reportage

Dividing Lines

The battle over Hyderabad's metro

By Mark Bergen | 1 May 2013

ON A THURSDAY AFTERNOON in late February, a crowd formed in the courtyard of the Chaitanya Bharathi Institute of Technology in Gandipet on the western outskirts of Hyderabad. Around 200 students fanned out around a makeshift stage, with speakers blasting hit songs in Hindi and English. The bold ones stepped forward to dance. At the end of ‘Sexy and I Know It’, they were asked to welcome Sanjay Kapoor, the head of corporate communications for L&T Metro Rail Limited, the private contractor building Hyderabad’s new metro system, which has been rising on lofty pillars of concrete all over the city since it broke ground in April 2012.

Kapoor stood before a lacquered board in his pinstriped suit, tight ponytail and wide sunglasses. The board displayed a futuristic rail car above the words “your chance to be a celebrity”. That chance came from a tiny box, into which students could submit a proposed slogan for the metro, in order to become one of its “brand ambassadors”—10 city residents who would appear on posters and TV advertisements promoting the metro. Near the box was Akshay, a first-year student of civil engineering from Dilsukhnagar, the neighbourhood where a bomb blast a week earlier had claimed 17 lives. A friend from the same neighbourhood, a young mustache gracing his top lip, stuffed a sheet in the box. He bashfully shared his tagline: “Making Hyderabad more beautiful.” They each spend Rs 10,000 per year on their hour-long bus commute to campus.

Once Kapoor took the microphone, it became evident that the dancing was over. On a “serious note”, he began to pose a series of questions to the thinning crowd. Were they aware of the metro? An affirmative murmur rose. “What,” Kapoor went on, “do you know about the Hyderabad metro?” This time, the murmur was less intelligible. One distinct response came from a 23-year-old on my right, muted but audible, and it neatly captured the growing public skepticism that led L&T to launch an unprecedented public relations campaign in January, four years before the metro is scheduled to open: “It is eating money.”

NINE YEARS SINCE IT WAS FIRST ANNOUNCED, the Hyderabad metro remains marred by controversy over its design, execution, funding and cost. It is also far from complete. To hear Kapoor speak on their campus, Akshay and his friend had crossed the crowded old city, where the metro’s three proposed lines will some day cross. From there, their bus route had taken them on one of the lonely roads of suburban Hyderabad, through a rocky, sparsely populated landscape shaped by nature and Chandrababu Naidu. More than a decade ago, the then-chief minister of Andhra Pradesh had conceived of a metro for the fast-growing state capital that would carry 2.5 million commuters per day by 2025 and be the most modern transit system in the world. His vision has had a troubled journey since.

On 1 September 2010, Andhra Pradesh entered a public-private partnership (PPP) with Larsen & Toubro (L&T), the nation’s largest engineering conglomerate. According to the terms of the agreement, the state has leased the company 269 acres of land, spread across each of the three corridors of Hyderabad through which the metro will run, on which L&T will build and operate 72 kilometres of rail lines—120 kilometres fewer than the Delhi metro. Unlike Delhi, this metro will run entirely above ground. By the time of its completion, it will have cost, by latest estimates, at least Rs 16,375 crore (Rs 163.75 billion), nearly double its original estimated cost of Rs 8,760 crore (Rs 87.6 billion).

One of the three lines is slated to be ready by the end of 2014; it will connect Uppal in the east to Secunderabad and Begumpet, and eventually to the western tech parks of Madhapur and HITEC City, near the Shilparamam crafts village. Work is beginning on another, with pillars already rising in the hectic northern suburb of Miyapur. As we walked off the campus, far from the metro line’s planned reach, Kapoor confessed that the full promotional road-show—set to visit 20 universities, and then temples, churches, mosques, tech campuses and the offices of every local politician—would cost Rs 1.25 crore (Rs 12.5 million). He deemed it a worthy expense.

In 2003, the state outlined plans for a metro rail to service a metropolitan region that had doubled, from 3 million to over 6 million, in the preceding two decades. The next year, the government created the Hyderabad Metro Rail Ltd (HMRL), a quasi-govermental agency, and appointed NVS Reddy, a former Indian Railways accountant, as its director. Dr E Sreedharan, the chief engineer famed for having built the Delhi metro with record speed and unparalleled integrity, was to be the project’s prime consultant. They opened a bid for construction. Four years later, the HMRL signed a contract with a consortium led by Maytas Infrastructure, a company helmed by B Teja Raju.

But just two months after that, on 23 September 2008, Sreedharan suddenly resigned. He scripted a very public letter to Planning Commission Deputy Chairman Montek Singh Ahluwalia, a key advocate for the metro, in which he called the project an impending scandal. Granting a private party “269 acres of prime land to BOT [build, operate and transfer] … for commercial exploitation,” he wrote, “was like selling the family silver.”

On 9 January 2009, Raju’s father, Ramalinga, chairman of the software giant Satyam Computer Services, confessed to an accounting fraud amounting to Rs 5,040 crore (Rs 50.4 billion). The case unleashed a flood of criticism aimed at the metro project, followed by a rapid chain of events that nearly shut it down. After Ramalinga’s fall, business investment in the city came to a standstill. Uncertainty about Hyderabad’s future grew deeper as that same year, the decades-old Telangana separatist movement reignited.

The concerns of a few dogged detractors, who had closely scrutinised the metro project since its inception, began to spread. Protests erupted in Hyderabad’s oldest corners, as roads were widened and concrete poured. Many of the grievances were born out of the reshaping of daily lives by a cumbersome new intrusion. But many others were rooted in objection to the singular distinction of the Hyderabad metro, which sets it apart from all the metros underway in Bangalore, Chennai, Pune, Jaipur, Ahmedabad, Lucknow, Ludhiana, Chandigarh, Nagpur and Kochi: its unorthodox funding arrangement. Only in Hyderabad will the entirety of the metro be built on public land conceded by the government to a private operator.

“The very definition of this project is rail and real estate,” said C Ramachandraiah, an urban geographer and the metro’s fiercest critic. In his fight, the city itself is a battleground, one on which a battle has been waged for a decade by citizens who do not want Hyderabad’s character to be shaped by techno-parks and private wealth. “It is going to be a huge white elephant [that will] destroy the skyline of the city.”

In his office at the Metro Bhavan in Saifabad, HMRL managing director NVS Reddy told me that before drawing up plans, in 2004, he studied the four cities where metros turn a profit—Singapore, Tokyo, Hong Kong and Taipei—and found a shared ingredient: real estate. To be more specific: mechanisms that harnessed the value of real estate to fund the metros’ construction. When a metro comes up, the properties along its route invariably rise in value, boosted by the convenience, crowds and improved infrastructure. This brings a rush of developers eager to buy proximate realty and—as in the case of the four successful east Asian metros—willing to pay for this access.

