A senior bureaucrat said officials of the Urban Development Department and Ministry of Finance met in February to approve the VGF for Mumbai’s first Metro line. “As a special case, the central government has approved a grant of Rs 460 crore, or 20 per cent of the total project cost. The remaining Rs 190 crore will be borne by the Mumbai Metropolitan Region Development Authority,” the official said.

The state government had demanded that the Centre grant the entire VGF amount, Rs 650 crore, which is being undertaken on public-private partnership model. But the Centre rejected it as the contract had been awarded before the guidelines were framed.

Following the demand for VGF, the Centre also explored options like funding the project under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and even an outright grant.

A senior official said, “Even if the VGF had been declined by the Centre, the MMRDA had promised to bear it through its funds, therefore the project never faced a threat of being stalled due to lack of funds. Now that it has been approved, it will reduce the burden on MMRDA, which has to fund other key infrastructure projects.”