Prabhu takes debt route to fund infra projects

He wants to approach institutions like LIC, pension funds etc for long term financing of huge infrastructure projects

New Delhi: Ruling out privatising railways, the Union Railway Minister Suresh Prabhu on Thursday clarified that the government has no intention to privatise railways but will depend largely on long-term borrowings but not to burden passenger by rising fares or using tax payers’ money.

"Loan is way forward (infrastructure) development. Countries like US, China and Europe have taken loans for development of their infrastructure," Prabhu told to Lok Sabha TV.

He further explained: "We are taking debt for development of railways infrastructure that means we are not doing privatisation. Besides there will be no burden of development on passenger fare as well as tax payer money."

Prabhu expressed confidence that institutions like LIC (in India), pension funds and sovereign funds can provide debt and they will not insist on early repayment of loan.

Prabhu envisages an overall investment of Rs 8.50 lakh crore in five years and proposed 77 new projects to undertake covering about 9,400 km of doubling works, among others.

The Minister hinted that some initiatives like train-sets, redesigning of coaches, doubling and tripling of rail lines, may take longer than expected to be implemented.

On running of bullet trains, he said, "Our thrust would be on basic facilities first like sanitation, time bound arrival of trains which is going to be implemented in the stipulated time period. Those would be focus areas."

On private participation, Prabhu said that there would be a system to regulate private sector players willing to invest in station development projects.

About states' role in development of railways, he said: "We are working with 20 states to enhance rail services. It is like creating another 20 new railways. We are going to work with each and every state government to create new infrastructure in their state."

On SPVs he said, "we have created new Special Purpose Vehicles (SPV) with oil ministry, coal ministry. Those will deliver. Rather one entity, there will be multiple entities delivering."

He further said: "The state governments can undertake some projects, but primarily public sector undertaking which have a good track record of laying tracks will be able to implement it faster and better provided you give them freedom, make them operationally efficient and give them funding."

About arrangements of funds, he said, "The funding could come from companies which have Rs 10,000 crore to Rs 15,000 crore net worth. They can bring in (loans worth) Rs 60,000 crore to Rs 70,000 crore in their balance sheets alone. That money can be used for financing. Railways can use funds from balance sheet of the PSUs owned by it."

Investment Plan
The Railway Budget envisages an investment of Rs 8.5 lakh crore in the next five years to be mobilised from multiple sources to cater to funding through multilateral development banks and pension funds. Segment-wise investments earmarked Rs 1,99,320 crore for network decogestion, including DFC and electrification. Rs 1,93,000 crore were earmarked for network expansion, Rs 39,000 crore for national projects (North Eastern and Kashmir connectivity projects) and Rs 1,27,000 for safety (track renewal, bridge works, road overbridge, road underbridge, and signaling and telecom).

Rs 5000 crore was allocated for information technology/research, Rs 1,02,000 crore for rolling stock (locomotives, coaches, wagons production and maintenance), Rs 12,500 crore for passenger amenities, Rs 65,000 crore for high speed rail and elevated corridor, Rs 1,00,000 crore for station redevelopment and logistic parks.