Infrastructure companies might be happy to build a lofty project like a metro; however, they are less keen to own and operate it. Worldwide, including in countries where transit riders have greater expendable income than the average Indian commuter, metros run on losses. Reddy devised a plan whereby the real estate gains that accompany a metro’s arrival circled back to the metro project itself. The private partner would be given land free of charge to build the metro, operate it and collect fares for a lease period, after which they would transfer both land and metro back to the government. To cover the costs of building the metro, 212 acres of land would be allotted for the private company to build on. It would get an additional 57 acres around 34 of the 66 stations, set one kilometre apart. On its total allotted land, it would be permitted to develop up to 18.5 million square feet of commercial property.

Reddy’s plan was devised at a time when the central and state governments, led by the Planning Commission, were forcefully steering bureaucrats toward collaborations with private partners in public projects, most of them smaller than the Hyderabad Metro. For Reddy’s colossal project, the public would pay no more than 40 percent of the costs, split evenly between the central and state government. Unlike the vast majority of the world’s rail transit systems, this metro would not be wholly funded by public money.

In order to further maximise potential real-estate values, Hyderabad in 2008 became the first city in India to ditch the regulations on floor-space index, the zoning rule that caps building height. Reddy expects 100-storey skyscrapers in the city soon. (“The sky’s the limit,” he said.) It would be only a matter of time, he swore, before Hyderabad looked like those four vertiginous Asian megalopolises.

When Satyam imploded in January 2009, Maytas, where the elder Raju had discreetly stowed away millions, pledged it would still complete the metro rail. The HMRL refused, and after a lengthy back-and-forth, severed the contract in June 2009, amidst a global financial free fall. But Reddy did not balk. A year later, L&T joined and work began anew. This March in New York City, the Global Infrastructure Leadership Forum, an industry gathering, gave the Hyderabad metro its annual award for “Best Global Engineering Project”, an accolade that prompted Sudhir Krishna, secretary of the Ministry of Urban Development, to send a letter of congratulations to NVS Reddy. The ministry also sent around a circular to all the country’s other metro projects, demanding that they emulate Hyderabad.

“This is the first-ever project which L&T has taken on at this large a scale,” Kapoor told me. As the company’s glossy promotional materials proclaim, it will be the world’s largest metro built through a PPP. If it survives, it will be the only PPP metro to do so—others who have attempted the model have failed.

Inside L&T’s offices, in the lofty Cyber Towers of HITEC City, Kapoor’s boss and L&T’s metro chief, Vivek Gadgil, explained the logic behind his PR blitz. Other companies would bring in an Amitabh Bachchan; he wanted local people. “I would like Hyderabadis to be emotional owners of the project,” he said. “I’m sure everyone is watching this. Not only in India, but outside.”

If no longer mired in scandal, the metro is still marked by its history. At the same time, its success or failure has massive implications for a long-running national argument over India’s transportation decisions, and the needs of our sprawling cities. It is the most complex of many lengthy, costly proposed metros in the nation, which must soon prove they can fix choked cities better than bus rapid transit (BRT), light rails, or any other alternatives they beat out in the planning stakes. An investigation into Andhra Pradesh’s politically powerful Reddy family, once key movers of the metro project, continues to uncover evidence of corruption linked to land deals in Hyderabad. And in the same month that the metro was honoured as the world’s best engineering project, L&T, having suffered a credit downgrade in the winter of 2012, was temporarily banned from doing business with the World Bank.

Hyderabad is now embarking on an audacious, untested infrastructure plan built around real estate, in a city whose political future is entirely uncertain. Partha Mukhopadhyay, an infrastructure expert at the Center for Policy Research, Delhi, who is watching the metro very closely, summed it up this way: “This is literally a shot in the dark.”

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AS I WAITED FOR SUMAN GUPTA in his storefront pharmacy, I noticed the shuttered doors of several shops nearby. Most were yet to open for the day, but a few shop owners in the market had taken compensation from the authorities, closed their shops and left.

Sultan Bazar’s main strip leads to a stop on the metro’s second corridor, just north of its proposed intersection with the first, at Osmania Medical College. The HMRL says it has plans to compensate displaced shop owners and move them to a new high-rise complex. The market is the epicentre of enmity toward the metro. Its traders declared a three-day bandh in opposition to the project in July 2011, and have held multiple protest vigils.

Gupta arrived. Broad-built, with salt-and-pepper hair, he is an old tenant of the Bazar, and speaks angrily about the metro, in rising, interrogative sentences. It may help ease traffic in his city, which has grown fiercely since he took over from his father. “OK, at what cost?” he asked. “At the cost of our livelihoods? At the cost of throwing out thousands of people?” He pulled out a fat binder of documents and news clips. He said it was not until 2010, six years after the plans were supposedly drawn up, that he and his fellow tenants even heard that the metro would cut through their street, widen it and force relocations. Gupta is skeptical about the proposed move to multi-storeyed buildings; the details of the plan, he claimed, were not at all clear.

Citywide, residents are worried that the project will upend their lives. A coalition representing 500 business owners in four neighbourhoods filed a lawsuit in 2012, claiming the metro’s alignment had been illicitly altered to move through the Ameerpet neighbourhood and that metro construction would halt foot traffic and create years of congestion on the roads.

Such concerns are particularly acute in old Hyderabad. Directly at stake in the clash over the metro is the self-image of this city, which clung fiercely to its independence under the Nizam well after other principalities had acceded to the new Indian state. The metro’s adversaries are convinced that Hyderabad’s identity is tied to its past, which, much like the public’s notional control over the city’s land, is now being wrested away.

Sultan Bazar has been a central urban market for a century, but its history goes back 300 years, a fact metro opponents brought up insistently in our conversations. Outside his offices at the Centre for Economic and Social Studies in Begumpet, Ramachandraiah proudly pointed out two observatories on campus which had both recently turned 100 years old. Ramachandraiah is the dramatic foil to NVS Reddy. An academic, he is, in some ways, the face of the opposition to the metro. The two have squared off in multiple public debates. Since the project’s inception, Ramachandraiah has been its reliable gadfly; he has released scores of statements and written a lengthy report on the project, published in 2010, called “Undoing the City”.

I visited his offices the day before I was scheduled to meet Reddy. Ramachandraiah warned me of the spin I would receive. “It’s all duplicity,” he said. “The tactics used by them are all bogus and deceptive—to whitewash the people’s minds.”

Ramachandraiah’s rivals are well entrenched. On 19 January 2009, as the Satyam scandal unraveled, the government of Andhra Pradesh took the unusual step of permanently extending Reddy’s directorship at the HMRL. Ronald Rose, a zonal commissioner for the Greater Hyderabad Municipal Corporation (GHMC), told me this was a substantial asset to the project—to have one person at the wheel throughout. But Reddy’s lack of an engineering background has also earned him the opprobrium of metro opponents. Several claimed Reddy was responsible for cutting the quiet deals that appeased business and political interests eager for a stake in the metro.

For Ramachandraiah, Reddy’s metropolitan vision itself is a colossal affront. “Slowly, these small shops, small houses, low-density [areas], all will be wiped out,” he lamented. “What kind of city is it?” He fears it is becoming one where private interests inevitably take precedence over the public good. Like many, he imputes the thrust toward privatisation in Andhra Pradesh to former chief minister Chandrababu Naidu, whose Telegu Desam Party ruled the state between 1995 and 2004. “Naidu was for everything PPP,” Ramachandraiah said; it was an extension of his dream to remake the city—for Cyberabad and the swanky IT hubs.

