The Asian Development Bank (ADB) would extend loans of up to $500 million to Indian Railways to help improve its services along some of the busiest freight and passenger transport routes.
The investment would target various routes in Chhattisgarh, Orissa, Maharashtra, Karnataka and Andhra Pradesh, including the critical 'golden quadrilateral' corridor that connects Chennai, Kolkata, Mumbai and New Delhi.
Many of these lines carry a large number of passengers, along with large quantities of minerals and other important freight. They also traverse large rural stretches in which a large number of people live below the poverty line.
The ADB board of directors has approved a multi-tranche financing facility for the Railway Sector Investment Program. It would finance additional lines and the electrification of hundreds of kilometres of existing track, along with the installation of new signaling. ADB would also support accounting reforms to improve operational efficiency of the railways.
“This programme will help deliver more energy-efficient, safe, reliable and environmental-friendly rail services along key high-density routes,” said Hiroaki Yamaguchi, principal transport specialist, ADB. This, in turn, would result in direct and indirect economic opportunities for about 21 million people in programme areas, he added.
The funds would be released in several tranches, with an initial loan of $150 million from ADB's ordinary capital resources. It has a 25-year term, with a grace period of five years and annual interest set in accordance with ADB's London interbank offered rate-based lending facility. The Union government would provide counterpart finance of over $644 million to cover the balance of the costs of the entire programme, estimated at $1.1 billion.
