The Ministry of Railways will seek Cabinet approval to set up a “socio-economic railway lines fund” to finance its network expansion projects. The ministry is working on guidelines to develop tracks on a public-private partnership (PPP).
A senior official at the ministry said: “We have framed a note for creating a non-lapsable fund through a mix of additional Gross Budgetary Support and dividend waiver. It will soon be sent to the Cabinet for approval.” The proceeds of the fund, once approved, will go towards developing around 97 network expansion projects over the next eight years. The Railways facing a severe resource crunch in taking up and completing projects have a throw-forward (balance funds required to complete the earmarked projects) of Rs 100,000 crore to lay 286 new lines and execute gauge conversion and doubling projects.
However, under the annual plans for the last two Budgets, these projects were allocated only Rs 18,000 crore. Taking into consideration the increase in the cost of the projects, the Railways say it would take them over nine years — if the allocation is not enhanced substantially — to complete these. The official added: “After taking into account the resources position of the Railways, the minister has sought private investment in projects involving construction of new lines. We have asked industry bodies to come up with commercially viable business models, which will be evaluated by the ministry.”
The measure comes in the wake of Railway Minister Mamata Banerjee announcing in her vision document Indian Railways’ intention to lay 25,000 km of tracks over the next 10 years. In the 62 years of Independence, the organisation has been able to add only 10,000 km to the inherited network of 53,996 km.
Akhileswar Sahay, president of the infrastructure advisory division of Feedback Ventures, said: “If the Railways intend to construct 2,500 km of lines annually, which would be a rate almost double that of China’s, an action plan has to be put in place. Appropriate strategies have to be worked out to draw private investment, which is the only viable option available to raise money.” Out of the sanctioned 286 projects, 123 have been identified by the Railways on priority basis on grounds of traffic and operational growth. Around Rs 21,500 crore is required to complete the projects.
However, if funds were to be allocated only for such works, the ministry officials said, development of other projects sanctioned on socio-economic grounds would face delays. This impelled the Railways to look at innovative measures to generate additional resources.