That vision deeply troubles those who believe the city’s geography should embody its past. Anuradha Reddy, the Hyderabad convener of INTACH, a historical preservation group, has fiercely fought the metro’s planned passage near heritage sites—the Mozamjahi market, the Clock Tower and the Assembly. She drove me past the Assembly, Andhra Pradesh’s stately capitol building, also marking its 100th year, which faces what Reddy called “one of the last green spaces left in the city”. The HMRL has pledged the metro will stay 50 feet away, but did agree that it would forever alter the skyline.

Over coffee at her uncle’s home, Reddy’s aunt invoked Naidu by his common calling card: the man who “put Hyderabad on the world map.” Reddy interrupted. “We were on the world map for the last 300 years!”

In Ramachandraiah’s telling, the Naidu ethos brought harmful, naked ambition and naivety. The professor derided the “world class city” slogan that was deployed to usher in Hyderabad’s new airport, opened in 2008 as a PPP with Indian and Malaysian companies, and nearly twice the acreage of London’s Heathrow. He said it was, like the metro to follow, a shallow land grab; the city would never generate the commercial activity to justify such investments. “How can this become a south Asian hub?” Ramachandraiah asked indignantly. At Sultan Bazar, the sentiment is blunter. Gupta and other tenants founded a group, Society Concerned About the Metro (SCAM). “Metro is only a mask,” Gupta told me. “The real agenda is real estate.”

Concern about the metro has not spread to political quarters. K Chandrasekhar Rao, the president of the Telangana Rashtra Samithi (TRS), has questioned the decision to build a fully-elevated rail, particularly near Sultan Bazar. But he has not brought his movement’s full weight to bear against the project. The current chief minister, N Kiran Reddy, a Congress politician, full-throatedly backs the metro. “The metro rail project will solve traffic problems in the city,” he told reporters last October, while assuring them that it would be completed within five years.

Gupta points to the absence of vocal political opposition as evidence that the officials have all been bought off. To others, though, the metro project is not so much a cunning plot between the chief minister and private developers, as evidence of a broader inclination for prodigious undertakings. “I don’t buy that kind of a conspiracy theory,” Anant Maringanti, the director of the Hyderabad Urban Lab, an outfit that conducts research on Hyderabad and urban India, argued. “It’s not like Maytas or somebody said, ‘Let’s build a metro rail and then grab the land.’” Instead, it was the product of an attitude, “a new orientation”, from the central government on down, in favour of “mega-projects”. A metro, Maringanti said, “is as mega as you can get”.

Maringanti objects to the project not as a land grab but as an urban planning blunder—a foolish effort to solve problems in the congested city with an elephantine fix, rather than careful consideration. He did not criticise the usual suspects. “If it had not been Naidu, it would have been somebody else,” he continued. Yet he does assign considerable responsibility for the nature of the project to the man who has been associated with every metro in India. “There was somehow a sense that Hyderabad should be turned into a model for all metros. It didn’t happen; that’s a different matter altogether. But that was something Sreedharan himself was interested in.”

The Delhi Metro Rail Corporation (DMRC) chairman has now put a great deal of distance between himself and the metro project, but Maringanti recalled a different start to the affair. When he interviewed NVS Reddy in 2005, Reddy wanted, Maringanti said, “to do this very differently from Delhi,” without major public subsidies. And he had support. “Sreedharan backed this project very strongly,” Maringanti told me. “This was his child.”

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IN DECEMBER 2011, Sreedharan retired from New Delhi to Ponnani, a tiny port town in Kerala’s Malappuram district, 40 kilometres west of his childhood home in Palakkad. We met on a Sunday morning. He was livelier than he appeared in televised interviews, at ease in his wife’s family home. Photos on his walls showed him receiving four national awards. In a display case in the centre, a small metro car sat encased in glass. A framed magazine cover, in the adjacent room, splashed his familiar sobriquet, ‘The Metro Man’, above his face.

I asked if he had imagined that his first metro after Delhi would improve on its considerable achievement. “That was our hope on hope,” he said. “But it didn’t happen.”

During the firestorm that followed his departure, Sreedharan spoke often, and critically, against the Hyderabad metro. In an interview with CNN-IBN in late November 2008, he downplayed his (and by extension, the DMRC’s) influence over the project, and claimed that he had warned the HMRL that if they handed over “such prime land to a private operator, there will always be a scandal.”

Last September, at a conference in Kochi, he accused private operators of inflating costs and extorting the public through transit projects. His comments may have been prompted by a push from authorities in Kerala to adopt the PPP model for the Kochi metro, which he had been prodded out of retirement to consult on. The Union government contemplated privatising the construction of the metro, as well as two state monorails. Sreedharan firmly opposed the idea.

“Right from the beginning [in Hyderabad],” he assured me, “we were objecting to the PPP model.” According to Sreedharan, the advice of the DMRC was entirely ignored by Naidu’s successor, YS Rajasekhara (YSR) Reddy. “He’s the person who said, ‘No, we will do it privately,’” Sreedharan recalled.

Subsequent developments further hastened Sreedharan’s departure. “When the Maytas tender was being considered,” Sreedharan told me, YSR Reddy and his family “changed the alignment so that it would benefit Maytas. Then we withdrew.” In March 2008, the original plans for Corridor III, the Shilparamam–Uppal line, were redrawn, extending five additional kilometres to reach Nagole, a site earmarked for 96 acres of private development that sits near properties connected to Jagan Mohan Reddy, YSR Reddy’s son and political heir, who has been jailed on charges of corruption since last May. “He was in partnership with these people [Maytas] for the land,” in a process that was “very mucky”, Sreedharan said of the younger Reddy. “That’s why DMRC left the metro.”

The redrawn lines also brought the metro closer to Indu Aranya, an upscale complex just east of the new Nagole hub, owned by the Hyderabad conglomerate Indu Projects. Last May, as it carved out the case against Jagan Reddy, the CBI began an investigation into Indu Projects chairman Syam Prasad Reddy. After making investments in Jagati Publications, Jagan Reddy’s media company, the Indu chief had suddenly turned over huge real estate profits, driven, the CBI alleged, by gifts of over 8,800 acres from YSR Reddy. This included the land on which Indu Aranya stood. The CBI also discovered that another one of Jagati’s venerable backers was Satyam’s Ramalinga Raju; he had invested Rs 20 crore (Rs 200 million) through Maytas Infrastructure.

Some news reports credited Sreedharan with having been the first person to sniff out the corruption surrounding the Hyderabad metro. His wariness of YSR and Jagan Mohan Reddy appears prescient, although Ramachandraiah and others in Hyderabad now attribute much of the engineer’s present show of reluctance to hindsight. Sreedharan admitted he did not anticipate the Satyam accounting fraud—nor could have HMRL. Instead, he said, real estate wrecked the project. “The real estate deals are all blood deals. We knew that Maytas would fail. They wanted to get the project, somehow, to get all the lands.” The Hyderabad metro, Sreedharan concluded, “was all their idea”.

