LIC to invest Rs 1.5 lakh crore in Indian Railways

By: |
New Delhi | Updated: March 12, 2015 9:09:59 AM

Will help meet national carrier’s R8.5-cr capital requirement by FY19

The Indian Railways on Wednesday signed a memorandum of understanding with the public insurer Life Insurance Corporation (LIC) to bring in R1,50,000 crore of investments over the next five years to meet its R8.5-crore capital requirement by 2019.

According to railway minister Suresh Prabhu, the national carrier, which is trapped in a vicious cycle of high operating expenditures resulting in meagre capital left to fund its capacity-building needs, will benefit from the initiative.

“With such encouraging initiatives, the ministry of railways will be able to augment its resources for speedier execution of projects. The resultant enhanced throughput of traffic is likely to further increase the capacity to carry more to meet with a growing transportation demand leading to a robust economy,” Prabhu said.

LIC will make available the financial assistance with a limit of R1,50,000 crore over the next five years for implementing Railway projects, starting from FY16.

Railways is currently struggling to operate and run its locomotives on the existing 65,000 kms of rail network. And the situation has worsened due to an addition of a hefty number of new trains by consecutive railway ministers.

As per the Budget estimates, Railways will require some R8,56,000 crore over the next five years as investments and R1,00,011 crore in the next fiscal.

According to Rajalakhshmi Ravikumar, the railway finance commissioner, railways has been in talks with the World Bank, IIFCL and other multilateral institutions, apart from LIC, for quite some time to attract investments to increase its rail network. And LIC with its R1 lakh crore cash reserves will help meet 20% of its target by FY19.

Do you know What is Repo Linked Lending Rate (RLLR), Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.