Railways to float Cabinet note for development fund

The fund, with an initial corpus of around $5 billion, would be used for modernisation of rail infrastructure

The railways ministry is set to float a Cabinet note soon for creating the Railways of India Development Fund, anchored by the World Bank, which would be used for modernisation of rail infrastructure in the country.

The proposal has already got a go-ahead from the finance ministry. “We would soon float a Cabinet note for setting up the fund, which would be up for inter-ministerial consultation,” said an official close to the development. According to media reports, the initial corpus of the fund would be around $5 billion and it is likely to be operational by the first half of 2017.

Indian Railways is planning to invest $142 billion in the next five years, as part of the plan by the Narendra Modi-led government to improve the efficiency of the national carrier. The fund would also be used to access various new technologies in the sector. “Our idea is to get part of this plan funded by multilateral bodies, and the World Bank that has global experience and access to technology is a good partner,” Prabhu said about the fund after a meeting with bank officials in January. The fund would provide financing for infrastructure projects of the railways and also invest in debt and equity in projects with private-sector partnership.

The World Bank is already debt funding part of the eastern arm of the ambitious Dedicated Freight Corridor (DFC) project, which was cleared in three tranches. The eastern DFC is to be 1,840-km long, from Ludhiana to Kolkata. The World Bank is supporting it as a series of projects in which three sections with a total route length of 1,146 km will be implemented. The World Bank board had in 2011 approved the first tranche of $975 million loan for the 343-km Khurja-Kanpur section already under implementation. In April 2014, the bank approved the second tranche of the loan of $1.1 billion for the section covering 402 km from Kanpur to Mughal Sarai. The third tranche of $650 million was cleared in July 2015.

The eastern and western arms of the DFC project are expected to help India increase the railways’ transportation capacity by building high-capacity and high-speed dedicated freight corridors along the Golden Quadrilateral. Currently, the rail routes connecting the quadrilateral between Delhi, Mumbai, Chennai and Kolkata account for 16 per cent of the railway network’s length but carry 60 per cent of India’s total rail freight.

FOR MODERN TIMES

• The proposal has got a go-ahead signal from the finance ministry
• Initial corpus of the fund would be around $5 billion
• Likely to be operational by the first half of 2017
• Indian Railways is planning to invest $142 billion in the next 5 years
• The World Bank is already debt funding part of the eastern arm of DFC project
• The eastern DFC is to be 1,840-km long, from Ludhiana to Kolkata
• The World Bank board had in 2011 approved the first tranche of $975 million loan
• In April 2014, the bank approved the second tranche of the loan of $1.1 billion
• The third tranche of $650 million was cleared in July 2015