Railway gets biggest ever funding; LIC to invest Rs 1.5 trn

In the biggest ever funding for Indian Railways, state-run insurance behemoth LIC today committed Rs 1.5 lakh crore for development of various railway projects over the next five years.
The investment would be made through bonds issued by various entities of the Indian Railways, such as IRFC (Indian Railways Finance Corporation), beginning next fiscal. There would be a 5-year moratorium on interest and loan repayment.
"LIC has taken the task of supporting Indian Railways... It is a commercial decision... LIC will invest Rs 1.5 lakh crore over a period of five years," Finance Minister Arun Jaitley said here.
An MoU was signed today between Life Insurance Corporation (LIC) and the Ministry of Railways in this regard, which Railway Minister Suresh Prabhu termed as a "marriage" between two major organisations of the country that would be a "win-win situation" for both of them.

LIC will be subscribing to bonds worth Rs 30,000 crore on an average every year over the next five years, its Chairman S K Roy told PTI after signing of the MoU.
Asked about the expected returns for LIC from this investment, Roy said, "The rate is yet to be finalised. Since it is a commercial decision, it would be a win-win situation for both."

Terming the MoU as a significant step towards raising funds for Railway, Prabhu said on a lighter note, "People are always asking where is the money? So there is money, with honey because this is coming in at such a rate which is good for LIC and good for us."

With these funds, the cash-strapped Railways will be able to augment its resources for speedier execution of projects.
Jaitley also highlighted the need for improvement in performance of Railways.
"Railways have a long history. But the growth of Railway has to be expanded. Railways have to run professionally. Railway journey for passengers has to be a matter of comfort and delight. It can't be a matter of compulsion with no option. Therefore, the quality of Railways has to hugely improve," he said.
About LIC, Jaitley said it is "a great commercial giant and it is an example of how state institutions can grow so huge, grow professionally, and serve the country."

LIC is a leading financial institution with assets under management of Rs 15 lakh crore. One of the major activities of LIC is to provide long term finance to various entities.