Of the 10 metros outside Hyderabad currently in development, Sreedharan is involved to some degree in all but Bangalore, which he departed after a dispute with the Bangalore Metro Rail Corporation. At least four more cities will likely begin metro plans soon, he told me. His unpleasant departure from Hyderabad has not dulled his conviction that metros are an absolute necessity for most Indian cities. A city with a population of over 30 lakh (3 million), Sreedharan said, “can’t survive without a metro.” This conviction has drawn criticism from Hyderabad metro opponents, even following Sreedharan’s rift from HMRL. Ramachandraiah is unimpressed. “Any city asks for a metro, he says, ‘Okay,’ whether a city requires it or not.”

Among scholars of urban planning and transit, a consensus is emerging that most Indian cities do not require one. Most trips are typically no longer than 10 kilometres, and taken on inexpensive buses, or on foot. Indian cities are mostly developing in sprawls along urban peripheries, and the sheer distance a metro rail must cover in order to connect riders usefully makes it a far costlier proposition than other alternatives. Dinesh Mohan, an IIT-Delhi transport researcher, estimates that, per kilometre, bus rapid transit (BRT), a system of exclusive lanes on existing roads on which buses can efficiently ferry passengers at high speed, is 15 times cheaper than elevated rails.

In 2005, the Institute for Transportation and Development Policy, a New York-based think tank, released a bulky ‘pre-feasibility’ study of BRT in Hyderabad, concluding it was indeed viable. It fulfilled three of the criteria HMRL’s Reddy insisted on: cheap, sans taxpayer burden, and development-friendly. A BRT, the study concluded, could generate real estate profits comparable to those produced by an elevated rail system, as both would boost property values in the vicinity of transit stops. It could also be run on a build-operate-transfer model, like the L&T contract—but its cost would be one-eighth that of a metro.

Reddy told me he was “one of the first Indians” to travel to South America and study BRT, the dominant mode of transit in that continent’s cities. He liked it, but deemed it infeasible on Hyderabad’s narrow roads. On this point, Reddy and Sreedharan are in rare agreement. BRT can only work on roads with six or more lanes, Sreedharan told me. In Hyderabad, it would be impossible to procure right of passage for the roads. But Maringanti finds this excuse invalid. For the metro, he said, “they’ve been widening roads left, right and centre.” He accused officials of ignoring cheaper options and succumbing to the allure of a mega-project.

Maringanti offered an example to explain his point. A centuries-old labyrinth of water paths, engineered as storm water drains, crisscrosses Hyderabad. These ‘nallas’, mostly on GHMC land, saw considerable encroachment over the last four decades, which slowly buried them under a mix of concrete and sewage, and mired their existence in bureaucratic red tape. To Maringanti, their abandonment signals a deficit in municipal imagination. “You could very easily have built an entire rail network on those waterways,” he noted, “without actually trying to get any extra land, without displacing too many people, without requiring a major new organisation. And it could have been a wonderful system!”

Hyderabad’s existing public transport systems are not short of challenges. The Multi Modal Transport System (MMTS), a dilapidated 43-kilometre rail line which cuts through the city, carries 150,000 primarily working-class passengers daily. In December, the system hiked its fares. The city’s bus system is considering doing the same, in the face of considerable losses.

Reddy pledged that the metro would be integrated with both systems with a universal transit pass. Critics doubted this. “My fear,” said Shankar Narayan, an architect who has worked in Hyderabad for two decades, “is that once the metro goes up, the RTC will go further down the drain.”

Publicity materials tout the Hyderabad metro’s emphasis on an urban planning concept currently in fashion in the United States of America: “transit-oriented development”, a term for mixed-use urban areas that maximise users’ access to transport. By this model, local governments reap—through taxes and fees—some of the bounty from private developers who gain from public infrastructure investment. Maringanti thinks the planning buzzword is a sham, at least as it’s been applied in his city. It is a “ritualistic invocation”. he said. “This [the metro] is about increasing property values in the city. That’s what this is. This is not about changing the nature of the region.” He added: “We’re kind of shopping for solutions. And you pluck them out of the social context and the historical context in which they worked.”

According to Sreedharan, the central government has, for the past decade, urged cities toward one specific kind of solution. “The government,” he said, “was very keen for PPPs, PPPs, PPPs.” For the flailing Delhi Airport Metro Express Line, which had its operations suspended from last July to February this year for safety concerns, the DMRC did not support a PPP, Sreedharan said, but they caved to pressure from the Planning Commission. In the end, he claimed, the PPP’s execution failed the Delhi line. But while it is possible for an airport rail, which caters to riders with fatter wallets, to churn out profits for private operators, metros—which must keep ticket prices low—cannot generate similar revenue. Sreedharan laid out this proposition at the very beginning of our conversation. Metros, he said, “can never make a profit”. A private operator will sign on only when there are “other sweeteners” available—“in the form of land”. That brought us to Hyderabad.

“But even then, I’m not sure it will succeed,” he went on, choosing his words carefully. “I won’t say a disaster.” He settled on diagnosing it a “drag” on L&T.

When I asked Reddy about these criticisms, he deflected them diplomatically. “I have a lot of respect for Dr Sreedharan,” he began, in a rehearsed tone. “He’s a great leader. He’s a good engineer. But I’m of the view that his capabilities stop there. He’s not good at making a financial model.” Reddy insisted that, prior to Sreedharan’s departure in 2008, the engineer had backed the HMRL model fully. “He supported PPP,” Reddy said. “I have letters.” Sreedharan, for his part, claimed that any correspondence he may have had with HMRL was now buried in the DMRC offices. “It is true at the early stages of DPR [Detailed Project Report] preparation we had suggested a PPP model,” he said. “But after the costs and ridership were assessed we did not support the idea. Indeed, we vehemently opposed it.”

When I pressed Reddy about Sreedharan’s “selling family silver” accusation, a line Sreedharan had reiterated for my benefit, he grew animated. “We are not allowing an inch of property to be sold,” Reddy said firmly. After the concession period ends—likely around 2065—L&T will hand the land back to the government. In August 2008 in Delhi, the DMRC leased two hectares of land by the Vishwavidyalaya station to a private developer, in what Sreedharan called a “very transparent” auction. Reddy pointed to the lease as evidence of the engineer’s inconsistencies. “Did we sell family silver or did he sell family silver?” he asked.

The rift between the two former colleagues was largely a creation of the media, Reddy said, and was now a thing of the past. “It’s buried,” he intoned. (When I asked for copies of Sreedharan’s letter supporting the PPP, Reddy refused. “This is a closed chapter.”)

As Sreedharan has maintained his distance, it seems to have strengthened Reddy’s resolve. With his metro, he now has something more to prove. “As Chairman Mao famously said, ‘Let a thousand flowers bloom,” he told me, chuckling. “Let different models come up.”

