Another Indian infrastructure project is in trouble. This time, the crisis concerns finding funds for the proposed dedicated railway freight corridor. This is a critical undertaking that aims to ease the transportation constraints that are coming in the way of the country?s blistering economic growth. It will also make the railways a serious contender for a growing share of the country?s burgeoning cargo business. As of now, costs, delays and capacity crimps make the railways the least preferred option. Sadly, the project is two years behind schedule on financial closure. In fact, the programme has been in the news more for hiccups than progress. The sticking point now seems to be the fact that the Japanese investors who had come forth are keen only on funding one link?the lucrative Delhi-Mumbai corridor. The railways, however, plan an eastern extension on valid expectations of a revival of cargo traffic along the legendary east-west Grand Trunk route.
Without financial closure, fears of the committed funding from Japan not materialising pose a threat to the entire project. The government can either compromise on its plan and settle for the Delhi-Mumbai corridor alone, or quickly find alternative funds. The current funding gap is to the tune of Rs 18,000 crore. Now, the government has four options. First, it can borrow from multilateral institutions such as the World Bank. This would be a reasonably low cost affair. The second way would be to seek private money for the first time in a signature infrastructure project. This would mean a public-private partnership model. This method has been tried on toll roads before, and whether it can work on such a vast scale is yet to be tested. A third option could be to use a special purpose vehicle created on the strength of India?s foreign exchange reserves. The financial rudiments for such a modus operandi are reportedly in the process of being put in place, and there?s a familiar argument that applies in this case: if China can, so can we. The final option is to go in for a mega bond issue. Indians are quite eager to put their money into high-profile projects. Raising funds is not really a restraining factor for infrastructure anymore. But those in charge of ground implementation must demonstrate a heightened sense of purpose and new-found level of efficiency.
