The politically profitable decision to use a copy of the proposed Delhi-Mumbai freight corridor for Delhi-Kolkata could become a headache for the Centre. The Japan Bank of International Cooperation (JBIC) has informally told the railway ministry that it is not keen to finance the new corridor that consultants say will need an extra expenditure of Rs 28,000 crore.
This means the Centre will have to take some tough decisions if it wants the project to take shape. The final draft of the Japanese International Cooperation Agency (JICA), the consultants for the project, has put the cost of constructing the two stretches of the corridor at about Rs 49,900 crore, almost double the railway ministry?s estimate of Rs 28,000 crore.
The Delhi-Mumbai corridor is expected to connect strongly the vast northern Indian hinterland with the big ports in and around Mumbai. The move will make the industrial corridor coming up along the railway tracks in the region competitive. But, even before the project cost could be established, a similar Delhi-Kolkata corridor was proposed owing to pressure from political leaders in eastern states.
Rail Bhawan sources told FE that JBIC was likely to provide about Rs 15,000 crore to Rs 20,000 crore for the project, and the railways would have to fund the rest. A JICA team is set to visit India in November to decide on key issues relating to the loan. Exactly how much Japanese money will be pumped into the project will be finalised in March next year.
Officials of the Prime Minister?s office, the finance ministry and the railway ministry are now scheduled to meet on Monday to discuss the issue. ?We will have to take a final call now on the funding of the project, and also whether the government will be willing to take Japanese funds with such restrictive terms,? a government official said.
The railway ministry feels that going by the JBIC report, the project cost will escalate because it has included factors like the costs of locomotives and a proposed inland container depot at Gurgaon in Haryana. The earlier estimate by Rites, which had pegged the cost at Rs 28,000 crore, was more realistic, the ministry feels.
Another spanner in the works is JBIC?s stance that it will not be able to help finance the project unless electric trains are used, whereas the ministry has plans of using diesel locomotives.