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ON 16 APRIL 2012, SK Lohia, an officer on special duty at the Ministry of Urban Development, wrote a memo on metro rail financing. While it made no explicit reference to specific projects, its conclusions underscored the scope of Hyderabad’s audacity. Addressed to all chief secretaries and all managing directors of metro projects, the six-page document was a summarised review of 113 metros across the world. Only 14 had used some form of PPP. Outside of India, no city had attempted an entire metro with this model, save the STAR and PUTRA light rails in Kuala Lumpur. The first, opened in 1996 by a private firm, and the other, which came two years later, used a model similar to Hyderabad. Both companies sank into tremendous debt, forcing a government bailout in 2001 that cost $1.46 billion. Private metros, Lohia charitably put it, have “not been very successful”.

Gadgil, the L&T Metro chief, knows this. He called it a “known fact” that metros across the globe are not financially viable, “standalone on fare-box collection”. He used the same idiom as Sreedharan to describe the lure for L&T: “sweeteners”. The company expects 70 percent of its future revenues to stream in from real-estate gains; the remaining income will be generated in ancillary commercial cash, including the right to sell spaces for ads.

But Gadgil also knows that with each passing day, the cost of the metro rises. A Times of India report from June 2012 pegged the cost at Rs 20,000 crore (Rs 200 billion), about Rs 278 crore (Rs 2.78 billion) per kilometre. Estimations for the Delhi metro put it at Rs 200 crore (Rs 2 billion) per kilometre. HMRL’s request for proposals had estimated the cost at Rs 12,132 crore (Rs 121.32 billion). L&T demanded slightly more, raising costs to Rs 14,580 crore (Rs 145.8 billion). They asked the government for a tenth of that sum in funding—well below 40 percent, the maximum stipulation for public investment in the original scheme, as Reddy was quick to point out. At present, L&T’s total cost is Rs 16,375 crore (Rs 163.75 billion). For land acquisition, the GHMC spent just shy of an additional Rs 2,000 crore (Rs 20 billion).

Times of India, without knowing anything, they write that it’s 20,000!” an irritated Reddy said. He claimed the escalation was only driven by inflation and the rupee’s precipitous fall. Then he promptly retracted his criticism of the Times, and laid the blame instead on Ramachandraiah. His comments, according to Reddy, had fuelled uncertainty about the project.

The professor, in turn, rejected the idea that the public funding was in any way minimal. He spoke of some Rs 10,000 crore (Rs 100 billion) in loans from state banks, which had gone into the project as what he considered a concealed subsidy. The actual value of the loans is nearly Rs 1,500 crore (Rs 15 billion) higher. Seventy percent of the L&T budget comes from loans, with the remainder from government funds and equity raised by L&T shareholders. Those loans, Gadgil admitted, all came from nationalised banks. They offered the best rates.

The metro’s ledger, and its precarious timeline, had been thrown into further disarray by political developments. On my first day in Hyderabad, the last rites were held 140 kilometres away, in Warangal, for Neeraj Bharadwaj. The first-year engineering student had poured kerosene on himself and lit a flame. A few days earlier, two others, 17 and 27, had taken their own lives in Nalgonda district. Around that same time, a student in Hyderabad had hanged himself. They were the latest of an estimated 850 people to commit suicide since 2009 to demand a separate Telangana state.

As the separatist movement intensified, the metro lurched along in its own orbit. Busi Sam Bob, Andhra Pradesh’s principal secretary for municipal administration and urban development, denied that the separatist movement had impacted the metro. Even if Telangana becomes its own state, with Hyderabad as its capital, the project would not be derailed, he insisted. “It’s a local project,” he said. Gadgil swore that such a sizable infrastructure venture would not be abandoned, regardless of the city’s political fate. “It is not possible that a new government will come and say, ‘We don’t need this project,’” he said.

Yet he admitted that uncertainty about Telangana has steered investment away from the city. During Naidu’s tenure, L&T grew close to the chief minister, building much of his “brand Hyderabad” architecture. With YSR Reddy, the ties had been far colder. “We knew we would not get it,” Kapoor, an 18-year L&T veteran, said of the project’s first bid. The firm dove for the second tender, released on 14 July 2009, one week after the government shredded the Maytas contract. Nearly 14 months passed before L&T signed the concession—a lapse authorities and critics agreed was driven by the Telangana issue.

While political uncertainties accumulate, the financial risks, for both public and private partners, might result in an all-too-familiar outcome. “Will it look like the Delhi airport line?” the researcher Mukhopadhyay asked. “Possibly.”

The Delhi airport line, India’s first flirtation with a private metro, has emerged as something of a white elephant. A February 2013 report from the Comptroller and Auditor General (CAG) accused it of being weighted heavily toward the interests of the private partner, Reliance Infrastructure. The project contract stipulates that at least 60 percent of the funding should be private, the same portion as the HMRL contract. The CAG unearthed evidence that Reliance has only met 46 percent of the cost, leaving the government to cover the remainder.

Sudhir Krishna, the Union urban development secretary, defended PPPs in the wake of the CAG report, calling the botched line an aberration. It may not be. Reliance Infrastructure also ran into trouble in Mumbai, where it nabbed the PPP contract for the first phase of that city’s metro, then promptly faced delays and financial tangles. The firm is still locked in an extended conflict with Mumbai’s municipal corporation over the environmental clearance and cost distribution needed to begin construction. Its contract to oversee the metro’s second phase, burdened with land acquisition problems, may now be facing cancellation. In August, the Ministry of Urban Development shot down a Planning Commission proposal that the third phase of the Mumbai metro also be built using a PPP model.

Unlike Reliance, L&T is less concerned with present obstacles than future ones. The entire metro is one large gamble on the imminent growth of the country’s fastest growing asset, real estate. Although Hyderabad has some of the lowest urban real estate prices nationwide, Narayan, the local architect, doubts that metro-related development can expand the city much, as the rail will actually cut through areas that are already Hyderabad’s “densest corridors”. On the plans to scrap building-height limits, he was blunt: “That is a foolish thing to do.” This skepticism, a fear that commercial development in Hyderabad cannot thrive upward, fuels speculation that the metro, and its associated parcels of land, will spread outwards. Reddy has repeatedly said the grant will not exceed 269 acres. But Gadgil considered Hyderabad’s room to grow one of its inherent advantages. In the near future, the rail network will be required to expand, he said. And that would require more land—which L&T is poised to nab.

Apart from land, L&T bagged another sweetener. In 10 years, the HMRL projects that the number of daily passengers will hit 26 lakh (2.6 million). If it does not, L&T’s lease period extends: half a year for each percentage point that ridership falls, for up to seven and a half years. Ramachandraiah considered this clause a blatant concession to the private party. Reddy insisted that ridership will meet expectations; he pointed out that in the reverse case—if ridership tops projections—the lease time shrinks. But the latter is a scenario without historical precedent. In its first five years, the Delhi metro carried less than a fifth of its projected passengers.

