Dedicated freight corridor to enhance capacity and efficiency
Stronger investments, inherent cost competitiveness, improving efficiencies and lower cross subsidisation from freight charges would lead to a strong growth trajectory for rail-based transport, and dedicated freight corridor would enhance capacity as well as efficiency, according to a Credit Suisse report of December 2014.
Despite being one of the largest railway networks in the world, Indian Railways has not been able to leverage the freight potential, largely because this network is common for passenger and freight trains.
In order to resolve network issues and provide a dedicated network to freight traffic, the government has initiated work on Dedicated Freight Corridor projects to connect Delhi-Mumbai (Dadri to JNPT) and Delhi-Kolkata (Ludhiana to Dankuni). The estimated cost for these two routes is R80,000 crore.
While the funding for the western corridor will come from Japan Bank for International Cooperation (JBIC), funding for the eastern corridor will be partly met with debt flows from World Bank. In addition, the ministry of railways will fund about 125 km of eastern corridor, and another about 550 km of track on the eastern corridor would be developed on a PPP basis.
“These projects were targeted to be completed by 2017. However, given the execution challenges, we expect a delay of a couple of years in completion of these projects,” says the report from the foreign brokerage.