Half year past, most Rail based industry projects still in limbo

The rail ministry has failed to initiate work on a majority of the rail-based industry projects announced in its last Budget in February this year. Six of the eight such initiatives, including a crucial Coach manufacturing unit and a modern signaling equipment facility through the PPP route, have seen no development.

The dismal performance is owing to a perennial funding crunch for the national transporter coupled with the lack of a clear policy on private participation. The tardy progress on the projects adds to the growing list of the rail ministry’s unfulfilled promises three months before the end of this financial year.

“The projects have not taken off. Lack of funds is a major issue. Also, cost sharing agreement and lukewarm response on Public private Partnership (PPP) initiatives has become a problem,” a senior rail ministry official told Business Standard.  Other officials also cited lack of continuity in top leadership as a dampener. The Ministry has witnessed six new ministers assuming office in the past four years alone.

Only two out of the eight projects announced in the budget of 2013-14 have had their foundation stone laid. The plan to set up a Coach Manufacturing Unit in Sonepat is facing delays because of lack of clarity on the new land acquisition law. “The project may need close to 400 acre of land. But as the new land acquisition Act has come, states are seeking clarifications. The exact duration of completion of land acquisition cannot be ascertained,” said a senior official from the Haryana State government closely associated with the project.

Asked about the slow progress on most Rail based industry initiatives, rail minister Mallikarjun Kharge had earlier told Business Standard: “I will soon undertake a review of all the projects that were announced in the rail budget this year.” Other projects which are yet to take off include setting up of a new wagon maintenance workshop in Kalahandi district in Odisha and a Midlife Coach Rehabilitation Workshop in Kurnool in Andhra Pradesh.

The delays have led experts to question Indian Railways’ execution mechanism. “Earlier, projects used to be assessed over the feasibility of location, economic needs of that area and the supporting infrastructure needed before they were announced. We have do not follow this procedure anymore,” former Railway Board Chairman J P Batra told Business Standard.

Senior Railway officials conceded politics plays a major role in decisions involving project execution. “Political compulsions have always over taken the economic concerns in Indian Railways.  But in both these projects, Indian Railways does not have to put any money. It is just the land and assured off-take,” a senior Railway official said.

The only two projects that have seen development are a forged wheel factory that would be set up in Raebareli in collaboration with Rashtriya Ispat Nigam Limited (RINL). RINL will invest Rs 1,100 crore in setting up of the factory. Railways will provide land and guaranteed off-take for 26 years.

The second project involves setting up a Mainline Electrical Multiple Units (MEMU) manufacturing facility at Bhilwara, Rajasthan which is the constituency of former Railway Minister C.P Joshi. The project worth Rs 1000 crore is executed in co-operation with Bharat Heavy Electricals Limited (BHEL).