In Ponnani, Sreedharan remained dubious of Reddy’s assurances. Ridership rates there, he said, would mirror Delhi. But he also voiced another concern, one which represents a doomsday scenario for vigilant metro watchers. In his sweeping report, Ramachandraiah highlights the terms of the concessionaire agreement in the case of a private party default: the state government would foot most of the bill (90 percent of contractor debt due, as well as the bulk of the depreciated losses). By his math, it may be profitable for L&T, years into the contract, to depart—to “scrap it and go”. Sreedharan admitted: “It may happen.”

Gadgil’s response was tactful, as befits a CEO at the helm of an unprecedented project, banking on a perilous business strategy, in a city whose political future is unknown. “You’re confident L&T will not default on the project?” I asked. “Today?” he replied. “Yes.”

| 5 |

“WE ARE NOT AGAINST THE METRO.” I heard this exact phrase frequently, always with a practiced cadence. They were the first words OM Debara, the general secretary of the Forum for a Better Hyderabad, uttered to me. We lunched at the home of VK Bawa and his wife, Oudesh Rani. Bawa, an elder statesman of sorts for the city, founded the forum 20 years ago. With his genteel, scholarly reputation, he was urged to be the sole petitioner in one of several cases filed against the metro. Debara was the petitioner in another. Members of the forum, and its disparate associates, have filed upwards of 32 public interest litigations (PILs) and three Supreme Court cases. They are against what they see as the project’s opacity to the public, as well as its refusal to move underground.

On the former point, they recently scored a minor, if temporary victory. On 15 March last year, Justice L Narasimha Reddy of the High Court of Andhra Pradesh passed a verdict on a PIL filed by 21 residents of three areas in the metro’s path—Krishnanagar, Yellareddyguda and Ameerpet. The state government had served as respondent. In his verdict, Justice Reddy said that upholding the respondent’s claims about the transparency of the project “would lead to disastrous consequences”. The state government, he wrote scathingly, had doled out the metro contract in a “clandestine manner, keeping the entire project away from public scrutiny”. His ruling was subsequently overturned in a higher court.

Officials dismissed the judge’s criticism. Bob, the state’s principal secretary on urban development, told me that he knew of the ruling, but disagreed with it. Reddy was even more forceful. Since the DPRs were finalised (in 2004 for the first two corridors, and then in 2006 for the third), they had been in the public domain, he said. “I have had more than 40 open debates. I’ve had about 100 TV channel debates,” he said, a little exasperated. “Anybody can ask any question.” As it happens, though, the DPRs are now protected and stowed as intellectual property, and are no longer available to the public. NVS Reddy claimed that this was a necessary move, since opponents were given to lifting information in the plans for their own materials.

The second portion of Justice Reddy’s verdict dealt with the metro’s legal status. While other metros in India, save Mumbai, fall under the Metro Rail Act, Hyderabad’s comes under the AP Municipal Tramway Act of 2008. The opinion from Justice Reddy was damning. The government, “in its anxiety to spread a red-carpet to a private agency, has chosen to violate and break the law”, he wrote. Tramways are, by definition, designed for low-capacity systems, which the verdict insisted does not cover the metro rail.

If Hyderabad falls under the Metro Act, it will lose much of its autonomy from the central government. For example, Reddy plans to inaugurate a “peak-hour” pricing system, a feature he believes will help heave the project onto the world stage. According to his proposal, during the busiest times, L&T can charge up to a quarter more of the fare, which can go up to a maximum of 19 rupees per journey. For each hour it does so, it will have to drop the price at the same rate for two hours.

Under the Metro Act, this model would be impossible, since a central committee sets the fares. The issue lingers in court. Sreedharan said the metro would need to abide by federal law. Gadgil guessed some hybrid act would emerge.

Disputes and manoeuvering around the subject act as fodder for the idea that the rail is a hidden real estate venture, particularly because it is, literally, rising everywhere. News of plans for full elevation was the spark that first motivated Ramachandraiah to investigate. Heritage activists and Sultan Bazar tenants all said they would have no qualms if the metro dipped underground.

To the question of why the metro was planned entirely above ground in the first place, officials mustered two responses. The first is security. Bob made this case and Gadgil, whom I met a week after the Dilsukhnagar blasts, reiterated that people felt safer on elevated lines. The second is feasibility. All of Hyderabad sits above the Deccan Plateau, a terrain of tough granite beneath a thin soil sheet. YJ Bhaskar Rao, with the National Geophysical Research Institute, confirmed that the ground is unforgiving, and would take a long time to excavate and tunnel. (Bangalore and Hyderabad share a similar topography, although Bangalore, where the metro is now digging below the earth, has some softer spots.)

But the primary reason for the Hyderabad metro’s elevation is cost. Building above ground, according to Sreedharan, costs one-third the amount it does to tunnel under the earth. He claimed the DMRC originally recommended Hyderabad repeat the strategy adopted in Delhi: go above as much as possible, then move below where it is physically or political untenable to elevate. The advice was soon overruled. Sreedharan said that when Chandrababu Naidu called him, questioning the expense, he had replied that roads were too narrow for the rail to be built above them. “Then he [Naidu] told me, ‘Look here. Underground, we are going to spend 400 crore per kilometre. I can give 40 crore to these people and get them vacated.’” It was settled.

Naidu had not anticipated the ferocity of the resistance. Srinivas Soni, a store owner in Sultan Bazar, admitted their request for underground rail was costlier, but asserted that the government would lose revenues by booting stores out. He pays 20 types of taxes, amounting to Rs 15,000 per year. He dismissed, as others did, the government plan to relocate stores to multi-storey properties. When Suman Gupta and I spoke, Gupta pointed to two elderly customers at his counter. Would they, he asked, climb stairs to reach his pharmacy?

I asked Bob if there had been any difficulties with land acquisition. “No,” he replied flatly. Then I brought up Sultan Bazar. “Oh, yeah,” he said. “That area.” Issues arose with “hawkers and what not”, he confessed, but insisted that these issues would dissipate once the new, towering real estate rose. I relayed the sentiments that the tenants preferred not to move up. He paused. “When such a big project is undertaken, obviously it will hurt some people.” He then offered me a pragmatic point of view. “Once they start seeing the pillars coming up, people realise this is going to be a reality.”

As we departed Banjara Hills in her car, Bawa’s wife, Oudesh, said as much. An academic herself, she confessed to a mild frustration with the litigious approach of her husband and his cohorts. “You must create an awakening for the public” on the metro issue, she argued, “which nobody does.” Many metro dissenters are old ivory-tower hands, with little political expertise. When I asked Ramachandraiah what would come of his years of labour, he mentioned turning his research into a “proper book”.

“I’m sure next time you come,” Oudesh told me, “we will inaugurate the metro rail. After nine years, you can’t do anything.”

WHITE SLABS OF CONCRETE are already rising in Uppal, to the city’s east, home to a future station near the Nagole terminal. Posters plastered on the wall, in Telugu and English, praise the metro and prompt the reader to “pay your property taxes”, and avoid using plastics. Work is rapidly proceeding on the rail in Begumpet, one of the city’s busiest, wealthiest pockets.

