Slow Railways reforms affect ADB loan inflow

The slow pace of reforms by the Indian Railways has affected the flow of Asian Development Bank (ADB) loans to the Rail Vikas Nigam Ltd.

Release of the second installment of the ADB loan to the RVNL for upgrading the rail network may get delayed by a year and will be tied up by 2007.

"While approving the first installment amount of $313 million, the ADB had set targets for the Railways that were to be met before the next amount was given. These targets, however, have not been met," a ministry official said. He added that the ADB would start discussions on the loan next year, which is why it was expected to tie up the funds by 2007.

The ADB had informally promised a $1-billion loan to the RVNL in three installments, officials said. While the first tranche of $313 million was tied up in 2002 itself, the next one was supposed to come in 2006.

The officials said the bank had set targets for achieving accounting reforms and the computerisation of various railway functions.

In addition, the Railways was supposed to initiate business process restructuring and empowerment of the front-line staff. Other measures included steps towards privatisation of infrastructure and tariff restructuring.

To cite an instance of tardy implementation, appointment of consultants for the accounting reforms programme of the Railways got delayed by nearly a year. It was only a couple of months back that PriceWaterhouse Coopers was appointed for the purpose, the officials said.

They, however, pointed out that the delay occurred because the process of getting approvals from the ADB was a lengthy one. The ministry was also in the process of preparing a report about giving more autonomy to frontline staff involved in actual construction work.

The officials added that the delayed inflow of funds was unlikely to affect the RVNL's pace of work as the entity had just spent Rs 53 crore of the first tranche that came in 2005.

RVNL was set up in 2002 to execute the Rs 15,000-crore National Rail Vikas Yojana, which envisaged better rail connectivity between New Delhi, Mumbai, Kolkata and Chennai, through the Golden Quadrilateral and its diagonals.