The railways have to shell out only Rs 250 crore as the total liability for Konkan Railway Corporation in 2002-03, as against Rs 530 crore projected earlier. Since the ministry of railways has already paid up the sum, it is through with its liability for this fiscal.
The rest Rs 280 crore will be rolled over as fresh debt, as per the financial restructuring plan chalked out by the Infrastructure Development Finance Company (IDFC). This is part of the package provided to the railways by the finance ministry. The package also includes a letter of guarantee against any possible default by Konkan Railway Corporation.
The ministry of railways had approached the finance ministry to share a part of the debt burden for Konkan Railways. Konkan Railway Corporation, a joint venture between the ministry of railways and the government of Maharashtra, has constructed the rail link between Mangalore and Mumbai through the inhospitable Sahyadri mountain ranges.
The company had raised a substantial part of its resources as high-cost debt on the letters of comfort provided by the railways. The railway ministry has also contended that the construction of the link was a social obligation for which it should be compensated.
The finance ministry had recommended the matter be referred to IDFC. The Centre has decided to convert a part of the debt liability of the railways on account of Konkan Railways Corporation into equity, and securitise the rest of the debt.
The rollover will also ensure that the debt burden of the ministry goes down in the subsequent fiscal years too. In 2001-02, the railways