AV Nageswara Rao, who oversees the four-acre L&T site near Uppal, also worked on the Delhi metro. This project presented more hitches than Delhi, he confessed. The workers kept striking power cords when digging into the thin soil. I asked him if it would be completed by 2017, a deadline at which cynics scoff. (Sreedharan called it “impossible”.) Nageswara Rao hedged a bit.

Traffic snarled up around the Uppal site, as vehicles passed the long, uninterrupted stretch of construction. The white columns dominate, hinting at the altered city to come. Officials acknowledged this permanent revision to the skyline. “It will no longer be the same, but this is how it has happened all over the world. How do you accommodate huge populations?” Reddy asked me.

L&T may well pick a motto along the lines of “making Hyderabad more beautiful” as they effect their dramatic reshaping of the city. Few people would have aesthetic objections to the metro. Most Hyderabadis would likely be loyal fans if the new system halved their commutes. It would cut down the CBIT student Akshay’s journey from Dilsukhnagar to Gandipet drastically; he reported that his family was eagerly awaiting the rail.

On 15 March, L&T co-hosted a promotional event with software industry association NASSCOM and the American Chamber of Commerce’s Indian chapter, on the benefits of the metro for IT companies. The crusade feels hokey. “People do laugh about it,” Maringanti said. But they also believe the city needs a transit overhaul, he insisted. “Add to that the sheen of the metro, and why not?” Even Sreedharan admitted metros had now become a “status symbol”.

For Hyderabad, it will be something much more complicated than that. Reddy often leaned forward on his desk during our interview—when discussing his critics, for example. But as he told me this, he leaned back in his chair: “For everything, there’s a first. Somebody has to venture. The history of human development is the history of calculated risk. Before Neil Armstrong, no human being ever set foot on the moon. Before Yuri Gagarin, no human being ever ventured into space. It’s a calculated risk. It is what we’re taking.”

It is a risk that will soon implode, Ramachandraiah said, leaving his city in shambles. “Bureaucracy has become so corrupt,” he intoned, “that nobody will bother if the state is looting.”

At the engineering school, Kapoor’s time with the microphone ended within eight minutes. The crowd dispersed. As he turned to leave, I caught the student who muttered the jeering comment, expecting more cynicism. Instead, he predicted he would soon be riding the metro. It would be a success.

“But you said it was ‘eating money’,” I countered.

He shrugged. “It will do both.”

 

Correction: The article originally stated that several shop owners in Sultan Bazar had closed their shops after taking compensation from the authorities. This has been changed to “a few shop owners”.

ON A THURSDAY AFTERNOON in late February, a crowd formed in the courtyard of the Chaitanya Bharathi Institute of Technology in Gandipet on the western outskirts of Hyderabad. Around 200 students fanned out around a makeshift stage, with speakers blasting hit songs in Hindi and English. The bold ones stepped forward to dance. At the end of ‘Sexy and I Know It’, they were asked to welcome Sanjay Kapoor, the head of corporate communications for L&T Metro Rail Limited, the private contractor building Hyderabad’s new metro system, which has been rising on lofty pillars of concrete all over the city since it broke ground in April 2012.

Kapoor stood before a lacquered board in his pinstriped suit, tight ponytail and wide sunglasses. The board displayed a futuristic rail car above the words “your chance to be a celebrity”. That chance came from a tiny box, into which students could submit a proposed slogan for the metro, in order to become one of its “brand ambassadors”—10 city residents who would appear on posters and TV advertisements promoting the metro. Near the box was Akshay, a first-year student of civil engineering from Dilsukhnagar, the neighbourhood where a bomb blast a week earlier had claimed 17 lives. A friend from the same neighbourhood, a young mustache gracing his top lip, stuffed a sheet in the box. He bashfully shared his tagline: “Making Hyderabad more beautiful.” They each spend Rs 10,000 per year on their hour-long bus commute to campus.

Once Kapoor took the microphone, it became evident that the dancing was over. On a “serious note”, he began to pose a series of questions to the thinning crowd. Were they aware of the metro? An affirmative murmur rose. “What,” Kapoor went on, “do you know about the Hyderabad metro?” This time, the murmur was less intelligible. One distinct response came from a 23-year-old on my right, muted but audible, and it neatly captured the growing public skepticism that led L&T to launch an unprecedented public relations campaign in January, four years before the metro is scheduled to open: “It is eating money.”

NINE YEARS SINCE IT WAS FIRST ANNOUNCED, the Hyderabad metro remains marred by controversy over its design, execution, funding and cost. It is also far from complete. To hear Kapoor speak on their campus, Akshay and his friend had crossed the crowded old city, where the metro’s three proposed lines will some day cross. From there, their bus route had taken them on one of the lonely roads of suburban Hyderabad, through a rocky, sparsely populated landscape shaped by nature and Chandrababu Naidu. More than a decade ago, the then-chief minister of Andhra Pradesh had conceived of a metro for the fast-growing state capital that would carry 2.5 million commuters per day by 2025 and be the most modern transit system in the world. His vision has had a troubled journey since.

On 1 September 2010, Andhra Pradesh entered a public-private partnership (PPP) with Larsen & Toubro (L&T), the nation’s largest engineering conglomerate. According to the terms of the agreement, the state has leased the company 269 acres of land, spread across each of the three corridors of Hyderabad through which the metro will run, on which L&T will build and operate 72 kilometres of rail lines—120 kilometres fewer than the Delhi metro. Unlike Delhi, this metro will run entirely above ground. By the time of its completion, it will have cost, by latest estimates, at least Rs 16,375 crore (Rs 163.75 billion), nearly double its original estimated cost of Rs 8,760 crore (Rs 87.6 billion).

One of the three lines is slated to be ready by the end of 2014; it will connect Uppal in the east to Secunderabad and Begumpet, and eventually to the western tech parks of Madhapur and HITEC City, near the Shilparamam crafts village. Work is beginning on another, with pillars already rising in the hectic northern suburb of Miyapur. As we walked off the campus, far from the metro line’s planned reach, Kapoor confessed that the full promotional road-show—set to visit 20 universities, and then temples, churches, mosques, tech campuses and the offices of every local politician—would cost Rs 1.25 crore (Rs 12.5 million). He deemed it a worthy expense.

In 2003, the state outlined plans for a metro rail to service a metropolitan region that had doubled, from 3 million to over 6 million, in the preceding two decades. The next year, the government created the Hyderabad Metro Rail Ltd (HMRL), a quasi-govermental agency, and appointed NVS Reddy, a former Indian Railways accountant, as its director. Dr E Sreedharan, the chief engineer famed for having built the Delhi metro with record speed and unparalleled integrity, was to be the project’s prime consultant. They opened a bid for construction. Four years later, the HMRL signed a contract with a consortium led by Maytas Infrastructure, a company helmed by B Teja Raju.

But just two months after that, on 23 September 2008, Sreedharan suddenly resigned. He scripted a very public letter to Planning Commission Deputy Chairman Montek Singh Ahluwalia, a key advocate for the metro, in which he called the project an impending scandal. Granting a private party “269 acres of prime land to BOT [build, operate and transfer] … for commercial exploitation,” he wrote, “was like selling the family silver.”

