity, paving way for a drop in home loan interest rates and providing policy support for home loans of less than Rs 20 lakh.