States’ share may dip to 50% from 80%

By: |
New Delhi | Updated: March 7, 2018 2:13:22 PM

Railways, however, to make 50:50 norm mandatory for all projects, including new lines and doubling

Indian Railways, Maharashtra, Karnataka, Odisha, madhya pradesh, suburban railway projectsThe revised cost-sharing norms were first mooted in 2016 when Suresh Prabhu was the railway minister. (PTI)

The Indian Railways is likely to relax the 80:20 ratio for financing of sub-urban network projects between states and the Centre and make it on a par with the proposed 50:50 norm for other projects like new lines and doubling of tracks. However, it will make compliance with the new cost-sharing formula mandatory for implementation of projects, said a ministry official. The move follows a series of representations made by state governments asking for a lower burden on them after the railway ministry came out with a scheme that the state concerned must bear 80% of the suburban projects’ costs, and also make available the land for it.

Maharashtra and Karnataka are learnt to be among the states that have asked for an increase in the Centre’s share of the project costs. These states have lined up a slew of suburban railway projects as part of their plans to bolster infrastructure. Although the concept of the Centre and states sharing project costs equally had existed even earlier, this has followed more in the breach. States used to approach the railways pleading inability to provide the stipulated funds. In most cases, they simply made the land available and bore a maximum of 10-20% of the project costs. This has practically inflated the expansion costs of the transporter, which is already on a weak financial footing.

The revised cost-sharing norms were first mooted in 2016 when Suresh Prabhu was the railway minister. The higher share was envisaged for states in suburban projects because these were potentially not remunerative; states, on the other hand, are bound to have interest in such projects which upgrade their infrastructure and thereby give a boost to the their economies.

According to sources, for projects such as new lines, states will now have to meet 50% of the project cost and, if the project is based on socio-economic considerations and are not remunerative for the railways, the states will additionally have to provide land too.

Meanwhile, cost-sharing in at least two suburban projects Mumbai and Bengaluru has already been relaxed to 50:50, in the states’ favour. In the Union Budget for 2018, the Centre announced that the Mumbai railway transport system will be expanded and augmented to add 90 km of double-line track at a cost of Rs 11,000 crore. Also, an additional 150 km of suburban network is being planned at a cost of Rs 40,000 crore, including elevated corridors at some sections. In addition, a suburban network of approximately 160 km at an estimated cost of Rs 17,000 crore is being planned in Bengaluru. However, these dilutions of the financing norms for states have been specific to the projects concerned and what is now being planned is make 50:50 cost-sharing a norm for all such projects.

“A couple of more such proposals have come and they are being examined on project basis,” said the official.
According to the official, a lot of discussions are taking place with the state governments at the railway minister’s level given that there are many railway lines, including suburban networks, which are not remunerative for the railways and states need to pitch in with funds.

“The philosophy across states varies and some states are more forthcoming (when to come to taking a higher share of project costs,” added the official. While states such as Odisha and Madhya Pradesh are focusing on new lines to connect backward areas to spur growth, many others are focusing on suburban networks.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Think out of the box for better productivity, says Railway Board Chairman Ashwani Lohani
2Indian Railways explains the reason behind train disruptions in Mumbai
3Etihad may exit Jet Airways this year, says CAPA