Why in the news?

At a June 22 meeting for Union Budget 2024-25, Tamil Nadu’s Finance Minister Thangam Thennarasu requested ₹63,246 crore for Chennai Metro Rail Phase-2, ₹3,000 crore for disaster restoration, and increased unit costs for centrally sponsored schemes.

How are the funds for phase two of the Chennai Metro Rail distributed?

• Funding Agencies and International Support: Chennai Metro Rail Phase-2 is financed by multiple international agencies, including the Japan International Cooperation Agency (JICA), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), and New Development Bank (NDB).
• State Government Contributions: Up to March 31, 2024, the Tamil Nadu government sanctioned ₹5,400 crore as share capital for the Chennai Metro Rail Limited (CMRL) and ₹12,013.89 crore as subordinate debt, bearing the entire expenditure due to delays in approval from the Union Cabinet Committee on Economic Affairs (CCEA).

Is the Centre stalling the funds for the metro project?

Approval Status:

• Public Investment Board: The Chennai Metro Rail Project’s Phase-2 was approved by the Public Investment Board (PIB) as a Central sector project under the equity sharing model in August 2021.
• Union Cabinet Committee on Economic Affairs: The project has been awaiting approval from the Union Cabinet Committee on Economic Affairs (CCEA) since then.

State Government Actions:

• Foundation Stone: Despite the pending approval, the foundation stone for the phase was laid by Union Home Minister Amit Shah in November 2020 when the AIADMK was in power.
• Ongoing Expenditure: The Tamil Nadu government continues to fund the project independently, stressing its finances and urging the Centre to sanction the project under the 50:50 equity sharing model as was done for Phase 1.

What about funds released by the Centre for restoration work after natural disasters in the State?

• Initial Request by Tamil Nadu: Tamil Nadu submitted detailed memoranda to the Union government, seeking approximately ₹37,906 crore for restoration works following two natural disaster spells in 2023.
• Initial Central Release: The Union government initially released a sum of ₹276 crore for immediate restoration efforts.
• Additional Approvals: The Union Ministry of Home Affairs (MHA) later approved additional assistance of ₹285.54 crore and ₹397.13 crore for the two disaster spells.
• Disbursed Amounts: From these approvals, a total of ₹115.49 crore and ₹160.61 crore were disbursed under the National Disaster Response Fund (NDRF).
• State Disaster Response Fund (SDRF): The Union government’s order also mentioned ₹406.57 crore as the 50% available in the State Disaster Response Fund (SDRF) account of Tamil Nadu as of April 1, 2023.

Way forward: 

• Metro Rail Project: The Union government should prioritize and expedite the approval process for significant infrastructure projects like the Chennai Metro Rail Phase-2. This can be achieved by setting stricter timelines for the Union Cabinet Committee on Economic Affairs (CCEA) to finalize decisions.
• Natural Disaster Restoration: The Centre should reassess the current disaster relief funding mechanism to ensure timely and adequate financial support for states hit by natural disasters.

Mains PYQ:

Q Discuss the recent measures initiated in disaster management by the Government of India departing from the earlier reactive approach. (UPSC IAS/2020)

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