1. Railways set to get big booster shot, Narendra Modi government to start work on $5 bn rail fund within weeks

Railways set to get big booster shot, Narendra Modi government to start work on $5 bn rail fund within weeks

After scaling up railway capex substantially over the last couple of years via extra budgetary resources, the Modi government will begin the process for creating a $5-billion Railways of India Development Fund.

By: | Updated: May 4, 2017 7:17 AM
railway capex substantially, Indian Railways, Railways of India Development Fund, PPP investment, NITI Aayog After scaling up railway capex substantially over the last couple of years via extra budgetary resources, the Modi government will begin the process for creating a -billion Railways of India Development Fund. (Source: Reuters)

After scaling up railway capex substantially over the last couple of years via extra budgetary resources, the Modi government will begin the process for creating a $5-billion Railways of India Development Fund (RIDF) soon. According to official sources, the railway ministry has floated a Cabinet note for RIDF, which will be considered by the ministers’ council in “the next two to three weeks”. As per the plan, the World Bank-anchored fund will be accessible to all railway projects — public-sector, private ventures and the projects undertaken by their alliance. The idea is that contractors bidding for railway projects will find a cheaper source of funds in RIDF which is in alignment with the long-gestation projects.

“The corpus will not only be available for Indian Railways but also for private operators, say, for station redevelopment,” said a top ministry of railway official, requesting anonymity. The fund was initially planned to be rolled out by the start of the current financial year. However, it is still to get clearance from all ministries. “We are awaiting comments of the law ministry,” said the official quoted above. While the government will contribute 20% of the fund, the rest will be pooled in from the likes of pension funds and sovereign funds. RIDF was announced by railway minister Suresh Prabhu last year in January after his visit to Washington, DC.

Given that the railways has not been able to generate enough internal revenue to fund projects, it is looking at public-private partnership model to fund its development projects. So far, it has had limited success in the PPP segment, partly due to policy restrictions that limited PPP investments to peripheral areas. The station redevelopment programme planned initially for 400 premium stations is now being given out on lease model to private developers. RIDF will be a ready corpus for these developers.

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Indian Railways’ capex for 2016-17 was Rs 1.12 lakh crore for 2016-17 compared with a target of Rs 1.21 lakh crore, though it was up 19% against the previous financial year. For the current year, the capex target is Rs 1.31 lakh crore and the carrier is looking to invest Rs 8.5 lakh crore for development of the railways by the financial year ending March 31, 2020.

Government think tank NITI Aayog too in its three-year vision document has advocated that the government support to the railways be increased to Rs 1.19 lakh crore by 2020 from the current levels of Rs 40,000-50,000 crore.

  1. M
    Magesh
    May 5, 2017 at 2:35 pm
    Why the are you using dollars and 'billions' when it's India
    Reply
    1. R
      Rajendra
      May 4, 2017 at 7:24 pm
      Very much informative.
      Reply
      1. D
        dk
        May 4, 2017 at 12:06 pm
        See the contradiction. Rly is sort of money.But has Rs.20 lac per AC 3 Tier coach to spend for trivial comfort.
        Reply
        1. Shahid Ullah
          May 4, 2017 at 8:50 am
          End Corruption in all sections of raiways. THERE WILL B ENOUGH MONEY TO PULL OUT FROM RED ZONE.. .
          Reply
          1. D
            dk
            May 4, 2017 at 12:20 pm
            Rly is not in red.yeh sone ke ande dene s murgee hai.That is why it is going to upgrade toilets at a cost of Rs. 3.5 lacs per toilet.A coach has 4 toilets and a train average 20 coaches.Just calculate the expenditure and of course commission to the officers and staff in a very systematic and disciplined manner..
            Reply

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