The Centre has decided to convert a part of the debt of the railways on account of the Konkan Railways Corporation (KRC) into equity and securitise the rest.
The measure has been recommended by Industrial Development Bank of India in its report to the ministry of railways which had referred the issue to the institution. The report has been approved by the railways and the ministry of finance, which will substantially reduce the debt on the railways, which has already touched Rs 1,300 crore since last fiscal.
KRC is a joint venture between the ministry of railways and the government of Maharashtra to create a rail link between Goa and Mangalore through the inhospitable Sahyadri mountain ranges. While the link has become operational, the company had raised a substantial part of its resources as high interest bearing debt, on the letters of comfort provided by railways.
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As a result its debt has ballooned. According to the railways own estimate, the company is just able to cover its operational expenses from the revenue generated.
The company has been forced to approach the railways to meet its annual interest liability, which is estimated at Rs 543 crore for fiscal 2002-03. In 2001-02, the railways made a provision of Rs 744 crore on this account.
It is, however, not sure if the Maharashtra government would also be asked to take an enhanced share in the equity of the corporation. The railway ministry in its