Rupee Fall May Hit Infrastructure Projects
The current fall in rupee value against the dollar may hit some major future infrastructure projects in Mumbai such as Metro lines II and III. There is an expected 10% rise in project costs, adding more burden on commuters.
According to experts, the second line of Metro project between Charkop-Bandra-Mankhurd and the third line between Andheri Seepz-Bandra-Colaba would require considerable imported material and foreign consultants. Hence, the original estimate may get impacted significantly. The ongoing Navi Mumbai Metro project (Belapur-Kharghar-Pendhar) too may face a similar situation. The ongoing metro project from Versova to Ghatkopar via Andheri would not be affected as it is nearing completion.
State government sources said that both proposed metro lines (Metro II and III) would witness an increase of over Rs. 2,000 crore each, owing to the depreciating rupee value while the Navi Mumbai metro line’s rolling stock would also witness significant increase in cost as the contract is yet to be awarded. The estimated rise in cost would be approximately Rs. 200 crore according to CIDCO. According to economic experts, the more the value of rupee falls, more will be the financial burden on these projects and the agencies involved in their construction.
Other projects that may potentially get affected are the Mumbai Trans-Harbour Link and the Mumbai Monorail projects. The metropolitan commissioner stated that projects that use only cement and steel won’t be much affected as India already has enough stock. However, projects that require rolling stock or other equipment to be imported will see significant impact.
Financial Impact on some projects
1) Mumbai Metro- Line II
The metro line between Charkop and Mankhurd is currently stalled due to the deadlock between the developers and the government over various clearances and permissions. There is also an opposition to the elevated section. The estimated cost of the project is Rs. 11,000 crore. If the route becomes an underground route instead of an elevated section, the estimated cost would be around Rs. 22,000 crore. With falling value of rupee, it may cost an additional Rs. 2,000 crore.
2) Mumbai Metro – Line III
The metro line between Colaba and Andheri SEEPZ via Bandra is completely an underground route with an estimated cost of Rs. 22,000 crore. With the falling rupee value, this too may cost Rs. 2,000 extra.
3) Mumbai Trans-Harbour Link (MTHL)
The MTHL project between Sewri and Nhava-Sheva is currently stalled due to lack of bidders for the project. MMRDA and the state government are looking at other options to raise funds for the project. The estimated cost of the project is approximately Rs. 10,000 crore. There may be a slight escalation due to depreciating rupee.
4) Navi Mumbai Metro – Phase I
The 11 km route between Belapur to Pendhar via Kharghar has 11 stations. The contract for rolling stock is yet to be awarded though the viaduct construction is already underway. The estimated cost of the project is Rs. 2,200 crore. With the current rupee value, the cost may go up by Rs. 200 crore.
