Economic Analysis of Hyderabad Metro Rail Project

Abstract

Hyderabad city is one of the larger metropolitan cities in India which has been undergoing the burgeoning of its population and facing the concomitant challenges of traffic and transportation problems over last couple of decades. The existing transportation modes - buses and trains - are already over-stretched and show the limits of mass transportation in such large cities; therefore, there is a need for developing Mass Rapid Transit Systems (MRTS) in them. The Hyderabad Metro Rail Project (HMRP) is one of the few MRTS projects undertaken in India with some of its own distinctions. The HMRP is perhaps the first MRTS project conceived and developed under Public-Private Partnership (PPP) model in India. It is on the verge of completion now after sailing through a lot of difficulties at the various stages of project. This paper first discusses the importance of HMRP towards improving the traffic and transportation of Hyderabad city and its citizens. It then attempts to make an economic analysis of the HMRP using the framework of “Cost Benefit Analysis (CBA)”, which is widely used in the traditional project feasibility analysis to extend it to include socio-economic aspects of projects. The CBA of HMRP finds that the project is favourable on the numeraire measure of Cost-Benefit ratio.