In an attempt to increase its freight business, the railways are planning to review its two-year-old wagon investment scheme (WIS). The ministry now plans to make the policy more market linked to ensure that it has enough takers.
The policy, which at present has a uniform rate of investment of 10%, is now likely to be linked to the prime lending rate (PLR) of banks. A Rail Bhawan official said, ?We are reviewing the policy and may decide to link the rate of investment to the PLR with a margin of 1%.?
Under the existing WIS, railways provides a guaranteed number of rakes every month to a customer along with freight concessions. The wagons are procured by individuals, corporate bodies or association or groups of companies from the domestic or foreign builders approved by the ministry or directly from the Indian railways.
The ministry?s decision comes in the face of the recent phenomenon of hardening interest rates. ?It does not make much sense for investors to borrow at about 14% from banks and then get a rate of investment of 10% in the WIS,? the official pointed out.
This is one of the reasons for the low popularity of the scheme the ministry feels. So while in the iron ore circuit of Chakradharpur and Hubli the scheme have been very popular and railways has had to cap the number of players due to limited capacity of rakes, in the rest of the country, the railways have managed to sell only about 50 rakes.
The ministry is also set to unveil the wagon leasing policy by the month end. The scheme would be expanded to cover any person or company who leases wagons and containers from an agency, instead of procures them. At present customers under the WIS and container train licensees have to buy their own wagons. Railways will also charge Rs 5,000 crore from the leasing company as registration fee.
The agreement under the leasing policy would be only between the lessor and the lessee and would no longer involve the railway ministry. However, railways would continue to maintain the wagons and containers.