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India, ADB sign $130-m loan facility for rail routes

February 18: The Government of India and Asian Development Bank (ADB) have signed a $130-million loan to help India improve rail services along some of its busiest and most critical freight and passenger transport routes, an official statement issued by the Ministry of Railways said.

The second tranche of the loan is part of the $500 million Railway Sector Investment Programme approved by ADB in 2011, and will finance track components for 840 kilometres of additional tracks along existing railway lines.

Nilaya Mitash, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, said the investment programme targets busy freight and passenger routes in the states of Chhattisgarh, Orissa, Maharashtra, Karnataka and Andhra Pradesh, including the critical Golden Quadrilateral corridor that connects Chennai with Mumbai. Many of the lines traverse through impoverished rural areas and carry large number of passengers and huge quantities of minerals and other economically important freight.

The second tranche from the ordinary capital resources of ADB has a 25-year term, including a grace period of 5 years, commitment charge of 0.15% per year (on undrawn balance), maturity premium of 0.10% (by straightline method) and interest rate to be determined in accordance with ADB's LIBOR-based lending facility. The Government of India will provide counterpart finance of more than $97.2 million to cover the balance of the costs of the second tranche which is estimated at more than $227.2 million. The Ministry of Railways carries out the programme which is due for completion by December 2018.