To fund the railways' ambitious plan of doubling tracks, increasing track electrification, and improving traffic facilities and passenger amenities, Railway Minister Suresh Prabhu on Thursday announced a steep 52 per cent rise in the Plan outlay for 2015-16 to Rs 1,00,011 crore. Of this, about 17 per cent will come through institutional finance.
The total revised Plan outlay for 2014-15 was estimated at Rs 65,798 crore.
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The minister also announced the setting up of a financing cell in the Railway Board. (KEY TAKEAWAYS)
For raising long-term debt, the Railways could tap pension and insurance funds and set up a holding company or a joint venture with existing non-banking financial companies of public sector enterprises such as the Indian Railway Finance Corporation, the minister said. Debt could be raised from both domestic and foreign sources, including multilateral and bilateral financial institutions like the World Bank and the Asian Development Bank.
"While the budgetary support has been increased progressively over the years, it has not been adequate to realistically fund the large shelf of projects we have in the pipeline. Such projects can be taken to accelerated completion by tapping market funding from institutional finance agencies, multilateral lending," Prabhu said.
Of the Rs 1,00,011-crore Plan outlay for 2015-16, the central government will contribute about Rs 40,000 crore (Rs 10,000 crore more than in the 2014-15 Railway Budget), while internal resources will account for Rs 17,793 crore.
The Railways has identified about 100 large projects, valued at more than Rs 1 lakh crore, which will be funded through extra-budgetary resources, including institutional finance.
He added, "It is anticipated the Plan size will be bigger once resources from institutional bodies are formalised during the course of the ensuing financial year."
The Railways plans to carry about nine million more people a day and 0.5 billion tonnes of additional cargo a year, for the next five years. It also plans to bring about a 20 per cent rise in track length - from 114,000 km to 138,000 km.
"In the next five years, our priority will be to significantly improve capacity on existing high-density networks. Improving capacity on existing networks is cheaper," Prabhu said, adding emphasis would be on gauge conversion, doubling, tripling and electrification of railway tracks, increasing average speeds and making trains more punctual.
Going by Railway Budget 2015-16, the Railways is increasingly reducing its reliance on the public-private partnership (PPP) mode for large projects. The 2015-16 Railway Budget document shows funds through the PPP mode are expected to increase by only Rs 60 crore to Rs 5,781 crore.
In the entire 12th Plan period (2012-13 to 2016-17), Indian Railways was expected to generate about Rs 1,00,000 crore through the PPP mode. Now, this seems a tall order, given less than Rs 20,000 crore has been mobilised in the first three years of the Plan. For the five-year period, the internal revenue generation target was set at Rs 2,25,000 crore.