On 9 January 2009, Raju’s father, Ramalinga, chairman of the software giant Satyam Computer Services, confessed to an accounting fraud amounting to Rs 5,040 crore (Rs 50.4 billion). The case unleashed a flood of criticism aimed at the metro project, followed by a rapid chain of events that nearly shut it down. After Ramalinga’s fall, business investment in the city came to a standstill. Uncertainty about Hyderabad’s future grew deeper as that same year, the decades-old Telangana separatist movement reignited.

The concerns of a few dogged detractors, who had closely scrutinised the metro project since its inception, began to spread. Protests erupted in Hyderabad’s oldest corners, as roads were widened and concrete poured. Many of the grievances were born out of the reshaping of daily lives by a cumbersome new intrusion. But many others were rooted in objection to the singular distinction of the Hyderabad metro, which sets it apart from all the metros underway in Bangalore, Chennai, Pune, Jaipur, Ahmedabad, Lucknow, Ludhiana, Chandigarh, Nagpur and Kochi: its unorthodox funding arrangement. Only in Hyderabad will the entirety of the metro be built on public land conceded by the government to a private operator.

“The very definition of this project is rail and real estate,” said C Ramachandraiah, an urban geographer and the metro’s fiercest critic. In his fight, the city itself is a battleground, one on which a battle has been waged for a decade by citizens who do not want Hyderabad’s character to be shaped by techno-parks and private wealth. “It is going to be a huge white elephant [that will] destroy the skyline of the city.”

In his office at the Metro Bhavan in Saifabad, HMRL managing director NVS Reddy told me that before drawing up plans, in 2004, he studied the four cities where metros turn a profit—Singapore, Tokyo, Hong Kong and Taipei—and found a shared ingredient: real estate. To be more specific: mechanisms that harnessed the value of real estate to fund the metros’ construction. When a metro comes up, the properties along its route invariably rise in value, boosted by the convenience, crowds and improved infrastructure. This brings a rush of developers eager to buy proximate realty and—as in the case of the four successful east Asian metros—willing to pay for this access.

Infrastructure companies might be happy to build a lofty project like a metro; however, they are less keen to own and operate it. Worldwide, including in countries where transit riders have greater expendable income than the average Indian commuter, metros run on losses. Reddy devised a plan whereby the real estate gains that accompany a metro’s arrival circled back to the metro project itself. The private partner would be given land free of charge to build the metro, operate it and collect fares for a lease period, after which they would transfer both land and metro back to the government. To cover the costs of building the metro, 212 acres of land would be allotted for the private company to build on. It would get an additional 57 acres around 34 of the 66 stations, set one kilometre apart. On its total allotted land, it would be permitted to develop up to 18.5 million square feet of commercial property.

Reddy’s plan was devised at a time when the central and state governments, led by the Planning Commission, were forcefully steering bureaucrats toward collaborations with private partners in public projects, most of them smaller than the Hyderabad Metro. For Reddy’s colossal project, the public would pay no more than 40 percent of the costs, split evenly between the central and state government. Unlike the vast majority of the world’s rail transit systems, this metro would not be wholly funded by public money.

In order to further maximise potential real-estate values, Hyderabad in 2008 became the first city in India to ditch the regulations on floor-space index, the zoning rule that caps building height. Reddy expects 100-storey skyscrapers in the city soon. (“The sky’s the limit,” he said.) It would be only a matter of time, he swore, before Hyderabad looked like those four vertiginous Asian megalopolises.

When Satyam imploded in January 2009, Maytas, where the elder Raju had discreetly stowed away millions, pledged it would still complete the metro rail. The HMRL refused, and after a lengthy back-and-forth, severed the contract in June 2009, amidst a global financial free fall. But Reddy did not balk. A year later, L&T joined and work began anew. This March in New York City, the Global Infrastructure Leadership Forum, an industry gathering, gave the Hyderabad metro its annual award for “Best Global Engineering Project”, an accolade that prompted Sudhir Krishna, secretary of the Ministry of Urban Development, to send a letter of congratulations to NVS Reddy. The ministry also sent around a circular to all the country’s other metro projects, demanding that they emulate Hyderabad.

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Mark Bergen is a journalist living in Bangalore.

READER'S COMMENTS

7 thoughts on “Dividing Lines”

Really disappointed with this article, if any one thinks that BRT’s would solve urban congestion problems in India. they are just blind and unrealistic. They may be cheap but they wont solve any problem.

Without Metro’s no Urban city in India can survive. Our roads are jammed, busses have become useless. Riding bikes, cars has become a hectic job.

METRO is the way to go

Don’t be concerned with this article. It is written by an american kid who calls himself a journalist. At best he is someone who grew up and played soccer (football) and his team lost each week, while all the parents on his team told him and his teammates the gane ended in a tie. He is likely the product of a dysfynctunal, nuclear, pot smoking, hippie, super liberal family.

Was intrigued with the headline. But, the article hardly makes any sense. What is the alternative the author proposes? No metro, BRT not feasible. What should be done then?
Really disappointed with the article. Very biased with hardly any perspective.

Concur with Srikanth’s views. The metro is the ONLY mode of transport which is feasible, and will go a long way solving the troubles of lakhs of commuters in my city. For a BRT system to operate, we need very wide roads which are non-existent in every major city in India. The BRT system also has to deal with more operational difficulties than a metro once operational. The problem with Hyderabad’s metro project is with the execution. The top management have simply not been able to ensure planning and implementation effectively. Coming to the culture preservation part, as long as our heritage monuments are being protected, i don’t see why we have to go all teary eyed about the grandeur’s of the past. The only constant is change and as long as the metro is operated in a clean and efficient manner, the pros will far outweigh the cons

The writer is neither against the Metro Rail nor is he suggesting BRT. He is rather trying to highlight the PPP mode through which the funding for Hyderabad Metro is being done. One must understand that in the long journey that the Hyderabad Metro has traveled, the one aspect that things centered around was the ‘REAL ESTATE’. With already huge tracts of Government lands encroached, giving away 269 acres of prime land to private organizations which will again charge you for your travel in the Metro while still earning big bucks through revenues earned from spaces around transit points and Ad spaces is something to think of. Also, the talk of universal access involving MMTS, RTC and Metro is a distant reality as RTC is already dying a slow death and no talk of MMTS third phase.

dear Mr Mark bergen today 15-7-13 i am reading this article at page no.2 -“Several owners had taken compensation from the authorities, closed shop and left.” this piece of information i belive is not correct as far as ‘SULTAN BAZAR’ area
is concerned-the shops which were not yet opened by the time you had visited my place ‘CANNOT BE TAKEN AS THEY HAVE TAken COMPENSATION FROM AUTHORITIES AND LEFT’ -if any body has given you this information it may be a vested land lord who wants to evict his traders tenant. I REQUEST YOU TO TESTIFY THE STATEMENTS.

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