Rail freight plan hits FinMin hurdle

Railway ministry asked to acquire land before approaching the Cabinet.

The ambitious East-West dedicated rail freight corridor project has run into procedural problems over land acquisition.

While the railway ministry has put up the project before the Cabinet Committee on Economic Affairs (CCEA), the Department of Expenditure in the finance ministry has said the railways should have approached the CCEA only after acquiring land for the project.

According to sources, the expenditure department has said the move to seek CCEA approval is 'premature'. In fact, it has also asked the railway ministry to finalise the project funding before seeking cabinet approval.

Under the freight corridor project, 5,270 hectares of land is to be acquired for the western corridor (Delhi-Mumbai), while 3,563 hectares will be acquired for the eastern corridor (Delhi-Howrah).

The railway ministry has almost completed the survey for the two corridors. However, the land acquisition process has been slow. In its urgency to get the project rolling as soon as possible, the Railways went ahead and presented the project for CCEA approval last month.

However, given the expenditure department's view, Rail Bhawan mandarins may have to first complete land acquisition "" a process that may delay the project's approval.

Out of Rs 28,000 crore earmarked for the project, Rs 9,000 crore is to be raised by the railway ministry as equity, while the remaining has to be raised through debt.

The Railways says that as some part of the debt is to come through a loan from the Japan government, they are yet to be told by the finance ministry as to how much that amount would be.

According to a senior railway ministry official, unless the finance ministry tells them the amount, they cannot prepare a final funding arrangement.

Earlier this year, the railway ministry had circulated a draft Cabinet note to the ministries of law, finance and the Planning Commission proposing an amendment to the Railway Act, which would enable it to acquire land expeditiously for the project. This amendment, the ministry has suggested, should be on the lines of the National Highway Authority of India Act.

The amendment was supposed to have been introduced in the recently-concluded monsoon session of Parliament. However, railway ministry sources claim till date, no follow-up action has been taken on the proposal.

As a result, while on one hand the ministry wants to get CCEA clearance for the project at the earliest (by the end of this month, according to sources), its land acquisition process has not taken off as expected.