Coal news and updates

India’s rail budget focuses on PPP, FDI

June 8: Amidst severe financial crunch facing the Railways sector, India’s new railway minister, Sadananda Gowda, on July 8 said the ministry is considering opening up the sector for private sector investment and foreign direct investment (FDI).

Gowda, who presented the Rail Budget for 2014-15, said the ministry would seek approval of the Union Cabinet to relax the FDI policy to overcome cash crunch.

“Growth of the railway sector depends heavily on availability of funds for investment in rail infrastructure. Internal revenue sources and government funding are insufficient to meet the requirement. Hence, the Ministry of Railways is seeking Cabinet approval to allow FDI in the rail sector,” the minister said.

He however clarified that while FDI would be allowed in the state-owned network, passenger services would be excluded.

Gowda further said private investments would be encouraged in the form of public-private partnership (PPP) projects. “The bulk of our future projects will be...by the PPP model,” he said.

Among the various new projects, he said the major focus would be on high-speed projects such as bullet trains between Mumbai and Ahmedabad and the Diamond Quadrilateral project of high-speed trains to connect all major metros.

Major highlights:

• Indian Railways will aspire to become the world’s largest freight carrier;
• Freight business has grown but IR carries only 31% of total freight movement in the country; Railways runs 4,700 freight trains with 3 million tons of freight every day;
• With 12,500 trains, railways move 23 million passengers every day; equivalent to moving Australia's population;
• Indian railways spent Rs 41,000 crore on laying of 3,700 km of new lines in last 10 years;
• Fare revision will bring in Rs 8,000 crore; need another Rs 9,000 crore for golden quadrilateral project;
• Proposal to start bullet trains on Mumbai-Ahmedabad route; speed of important trains will be also raised;
• Ambitious plan to have a Diamond Quadrilateral high-speed rail network;
• Need to explore alternative sources of resource mobilisation and not depend on fare hike alone:
• Railways spend 94 paisa of every rupee earned, leaving a surplus of only 6 paisa;
• ​Bulk of future projects will be financed through PPP mode;
• Work for the Dedicated Freight Corridor on Eastern and Western corridors would be speeded up;
• ​Wi-fi facility will be available in A1 and A category stations and in select trains;
• Work for GIS mapping and digitisation of Railway land will be taken up; extension of logistics support to various e-commerce companies will be provided.