Railways receive Rs 2,000 cr assistance from LIC for projects

This is the first tranche for 50 projects involving construction of new lines and electrification of routes; LIC to disburse Rs 1.5 lakh cr over 5 years

Railways today received Rs 2000 crore from Life Insurance Corporation (LIC), the first tranche of its financial assistance for investment in 50 projects involving construction of new lines and electrification of routes as part of its capacity augmentation programme.

Railways had signed an MoU with LIC in March this year for financial assistance of Rs 1.5 lakh crore over the next five years for construction of new lines and route electrification. There is a five-year moratorium on interest and loan repayment

The Rs 2,000 crore cheque was handed over by LIC to Indian Railway Finance Corporation (IRFC) at a function here. IRFC will issue bonds worth Rs 2000 crore to LIC as part of the arrangement between railways and the national insurer.

There are several rail projects held up due to the fund constraints. Now some of these projects can be taken up with LIC fund, Railway Minister Suresh Prabhu said here.

The LIC fund will be utilised for the doubling in the 653-km long Itarsi-Katni-Cheoki section, 273-km long Billupuram-Dindigul section and the 182-km long Viramgam- Samakhiyali section.

Besides electrification of the 330-km long Chapra-Balia- Allahabad route and 423-km long Barauni-Katihar route among the 50 identified rail projects across the country will be taken up with the LIC fund.

Railways have identified the projects to be taken up on priority basis where the internal rate of return is more than 14 per cent.

The LIC fund will be invested in the doubling of the 263- km long Vizianagaram-Raigada-Titlagarh-Raipur section, crucial for coal movement in Odisha and Telangana.

Describing the funding as a "golden opportunity and a good beginning" for railways, Prabhu said, "It is a challenge now to invest it in a most appropriate way so that we derive maximum benefits."

Railways have drawn up an ambitious plan of Rs 8.5 lakh crore investment over the next five years.

Highlighting the importance of investment, Prabhu said "No organisation can survive without expenditure. If we do not invest in railway, we will go down and down."

Addressing the gathering, LIC managing director S B Mainak said, "LIC has committed to give Rs 1.5 lakh crore to railways through IRFC over the next five years and today we have the first tranche of it."

The insurance company has given the assistance money at 7.87 per cent interest rate to railways.