The Railways may float a special purpose vehicle (SPV) to finance a substantial part of the Rs 14,000 crore Golden Quadrilateral project.
Senior ministry officials said talks have been held with the Union finance ministry on the proposal for a SPV to raise funds from the domestic market, in addition to the steps taken to tap multilateral institutions.
Though the Railways have already tied up around Rs 1,000 crore of funds from abroad for the project to provide an additional railway line between the four metros, they feel that the domestic option may be a cheaper alternative in the present conditions.
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The officials said they have held talks with even finance minister Yashwant Sinha, and another round of talks is expected soon.
In the initial proposal, the Railways had considered raising the lion's share of the resources from abroad. But the Rail Bhawan has realised that loans of this sort like those contracted from the Asian Development Bank can be costly besides having "harsher" terms.
They have, accordingly, decided to pitch for a World Bank loan for some of the funds as it is cheaper.
The ministry has already firmed up plans to float an SPV for the Bogibeel mega train bridge over Brahmaputra river in Assam.
For the Golden Quadrilateral project the ministry is yet to decide on the nature of instruments to raise the funds under the SPV. It is confident that the returns on the project will be good enough to encourage domestic financial institutions such as the Life Insurance Corporation to invest in the project.
Till date the Railways have relied on plan funds from the Centre besides its own earnings to fund its investments. Since the finance ministry has already committed Rs 12,000 crore as grant for the Special Railway Safety Fund, there is little possibility of it shouldering additional responsibility for a mega project of this sort.
For the Railways too an investment of this magnitude on a single project has not been contemplated before for a long time and the officials feel that it is impossible to expect funds from internal resources like fares to be able to provide enough revenues to underwrite the project.
The Golden Quadrilateral project involves strengthening the rail network emanating to and from each of the four metros.
The investment plan prepared includes running of freight train at over 100 km per hour, construction of additional corridors at the approach of metropolitan cities for running of suburban trains and doubling of single line sections.