Railways needs to spell out clear policy on PPP, FDI investment: Assocham

Dec 07 2012, 17:01 IST
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SummaryA report has called for a clear policy framework to promote such investments in the sector.

Pitching for a greater share of private and foreign capital in the Railways, especially in the freight segment, a report has called for a clear policy framework to promote such investments in the sector.

"The government and the Railways should come up with a clear policy framework for promoting private sector investment and FDI. "Public private participation (PPP), currently being promoted in augmenting passenger services, should be extended to freight operations," it said.

The report, titled 'Re-imagining Railways-Giving a new life to the lifeline of the nation', is prepared by private lender Yes Bank and industry lobby Assocham.

Besides, the Railways may also look at capitalising on the existing rail infrastructure by creating a separate holding company, which would free up resources and provide additional capital for improving services, it said.

Railway modernisation requires an investment of around Rs 8.4 trillion in the next five years, of which Rs 2.30 trillion are expected to be raised through PPPs, according to the Railway Ministry.

Stating that equal opportunities should be created for attracting private sector, by sharing existing infrastructure, the report said PPPs can be taken forward by increasing the access to capital markets by floating bonds for financing projects for the Railways.

An investment of Rs 8.4 trillion during the 12th Plan is required which includes Rs 3.96 trillion for modernisation, the report said, adding it is a quantum jump from investment levels of Rs 2.03 trillion in the 11th Plan and Rs 84,000 crore in the 10th Plan.

The focus on leveraging on PPP is critical for obtaining funds, the report said, adding that PPP models in various areas are needed to attract private investments to augment core capabilities.

The report also suggested setting up of a central planning body to study, plan and implement a nationwide network of logistic operations - air, sea, land and rail.

The Railways, which is the fourth largest rail network globally, today operates around 19,000 trains a day including 11,000 passenger trains.

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