Proposal for Centre, states to form JVs for rail infra projects cleared

Move is aimed at greater participation of state governments; JV to have equity participation of both entities

The Union Cabinet chaired by Prime Minister Narendra Modi today approved a proposal for forming joint venture companies between Indian Railways and state governments to mobilise resources for executing rail infrastructure projects.

"This would ensure greater participation of state governments in implementation of railway projects both in terms of financial participation as well as decision-making process," an official statement said, adding the move will also facilitate faster approvals including land acquisition.

The joint venture companies would be formed with the equity participation of the rail ministry and the state governments. Each such JV would have an initial paid-up capital of Rs 100 crore —  including the rail ministry's paid up capital of up to Rs 50 crore — based on the quantum of projects to be undertaken.

Further infusion of fund or equity for the purpose of the projects will be carried out after approval of the project proposal and its funding. "Besides travelling people, various cement, steel, power plants etc would get the necessary rail link for transportation of raw material and finished products," the statement said.

The JV companies would also be allowed to form project-specific special purpose vehicles (SPVs) with equity holding by other stakeholders including banks, ports, public sector undertakings and mining companies. The rail ministry is working on a capital expenditure plan of Rs 1 lakh crore in the current financial year, including Rs 40,000 crore to be raised from Extra Budgetary Resources.